Please note I embargoed this post until the sale had closed:

I recently was tasked by an out-of-state client to find and residence and place it under contract all sight unseen. The client was traveling for work, has a tight deadline i.e., one month between mutual execution of a sales contract and closing and is tech savvy and experienced to use video and trusts my opinion. In the process this is a buyer who challenged the seller's market and literally turned the tables concerning the bargaining position of the sellers.

The client narrowed down the choices to two properties:

Option 1: is a single-family home in a rapidly gentrifying neighborhood northeast of Downtown Denver. While not large at 1,440 SF the home is a 2-sory single family with a one-car detached garage. Based on MLS data the home offers three (3) bedrooms and two (2) bathrooms constructed in 1886. Full disclosure there are foundation and drainage issues, Seller's broker has disclosed and provided engineering reports. Listing broker advised seller is securing contractors for repairs. The following is the price and sales history as of Saturday June 26, 2021:

  • 5/14/21:          Listed for sale at $635,000
  • 5/17/21:          Status changes to Pending
  • 5/27/21:          Returns to market with a price increase to $650,000
  • 6/12/21:          Price reduced to $629,000
  • 6/25/21:         You need to keep reading

Past Sales:

  • 6/98:               Sells for $72,000
  • 8/02:               Sells for $236,000
  • 5/06:               Sells for $266,000
  • 5/07:               Sells for $285,000
  • 5/12:               Sells for $289,900*

*May 2007 placed on market for $334,900 on and off the market during The Great Recession selling for $289,900 on May 2012.

Option 2: is an attached row-house in a desirable neighborhood due east of Downtown Denver.  Spanning four levels it is a vertical structure with 1,567 SF of living space with a two-car attached garage. In lieu of yard space the residence has a private 450 SF roof-deck including natural gas and water hook-ups. Based on MLS data the home offers (2) bedrooms and three (3) bathrooms, 1 full, 3/4, and 1/2 constructed in 2015. The design is known as a slot-home where the homes are constructed on a N/S axis to maximize density on the lot. The following is the price and sales history as of Saturday June 26, 2021:

  • 6/9/21:            Listed for sale at $635,000
  • 6/23/21:          Status changes to Pending

Past Sales:

  • 2/16:               Sells for $478,437 $10K abv ask $467,500 new construction.
  • 9/17:               Sells for $520,000 $5K abv ask $515,000

Thus, my client has two vast different and unique choices both with similar asking price. Of note the newer rowhouse does NOT have a formal HOA, instead a party-wall agreement with a minimal $94 monthly fee. 

There are obvious differences; the older home is just that an older home. While updated to contemporary standards and occupied as a rental during the past few years the mechanicals, appliances and design are dated and lower quality. However, again a single-family home. While a smaller lot i.e., 3,125 SF there is a fenced off yards front and rear. Due to lot-size a 2-car garage would be a tight fit if even possible. The basement accessible from the exterior is for utilities only, non-inhabitable. 

The rowhouse is vertical with many stairs. There is NO private yard area thus the roof deck. As designed as a slot home only two window exposures i.e., north and south. The unit is hemmed in on either side i.e., common walls. Yet as newer construction all mechanicals and infrastructure are to today's code. The kitchen is upscale including slab granite, Bosch appliances and the home is pre-wired for contemporary communication and entertainment options. 

So How Did My Client Turn the Tables on The Sellers?

My client was somewhat challenged to make a choice. I know his personal preference is Option 1. As an experienced broker and fiduciary for my client I suggested Option 2.  What to do? I suggested an unorthodox option. As both residences were within similar asking prices, and both were active on the market I suggested submit the exact same offer to both listing brokers at $602,500 including exact same dates, deadlines, and closing date. Of note a lender pre-approval letter was submitted with both offers. 

When I submitted the offers simultaneously, I indicated to both listing agents that my client was submitting identical offers and depending on the response he would choose one of the two options the following morning.

Option 1: Countered with the following our $602,500 with:

  • -$629,000 inclusive of all engineering issues to be rectified by seller.
  • Or
  • -$602,500 and my buyer takes the property in "As-Is" condition. 

Option 2: Countered with the following our $602,500 with:

  • -$620,000.

So which residence did my client choose?

While I knew my client preferred the single-family design of Option 1, he chose Option 2.

Again Option 2 was asking $635,000, the seller countered at $620,000 (of note the Zillow Zestimate is $650,800)

1327 Jackson Street, Congress Park, Denver

The rationale was simple, it is literally turn-key. If the seller/broker of Option 1 came back with a more attractive counter; even $620,000 the seller may have been under contract today with my client. However, to come back sans any adjustment to my buyers offer with the exception that if he take the home in "As-Is Condition" they would meet his offer, it was somewhat in our collective buyer/broker opinion an arrogant insult. 

2226 Clarkson St, Whitter, Denver

Let me add concerning Option 1; if my buyer were to proceed the mortgage may be challenged as with the deficiencies i.e., engineering issues needing to be rectified, the home would not appraise concerning a conventional mortgage. While there are substitutions including placing monies in escrow or using a renovation loan while challenges were not insurmountable, they are still challenging. 

Thus as of the composing of this blog my client is under contract for $620,000 for Option 2. The closing was on July 23, 2021. Of note the appraisal came is at $635,000 or $15K above my client's final closing price.

Concerning Option 1, their situation gets more interesting. After the first offer collapsed the home came back on the market with an even higher asking i.e., $650,000 from the original $635,000. When my client made his offer, the house was listed at $629,000.

On 6/25/2021 two days after my client rejected their counter the home had a price adjustment. The new asking price: $589,000 or $40K below their last asking and $61K below the asking of $650,000 one month earlier. Of note, as of today, July 27th, 2021 the home is sill on the market; approximately two and a half months since being listed on 5/14/2021.

Listing History 2226 Clarkson St

As I told my client I forecast Option 1 selling for $550,000 or less (against a Zillow Zestimate of $673,300, $612,400 as of July 27th, 2021).

The ZEstimate has been revised downward within last two weeks.

Even with the engineering issues rectified I just do not in my professional opinion justify the value unless there is a full gut renovation and/or remove/replace 2ndfloor and/or raze and rebuild. My gut says if it sells soon, it will be in $525,000 range which is aggressive for lot value however investing $125,000 into the structure could be an opportunity for those looking long-term beyond the immediate future.

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