Success Story:  13158 Ash Street

Last month I talked about a new listing in Thornton, and how many offers we had, which offer we chose, and why.Here's a follow up to how that transaction progressed to illustrate what pitfalls can, and do occur in a real estate transaction.

What Happens When the Deal Falls Through?

If you may recall, my Seller ended up choosing offer #4 for various reasons. The offer was for $410K (list price had been $399), and buyer was getting a conventional loan w/ 20% down, and they included an escalation clause up to $415K.

However, this Buyer terminated at inspection due to a minor issue that really wasn't a fault of the house. Buyer just changed her mind and because the Colorado Contract to Buy is written to protect Buyers, she was able to terminate and still get her EM back.

So, rather than putting the house back on the market, I contacted the agent with the "next best" offer. This was the buyer with a house to sell but offered $418K and a $3,000 "appraisal gap" clause. That buyer was still interested and her agent wrote up a new offer, at $418K and we were back under contract within a couple of hours. (Note, this was $3K more than the previous buyer!). And since the previous buyer had done an inspection and provided us with a copy of it, I was able to provide that to the new buyer, and they chose not to do an inspection. They did ask for a few minor items to be fixed.

So, everything is moving along smoothly right? Wrong!

What Happens When It Doesn't Appraise?

Shortly after the inspection deadline the lender ordered the appraisal. The appraise contact me to get access to the home, and I also provided him with some of the comps I used for pricing the home. (Truth be told: I was a bit nervous about the appraisal since we were under contract for so much over the list price). When the appraisal came back, it was only $403K. A whopping $15K LOW! With the $3K appraisal gap provision, Buyer agreed to come up to $406K and we moved forward with the transaction. My Seller wasn't too happy about not getting the $418K, but in the end she realized that price was unrealistic for that area, and she was still getting $6K over list price and she was happy to move forward. We eventually closed only 26 days after listing in the MLS (and 3 days early)!

It was a WIN - WIN for all parties involved. Buyers ended up with the house they really wanted, and Seller got more than she was asking for!