I had a frustrating conversation with a Buyers’ attorney, during which she grew a bit testy once I expressed my clients’ unwillingness to lop another $15,000 off the sales price of the house pre-contract (post-accepted offer) merely because the roof would need to be replaced within the next two years or so, per the home inspector. Said she: “Well, your clients are getting a profitable return on their investment from 20 years ago-- it’s all found money to them and you should tell them to be more reasonable.”
I sweetly thanked her for sharing her psychic abilities with my clients and me, as she seemingly knew exactly what my clients paid to buy their home and carry it all these years. Then I quickly opened the amortization calculator on my computer and did some quick inputting.
Here’s what I then shared with my colleague: “My clients took a mortgage of $275,000 on their house in 1987 and put down $75,000. If you use a rough estimate of an 8% mortgage, they paid over $277,000 in interest in 20 years. Since they accepted an offer from your clients for $600,000, they have lost $27,000 on the house before calculating closing costs, repairs, and improvements. And you want me to tell them to take another $15,000 off because a presently non-leaking roof might spring a leak in 2009?”
Please don’t try this at home, as my logic is most flawed (my clients got the intangible benefits of living there plus took tax deductions for a portion of the interest), and a house is only worth what a buyer is willing to pay at the time it is offered for sale. But what a buyer is willing to pay has nothing to do with what a seller’s profit is--or isn’t. My clients didn’t want to take $600,000 for the house to begin with, but since a comparable home sold a few months back for the same price, their agent told them to jump on the offer and I concurred. However, I am tired of buyers looking in sellers’ wallets and making assumptions.
The agent called me back a few hours later to say that “whatever you did worked”. The Buyers have decided to hold to the price of $600,000, even with the potentially troublesome future leaking roof, if the Sellers will agree to leave behind the pool equipment and work bench. Done deal!
Have a lovely weekend. The All Star break can’t come too soon for the Mets, despite last nights' win, and I have spent a most lonely week while my spouse was in Arizona after the death of my Father-in-Law.