Contract on Linwood Road

Thanks to a reader’s tip I learned about this bank-owned property that wasn’t listed on either the Greenwich or Connecticut MLS. My clients tossed a bid at it and today have a contract.

Which is nice, and it’s an excellent value, I think, but more instructive is how my clients came to make their offer. They had an accepted offer on another property in Old Greenwich but while we were there with the building inspector the listing broker called: someone else had bid higher and the sellers were going to accept it unless we matched the new price. We paused to consider this breach of promise and, while considering, I submitted a bid on the Linwood place just in case my clients declined to pursue the Old Greenwich property.

They did decide, reluctantly, to meet the higher bid, but felt wronged – some people don’t consider their word to have any value but for those who do, going back on it is an egregious fault. My clients were of the latter school, the Old Greenwich seller obviously belonged to the former. In any event, that same evening, as they were in their lawyer’s office signing contracts I received notice that our bid on Linwood had been accepted. So we all trooped off that night to see Linwood for the first time, my clients preferred it, and thus the contracts for Old Greenwich remain on the back seat of my car.

Last heard from, the “winning” bidder on the Old Greenwich property is having second thoughts and may have walked away. Which happens. The Linwood house is indeed a better property but due to the ill will generated by the reneging Old Greenwich seller, it would have sufficed had Linwood been merely equal to or slightly inferior.

So we got a better house, at a better price, and the seller either has his price with buyer 2 or he doesn’t – we’ll find out soon. My advise to sellers in this situation is that, once you’ve accepted an offer, stick with it, but tell the buyer what you’re doing and that, while you are honoring your word, you do have a second, higher offer waiting in reserve. That eliminates most of the first buyer’s power to negotiate down from the accepted offer but preserves the good will between you. And good will holds deals together better than anything else.

31 Comments

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31 responses to “Contract on Linwood Road

  1. Stanwich

    A touch too close to I-95 for my taste but if you think you got a bargain –hey, good for you.

  2. Gideon Fountain

    Oh, bosh! “Sellers should keep their word”, my left foot! Any broker can tell you about dozens of times they’ve had buyers still ACTIVELY LOOKING despite having gone-to-contract on a property. Buyers can be just as fickle as sellers and neither side owes any loyalty to the other.
    As I often remind clients who think they’ve just bought (or sold) a house: “Until it’s signed, you’ve got nothing.”

  3. JD

    The suspense is killing me, which OG property are you referring to? Any hints, price range, near the Village?

  4. Helsa Poppin

    You lobbed in a bid without having seen the property?

  5. Retired IB'er

    You better watch yourself, Chris, with reasonable/honorable advice like you’ve outlined you’re going to do serious damage to your reputation as an out of control, raving lunatic that only wants to destroy civilization as the powers that be know it (well, maybe just greedy Greenwich MLS). Still, slippery slope and all…

  6. Renting in OG

    Interesting stuff. Can you say what house in OG?

  7. KC

    Chris-
    If you bid and it’s accepted or your offer is accepted, aren’t there real consequences (like deposits, etc.) that should be forfeited and the like if one party just whimsically decides he or she wants out?

    • christopherfountain

      As my little brother points out below, until you have a fully executed contract you have nothing that will bind either party. Except integrity, which is rare.

  8. REF

    A bird in the hand is worth two in the bush?

  9. Cos Cobber

    The same shenangins happened to me when inspecting the home after the gentlemans agreement on price had been met….’Oh we have another offer now and you need to match.’

  10. skeptic

    I’ve always wondered about if those “other bidders” are ficticious? What percentage are actually bogus?

    • christopherfountain

      In this case, skeptic, I actually met the second bidder when I stopped by to retrieve the radon test kit, so they’re real. I doubt there are many mythical “higher bidders’ when the seller has actually accepted an offer, but I am amused by the number of times I’ve negotiated houses over the years and been assured that there was another offer, only to notice that, after we backed off, no other buyer appeared.
      The trouble with that strategy is that an agent can only use it once with each broker – after that, we know he’s a bluffer and don’t listen.

  11. Riverside Dog Walker

    Oh, please. A house sale is a business transaction where both parties seek to do what is to their best advantage. It is not a friends and family group hug.

    Once contracts are signed, that is different, but I’m sure you can tell us stories of buyer’s remorse where they ‘can’t get a mortgage’ accidentally on purpose.

    One of my favorite quotes is from Carl Icahn who observed ‘in business if you want loyalty and appreciation, get a dog,’ and was accompanied by a picture of his german shepherd sitting next to him.

    My german shepherd is laying at my feet…..

    • christopherfountain

      Here’s the deal, Dog – if a seller accepts an offer, he sets in train a series of expenses incurred by the buyer, including a house inspection ($800-$2,000) legal fees, etc. if the seller feels he must back off his word, he should at least pay back those costs but it astonishes me that the same person who breaks his word is usually the type to say “tough luck if you relied on it”.
      Yes it’s a business transaction, but that’s no reason to dump one buyer in favor of another. Besides the ill will you create, the second buyer often starts thinking, “gee, if he accepted a lower offer, why did I bid so much?” and walks away from the deal. Then the seller has lost two offers, not one. And in this market, that’s dumb.

  12. GiGi

    Glad it worked out for your client. But how honorable was a simultaneous bid on Linwood — a house your client hadn’t even seen?

    • christopherfountain

      No, it wasn’t simultaneos – we made a bid on Old Greenwich, it was accepted, then rejected, thus creating a counter-offer. While we were considering the counter-offer, and thus under no obligation, legal or ethical to proceed, I threw in a bid on Linwood.

  13. Renting in OG

    Highlights something else that seems to happen a lot – which is Sellers can’t understand the difference between a Buyer who has bid, invested the time and expense to do a home inspection, various tests and hire counsel to start a contract and a new Buyer who may come late to the party and lob in a higher price but is weeks away from being in a position to actually sign a contract and hasn’t shown a real willingness to engage and/or really show up. I’m sure it’s a tough decision for a Seller in this market where generally people are getting banged up on price – but I would think people should put a lot more value on the lower bid with higher certainty than trying to hold out for the bigger price and risk losing both.

  14. Riverside Dog Walker

    Chris,

    Surely your clients wouldn’t incur any out of pocket expenses (home inspection, radon test, survey, whatever) until they had a signed contract and the contract was contingent on the success of these items. My understanding is that your client had an accepted offer, not a signed contract, so at this point maybe their feelings are hurt, but they aren’t out of pocket any money.

    Even a signed contract typically has a 3 day contingency for attorney review, during which time if a better offer presents itself, the original deal can fall apart.

    I agree that if a seller decides to go with what they think is a stronger second offer (not only on price, but terms, and assessment of the buyer’s ability to perform), it may well blow up in their face.

    RDW

    • christopherfountain

      DogWalker, home inspections can come either before the contract or after its signed. When I was engaged in real estate law, we usually did the inspections after the contract was executed by both parties but that gradually shifted – why negotiate a contract, then re-negotiate when the inspection turned up defects? So it became more common to inpect after the offer was accepted but before the contract was signed.

      And there are other considerations. If there are multiple buyers out there, you may not want to make your bid contingent on an inspection but you’ll certainly want to know what you’re committing to buy, so the offer can be made contingent on inspection with the contract coming after you’ve satisfied yourself as to condition.
      And so forth. Negotiations and terms are always flexible, shifting to meet the needs of the seller, the buyer and the market. So no hard and fast rules here.

  15. anon1

    Is this the house at 15 Linwood in Riverside?

  16. Anonymous

    Would it not have been more fun to submit a mega high bid for the original house rather than just match the gazumper?
    Nothing like exciting a loser.

  17. Current Seller, Still

    I’d like to be in the position of balancing a low bid with higher certainty versus a higher one. Reader Renting in OG must know us – we are really getting banged up on price. Bottom Feeders are having a heyday. There’s a low bid with certainty and then there’s a low bid that hurts. We’ve gotten all the latter kind.

  18. Anonymous

    Current Seller,

    There is no truth attributing property purchasers with the label ‘Bottom Feeder’.
    You either bought your present property or the previous property at a realistic price, or you overpaid on your first home which you are now trying to offload on some person willing to take a risk that the market does not tumble further.

    You would be grateful for those ‘bottom feeding’ offers in February, Just wait. I can assure you that those buyers will be perceived as big spenders shortly.

    Why would an offer be painful? Surely receiving no offer would be an insult. They don’t like your property and wouldn’t want it at any price.

    Get realistic. The country is bankrupt.

  19. KC

    After I read all of these interesting posts, the thought goes through my mind that, unlikely as it may be, if I should buy a house in CT, I would certainly want someone like Chris representing me and giving me advice.

  20. Anon E. Moose

    The “insult” displayed and epithets the likes of “low-baller” and “bottom feeder” are just tells of insecurity. Next time put up a neon sign — it would be less obvious.

    When I’ve sold items of any speakable value I’ve had no trouble dismissing unacceptable offers with a clear and unambiguous rejection, because I had confidence in my valuation. The offers that caused consternation were the ones that might have been reasonable. However, I never considered name-calling as a viable negotiating tactic. Many used house salespeople disagree.

  21. Current Seller, Still

    Anonymous,
    You couldn’t be more wrong. As a couple in our 70s, ready to retire and leave Connecticut, we’ve owned our house lock, stock, and barrel for decades. We’re hardly trying to offload. We’re real estate smart and realistic, pal, and know the freakin’ difference between bottom feeders and authentic bids. I’d tell you what to do with your thoughts if I weren’t a lady.

  22. Cos Cobber

    The market is what the market will bear.

  23. Renting in OG

    Agree with Current Seller and feel your pain. Went through the same thing this summer selling my NYC apartment before moving out here (work out here and had first kid – so similar theme – didn’t have to leave but wanted to move on with life and not stay just to try to ride out what could be a pretty long period of lower housing prices) and had to do battle with the anonymous losers on streeteasy.com / curbed.com and places like that who lined up to bash my apartment and tell me how stupid I was and how crappy my apartment was and how I’d never sell above my mortgage (we got out okay… but did lose a decent chunk of my equity vs. a 2005 purchase price)… it’s the danger of being a seller and coming to a site that is dominated by buyers and/or voyeurs with no skin in the game but a lot of time on their hands.

    Hope you sell your place at a price your happy with (or at least can accept and move on with life).

  24. Anonymous

    Current Seller,

    The bids of the ‘bottom feeders’ are the authentic bids. They are the bids of the current market.

    Your considered ‘authentic’ bids either don’t exist or will be from the ignorant ‘out of towner’ who doesn’t know the values. Something like me buying a raw diamond in Amsterdam.

    If you have owned your property for decades then I presume that there has been no loss in value, and unless you refinanced in order to buy a second property with the imagined appreciation of your land, then your financial situation is no less than that of six years ago, which is where the values are today.

    You don’t have to be angry with me. I also have owned property for decades. We have ALL our assets invested in the real estate market. In 1987 during the property crash, we saw the our property half in value.
    If we end as a distressed seller of any of our assets, it’s not any ‘bottom feeders’ who are to blame, they would be buying at market value.

    One of our properties was rented at a sadly low level. Now, someone is living in my home for less than the building community charges.
    At some point you have to be mature enough to realise that the level that the buyer or renter is offering IS the market level, not some mafia trying to rip off your assets.

    I am not your PAL, but I would recommend that now is the time to cut your losses and move to Florida, where the sun makes you feel instantaneously more optimistic and the property owners realise where the market values are.

    If you want to sell your home, tell me your address, I would love to offer you what I can afford, if it is at market value!