By Jim Buchta
RISMEDIA, January 13, 2009-(MCT)-The home seemed to have everything: a big master suite, a wine chiller and views of a pond. The only thing missing was a buyer.
So after a cash buyer looked at it twice, but never got around to making an offer, the owners decided to take matters into their own hands. They wrote a purchase agreement-including a hefty price reduction, a closing date and the seller’s signature-and presented it to that prospective buyer in hopes of signaling just how anxious they are to make the deal work.
“We have to be creative, aggressive and think outside the box,” said Dave Lodge, the listing agent for the property, located in Maple Grove, Minn. “It’s another way to address the market today and the lack of buyers.”
Reverse purchase agreements-unsolicited offers that get written by sellers for prospective buyers-are rare in today’s market, but agents say that the strategy could be the next weapon in the ongoing battle to get prospective home buyers to take notice.
The approach is just one of myriad tactics sellers are using to attract buyers, who are now comfortably positioned in the driver’s seat. For some buyers it’s no longer enough to have a vacation or appliances dangled in front of them. Buyers simply have too many choices and not much incentive to make a decision quickly.
This was the first time Lodge tried the approach, at the suggestion of a colleague. His clients, two young sisters, have been trying for several months to sell a townhouse that belonged to their deceased mother. Already Lodge had done everything he could to attract a buyer. The house is staged, he started holding open houses during the week and he has suggested several aggressive price reductions.
Then, a well-qualified out-of-town buyer looked at the townhouse a couple of times. She offered great feedback, but months later, no offer. Her agent continued to keep in touch with the listing agent. Not closing the door gave hope to Lodge and his clients that her interest would turn into a purchase agreement. But it didn’t happen.
With no other prospects in sight, Lodge and his clients decided that if the buyer wouldn’t make an offer, they would. So they wrote an offer, complete with a quick closing date and an unsolicited $10,000 price reduction on top of a $20,000 price reduction earlier in the month.
“We were trying to get her to make a decision,” Lodge said. “Say, ‘Yes, I’m going to buy,’ or let my client move on and not worry about this offer.”
Her agent was pleasantly surprised.
“It was very impressive and very proactive,” said Katherine Pedrick, a sales agent at Coldwell Banker Burnet.
Pedrick said she never had encountered a reverse purchase agreement before. The strategy definitely captured the attention of her client, who still was considering the offer at this story’s deadline.
Ken Johnson, vice president of Burnet’s Minnetonka office, said that he often recommends this strategy to agents who have listings that are “market-worn,” but have had serious buyer interest. It’s particularly effective in situations where a prospective buyer has looked at the property two or three times, but just won’t take the next step.
Such lack of motivation is pervasive in this market. Many buyers are apprehensive about making an offer in a market where prices continue to fall. Buyers also are waiting to see if mortgage interest rates, which recently dropped to multigenerational lows, will keep dropping. And many have deep concerns about the short-term health of the economy and their own job security.
Nicci Brown, a mortgage consultant at Edina Realty Mortgage in Champlin, Minn., said that sellers have used this strategy in other down markets and predicted it will become more popular as buyers feel less confident about the market.
“Two to three years ago (sellers) had people standing in the street waiting to make an offer,” she said. “With that missing today, they don’t know where to start.”
An offer from the seller eliminates the guesswork for a prospective buyer. It’s the sellers who reveal how much they are willing to cut the price, the closing date and other terms, though a written offer doesn’t preclude additional negotiation.
In more robust times, sellers might give an oral offer to spark a conversation that could lead to a written offer, said Duane Bauermeister, sales agent with Edina Realty.
These days, talking about a deal sometimes just isn’t enough.
“In this market,” Bauermeister said. “Sellers need to be more aggressive and take charge of the transaction.”
© 2009, Star Tribune (Minneapolis)
Distributed by McClatchy-Tribune Information Services.