Since Jeff and Jim became “partners” in buying, renting, holding, selling and trading single family homes (SFH) for TheMonopolyProject we have significantly increased our search activities. We are looking for “The Perfect Monopoly” house. We went to Coolidge, an outlying suburb of Phoenix with a hot new electric truck story called “Nikola”. We went to Apache Junction on the east side of Phoenix; used to be run down, now a new hot spot. We went to Casa Grande, another outlying suburb halfway between Phoenix and Tucson with a purported international flavor.

What is our definition of “The Perfect Monopoly” house?

  1. 3 bedroom, 2 bathroom (3br2ba)
  2. Great neighborhood
  3. Good in-metro area location with excellent freeway access
  4. Small lot size, minimal landscaping, no swimming pool
  5. Move in condition
  6. Low HOA

So far in this new January 2021 we have looked at dozens of listings, contemplated buying four houses, made offers on three, won two and are now down to one. Let’s talk about the “one”.

Here’s why we like this one:

 

Now we need to make an offer. The house is listed at $235,000. What is our strategy?

Besides the normal information a buyer has from looking at the listing and viewing the property, we have two additional pieces of information.

  1. We just made an offer on a similar house on the same block two weeks ago. According to the listing agent, we came in ‘second’. This gives us a ‘comp’ to get a better idea of the value to a buyer and the probable appraisal of this house. We also have another comp house down the road from the above. The “first” sold in January, the second late November of last year. The “first” is identical in layout, square footage and lot size; the second is comparable.
  2. Jeff has a very good relationship with the listing agents having previously worked together. This should help in establishing our credibility and honesty. We can talk frankly about our objectives and motivations with the listing agents. Likewise, in the other direction.

We know that the ‘first’ house sold for more than the $240,000 list price and even more than our $246,000 offer. The first house was in better condition (basically no repairs or modifications necessary for a tenant to occupy the property) and had a refrigerator. Jeff confirmed that this one was listed $5,000 below the first because of these considerations.

Our strategy is:

  1. Accept that we are going to have to pay above list price for this home; about $10,000 above.
  2. Offer to waive the appraisal. This is important to the seller and the seller’s agent as houses often fall out of escrow when the appraisal comes in less than the purchase price. The buyer is either unwilling or unable to come up with the additional money to cover the difference. Or the buyer negotiates with the seller reducing the seller’s price. This also shows that we are serious in that we have the additional money and reinforces item 1 above. Given the information above, we are confident that the house will appraise near our offer and we will not have to come up with the additional money.
  3. Inform the listing agents that we really want this house and are willing to beat any bona fide offer via an escalation clause.

    An escalation clause is sometimes included in real estate purchase agreements, particularly in situations where there is a lot of interest in the property. As the name suggests, it’s a clause that allows buyers the opportunity to escalate, or increase, their offer on the home in order to beat out the competition.

    Put simply, every time you make an offer on a home, you’re taking a gamble. If your offer piques the sellers’ interest, they might be willing to negotiate with you. However, if the sellers feel that your offer is too low, or otherwise unrealistic, they might choose to simply not respond at all. In other words, there’s no guarantee that you’ll get to negotiate with the sellers, especially when you’re in a situation where you’re competing against multiple offers.

  4. Make the offer:

Our strategy worked; our offer was accepted over 14 others!
Next, we will go to the negotiations now that our offer has been accepted.

Here’s some more pictures of the house: