The Offer

On November 19th, we submitted our offer on the lot. The asking price was fair, but our agents learned from the listing broker that another couple had shown interest. As much as we wanted to throw in a low-ball offer in this market, we decided not to in order to avoid the other couple submitting a competitive bid. We submitted an offer that was about 6% below the asking price and requested a 30 day due diligence period. A due diligence period of this length is somewhat long considering there's no existing structure on the lot. Since we've never done this before, we thought we might need the extra time to figure out if we really have it in us to build a new home. More importantly, could we really afford to build a home the size we want.

Beth and I boarded a plane on Nov 23 to visit my family for Thanksgiving. Later that day, we received a counteroffer that split the difference on the price, included a 10 day due diligence period, asked for a pre-approval letter and asked for the plans of the home we wanted to build. Plans? Seriously? Call me crazy, but I'm not exactly going to invest the money in plans or on a design when I don't own the lot! The lot is in an old neighborhood, isn't exactly a "standard" lot, and there's a very low inventory of in-town lots. It's rather difficult to know what you want to build when the lot isn't certain.

So why was the seller asking for the plans? The seller happens to be builder. We could have replied to the request saying we haven't gotten that far yet, but we wanted to avoid giving the impression that we weren't serious about the purchase. We went online and found some plans that roughly fit the lot, somewhat fit our design goals (modern, but not too out of character for the neighborhood), and was the approximate square footage we were targeting. We found this and sent it: http://www.thehousedesigners.com/plan/darbi-8537/. The seller/builder agreed it could be built and submitted a rough estimate to us with a few days. The cost was much lower than our budget. A closer look revealed that this was not realistic. No big deal, we're focused on the lot for now and we'll worry about true construction costs during our due diligence.

The counteroffer price was a non-issue. We still felt it was a fair price, but we were more concerned about the 10 day due diligence period. Beth nor I were comfortable with 10 days. It was two days before Thanksgiving and going under contract at that time would have severely limited our ability to perform the necessary due diligence. So we stalled - accepting that the listing agent may "inform" the other couple that an offer had been received.

By the end our Thanksgiving weekend, we decided to counter with the seller's price and a 20 day DD period. However, during our trip we learned that zoning restrictions on this lot presented us with a big challenge. That's a whole other story I'll save for another post. In short, we added a condition that the seller must support us in filing a zoning variance prior to closing.

To wrap up this bit of the process, we went under contract on December 3. The 20 day clock is now ticking. The timing is less than favorable, but that's how these things go. We're both slammed at work and Christmas is quickly descending upon us. Fingers crossed!