How much to offer for a house?

[91FXRS]

Do your homework on an inspector and don't get one that works for the realtor. I would try and find one from word of mouth by Friends or coworkers. My buddy requested I come with him while his inspector was doing the inspection and what a joke the guy didn't know squat and everything was "my advice would be have a plumber, electrician,HVAC etc. check this out" When he got done with it he basically wanted my buddy to have every profession involved in building other than the framers check it out, Reason being is thats how he covered his ass. I was disgusted that he paid 300 for that, point being try to find someone that has been in construction not taught how to inspect a home from a classroom.

 

[Sgood]

If you are a first time buyer..there are alot of first time buyer programs out there....They have stopped the no money down options (for the most part) but you can ask for seller to pay a percentage of prepaids ( dont qoute me but for first time i think you can getup to 6%) Alot depends on your lender...

I would suggest if you have not, get pre approved....shows a seller you are not wasting their time and you are serious.....if they are asking 69500 and that is resonable for the area and current market.....and I wanted as much paid as possible at closing....to not offend I would offer 64,000 w/ buyer paying up to 6% in prepaids (3840.00 in prepaids) That should come close to no out of pocket for you...when all said and done.

Have your realtor check all first time buyer options out there....there are state and federal programs available.....

My house was on the market for 124500 a year and a half ago (sold for 140000 in 2006, new).....with 3 price drops and a little low balling.....i got into the house for 85000 and buyer paid 3.5% of prepaids.....the house appraised for 109,000 when appraised by the lender...

I got into it for a total of 980.00 out of pocket money and a 4.5 interest rate and the buyer supplied a 2 year home warranty.

As far as home inspector there are good and bad out there...mine offered a 90 day warranty on the whole house after his inspection..

 

[04DarkShadowGT]

Its a buyers market right now, offer less than you are willing to pay. More if you expect them to pay closing costs.

Offer them 60K if you want, or offer 65K and they pay all closing costs. That's pretty cheap, I don't imagine you are going to find many houses that are in descent shape for that cheap. At least not in a shady part of town.

 

[Sgood]

I would also offer them $60,000. The worst they will do is come back with a counter-offer. I also agree with the comment above. A three bedromm is alot easier to sell, but will also probably cost more up front.

Some people get offended at really low offers and would just ignore any offer, after....

Just like us, when someone tries to low ball a gun, you have for sale.....really pisses you off........

 

[Scutter01]

Some people get offended at really low offers and would just ignore any offer, after....

Just like us, when someone tries to low ball a gun, you have for sale.....really pisses you off........

That's true, but if they've been carrying the mortgage for more than a year on a house they're trying to flip, they may be starting to get desperate. Unless you just want to give them an extra ten grand out of the goodness of your heart, you should be taking advantage of that desperation. If they ignore you because they're offended by the lowball, well, they shouldn't be in the real-estate business and they pretty much deserve to have this albatross around their necks.

 

[SEIndSAM]

If your making an offer on the house I have up for sale, you want to offer listed price + $10k.

 

[Sgood]

That's true, but if they've been carrying the mortgage for more than a year on a house they're trying to flip, they may be starting to get desperate. Unless you just want to give them an extra ten grand out of the goodness of your heart, you should be taking advantage of that desperation. If they ignore you because they're offended by the lowball, well, they shouldn't be in the real-estate business and they pretty much deserve to have this albatross around their necks.

Your right, i think the OP could probably get a counter by offering 60,000 and probably get in to it for around 62500-65000......but with wanting as much of closing paid as possible, I would think an offer of 64000 with seller paying 6% prepaids, is a resonable offer......that would be 64000-3840 in prepaids = 60,160 to seller - other cost.

 

[Scutter01]

Your right, i think the OP could probably get a counter by offering 60,000 and probably get in to it for around 62500-65000......but with wanting as much of closing paid as possible, I would think an offer of 64000 with seller paying 6% prepaids, is a resonable offer......that would be 64000-3840 in prepaids = 60,160 to seller - other cost.

Agreed. Assuming that the actual (not asked) value of the property is around that point, that is.

 

[88GT]

First, good for you in remembering to have a few months of reserves for expenses on hand. If you engaged your agent as a "buyer's agent" he/she can be more helpful in your negotiation.

If he has a licensed salesperson representing him at all in the purchase of the home, said salesperson is by definition a "buyer's agent." Indiana no longer operates on the "all licensees are hired by the seller" agency paradigm. The exception would be a limited agency situation and that doesn't seem to be the case based on his comments.

Definitly make any offer contingent on the inspection AND on the appraisal. Any flaws the inspector finds which are termed "life/safety" issues or "required repairs" shold reasonably be taken care of by the seller.

If the offer--any offer--is written on an IAR state form, such a contingency is already in there. But the trick is to recognize that issues that come up in the inspection may not relieve the buyer of his obligation to the contract. And the seller refusing to repair items that are not material defects will not trigger the contingency. The better safeguard is to write in an additional contingency that if the total cost of repairs for defects of a non-material nature are greater than <pick some value that you the buyer can live with>, and if the seller refuses to make said repairs, the buyer may terminate the purchase agreement without penalty, and all earnest monies heretofore paid will be returned to the buyer immediately upon request.

Do your homework on an inspector and don't get one that works for the realtor.

Define "works for." Any Realtor/Inspector with a vested interest in the business of the other must disclose that interest prior to any finalization of terms with the customer. I've never met an Inspector that "worked for" a Realtor. Perhaps you are confusing business relationships wherein one recommends the other out of mutual benefit.

OP, offer what you feel comfortable offering. A home is worth what a buyer is willing to pay and a price the seller is willing to accept. Nothing more, nothing less. Every choice has an opportunity cost. Your Realtor's job is to help you weigh those costs to come to a decision. For example, if you low-ball, you run the risk of having the seller refuse to negotiate at all. The opportunity costs of trying to get a lower price is a dead deal.

And don't do yourself the disservice of trying to convince yourself that you can make these decisions detached from your emotions. That's a fool's errand. Because you'll be left with another emotion that's even worse: regret. It's not important that your emotions are involved. It's important that you recognize what those emotions are telling you and how you react to them. I'll let you in on a little secret too. It's okay to make a decision primarily because it makes you feel good. Just as long as as the opportunity costs don't put you in the poor house or jail house!

Good luck!

 

[JoshuaW]

Do your homework on an inspector and don't get one that works for the realtor. I would try and find one from word of mouth by Friends or coworkers. My buddy requested I come with him while his inspector was doing the inspection and what a joke the guy didn't know squat and everything was "my advice would be have a plumber, electrician,HVAC etc. check this out" When he got done with it he basically wanted my buddy to have every profession involved in building other than the framers check it out, Reason being is thats how he covered his ass. I was disgusted that he paid 300 for that, point being try to find someone that has been in construction not taught how to inspect a home from a classroom.

My buyers agent, and the list agent are from the same office, and the list Agent's husband owns the inspection agency they refer to. Yeah, Im not using their inspector, that is a bit of a conflict of interest.

If you are a first time buyer..there are alot of first time buyer programs out there....They have stopped the no money down options (for the most part) but you can ask for seller to pay a percentage of prepaids ( dont qoute me but for first time i think you can getup to 6%) Alot depends on your lender...

I would suggest if you have not, get pre approved....shows a seller you are not wasting their time and you are serious.....if they are asking 69500 and that is resonable for the area and current market.....and I wanted as much paid as possible at closing....to not offend I would offer 64,000 w/ buyer paying up to 6% in prepaids (3840.00 in prepaids) That should come close to no out of pocket for you...when all said and done.

Have your realtor check all first time buyer options out there....there are state and federal programs available.....

My house was on the market for 124500 a year and a half ago (sold for 140000 in 2006, new).....with 3 price drops and a little low balling.....i got into the house for 85000 and buyer paid 3.5% of prepaids.....the house appraised for 109,000 when appraised by the lender...

I got into it for a total of 980.00 out of pocket money and a 4.5 interest rate and the buyer supplied a 2 year home warranty.

As far as home inspector there are good and bad out there...mine offered a 90 day warranty on the whole house after his inspection..

0% down, no. I do have a pre-approval for an FHA loan, 3.5% down and 4.75% interest. Im allowed up to 6% sellers assist, and I am hoping to get all 6%.


Right now I am thinking about offering $66k + sellers assist + they route gas to the kitchen (fiance's request). I am expecting them to not want to route gas, and frankly, I dont want them to, because if they do, she will want me to buy a gas stove. So hopefully that goes.

I arrived at my number by taking the list price, adding in the 6%, then going 10% under that number.

 

[ATOMonkey]

You know what else is great?

Unless this place falls down around your ears, you should own it free and clear in about 3 years.

That is amazing in and of itself.

 

[snorko]

If he has a licensed salesperson representing him at all in the purchase of the home, said salesperson is by definition a "buyer's agent." Indiana no longer operates on the "all licensees are hired by the seller" agency paradigm. The exception would be a limited agency situation and that doesn't seem to be the case based on his comments.

I did not realize this. Interesting and good to know. I work almost exclusively on the non-residential side and not in sales so, news to me. Repped for very sound advice.

 

[88GT]

I did not realize this. Interesting and good to know. I work almost exclusively on the non-residential side and not in sales so, news to me. Repped for very sound advice.

THanks for the rep.

I started in residential sales about 10 years ago and seller/buyer agency was completely separated then, but I ran in to a lot of licensees that still had the old 'we all work for the seller' mindset.

I can't imagine trying to help a buyer purchase and still be ultimately obligated to the seller for confidential information and obligations. That would have to suck.

 

[JoshuaW]

You know what else is great?

Unless this place falls down around your ears, you should own it free and clear in about 3 years.

That is amazing in and of itself.

My goal is 15 years. I can and hopefully do it closer to 10. The loan is still a 30 year, because my fiance has a lot of health problems, and I dont want to be in over my head if she gets bad and I have to take time off of work while she recovers, or while we pay massive doctors bills.

If I owned my car free and clear, I could easily have this place payed for in 5 years.

 

[Rookie]

Go to Beacon and see how much the seller paid for it. Offer a little more.

 

[JoshuaW]

Go to Beacon and see how much the seller paid for it. Offer a little more.

I was not even aware of Beacon! Unfortunately St. Joe doesnt have very complete records on there. Bummer.

 

[88GT]

My goal is 15 years. I can and hopefully do it closer to 10. The loan is still a 30 year, because my fiance has a lot of health problems, and I dont want to be in over my head if she gets bad and I have to take time off of work while she recovers, or while we pay massive doctors bills.

If I owned my car free and clear, I could easily have this place payed for in 5 years.

Smart. The 30-year reduces your minimum obligation each month, but nothing says you can't pay on a 15-year schedule. It would be easy to find the amortization charts for your loan terms.


There are two other ways to help pay it down that I suggest to my clients who express an interest.

First method: divide your monthly payment by 12. Add that amount back to your monthly payment and send the new amount in each month. It's the equivalent of 13 payments a year instead of twelve.

Second method: Round up to the nearest $50 or $100 (whichever fits the budget better) and make that the new payment. So if the payment were $437.33, you'd pay $450 or $500.

Or combine them both, by rounding up the first method!

It takes a while to see progress since you're paying so much interest up front, but once you turn the corner, it adds up super quick. One point of note: be sure your note automatically applies any overages you make on the payment to the principal. I have heard of lenders holding the overages in a separate account. I don't know what they did with the money, but it did not get applied to the account immediately.

A little side bonus: when you get the loan-to-value ratio to 78, the monthly mortgage insurance you pay will fall off. Just be sure to confirm whether that's automatic or you need to initiate (you should be told this at closing) it.

 

[pinshooter45]

Just did this with my Brother-in-law

Situation is a little different but real simalar. He got a forclosure for 21,000 the just a few years ago sold for about 70,000. So get it as cheap as you can. Get a good Inspector. Be there when he inspects, as we were. some of the best inspectors are mom & pops, also some of the worst. Most sales are contingent on passing inspection but make sure, that way you can negotiate if any flaws found. if you are by yourself don't think about how your going to furnish the house ect. focus on the sale! If I was getting a good deal on a house I'd sleep on the floor If I had to. This housing slump will turn around, it always does. The length of time and price drops tells me one of two things, either theres a problem no one else wants to deal with or the house just doesn't appeal to anyone else. Some people will pass up a bargin house just because they don't want to rip up old carpet, paint all the walls, or the kitchen needs updating or the bath is ugly. If you are pretty handy with tools don't pass up this house if it's a fixer upper. When the market turns around you'll be happy you did! GOOD LUCK!

 

[JoshuaW]

Yup. I get paid bi-weekly, so I pay my bills bi-weekly as it is. Good tip though. Same with rounding.

As far as companies holding the money till later, I believe what happens is they place it into an account, and later apply it as a typical payment, not as strictly principal.

With PMI falling off, I need to talk to my lender, but if I remember correctly from what I read, the FHA PMI is required for a minimum of five years, no matter what portion you have paid, or if the property value goes up. I could be wrong, if someone wants to chime in.

 

[pinshooter45]

One other thing, 2 bedroom homes are harder to resell, because a majority of the house buyers are families and they need 3 bedrooms. You might figure that into your negotiations, depending what your plans for a family are, that might be a factor on how long you stay in the home.