Profile picture for KWimbley

Home for sale by owner for $119,000. How much should we offer?

We are newlyweds in search of our first home. We found an older home (about 50 yrs old) in a nice/safe neighborhood that is for sale by the owner of the home's (who is in a nursing home) children. The asking price is $119,000. We decided to get a home inspection done before making an offer on the home. The home is in pretty good shape according to the inspector with only minor issues. It needs to be updated but other than that, it's a nice home. We were pre-approved for $119,000 by our bank via an FHA loan. My husband and I would like to offer $112,000 and want to ask the home owners to pay $4500 in closing cost. We would also like to include the refrigerator, washer, and dryer in the sale... (they are all old but still functional and in good shape). We don't want to insult the sellers with a really low offer...so, is our offer reasonable? 
  • April 26 2011 - Alexandria
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Answers (4)

Best Answer

Profile picture for kittenonkeys
I agree with both previous responses.  A buyer's agent would have helped you pull comps for the neighborhood and would have known whether the $119,000 asking price in its current condition is fair.  Assuming that it is priced at fair market value, you need to offer closer to list price if you need closing cost. 

You are thinking of offering $112,000 yet want $4500 back in closing costs, so you are in essence asking the seller to reduce his price by $11,500.  That is quite a reduction in that price range, especially for a house that did well on inspection. 

Your lender will also require an appraisal.  So, if you offered $115.000 with $4500 back in closing and it didn't appraise for that value, at that point you would have grounds for a further reduction.  Even at that, you are asking for an $8500 reduction.

When you start thinking in these terms, it puts a slightly different spin on things, doesn't it?  Hope this helps, but if this doesn't work out, get a buyer's agent next time.  This is one of the largest investments you will ever make.  Why would you try to undertake it unrepresented?  In almost all cases, the buyer's agent will be paid by the seller as part of the negotiated commission.
  • April 26 2011
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Once you find out what the other properties are going for you will have a better idea of what to offer.  If this is information you have already received then make the offer based on what you feel is fair and see what the seller's feel about it.  They will be sure to counter offer if they do not like your price or terms.  Just remember that in all transactions both parties like to know that they are getting something from the deal.  If it is most important for you to not have to come up with the closing cost money then you may want to come up higher in price so that they are more likely to help you with that cost.  Good luck!
  • April 26 2011
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Wow Kim, this is so tough without you using a buyer's agent.  Most FSBOs would pay them their commission but it is too late now.  How do you know the asking price is market value (determined by SOLD comps, not actives)?  Assuming it is market value, as a listing agent I consider it a success if I can get my sellers to net 95% of the list price.

Good luck, hope this helps.
  • April 26 2011
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Depends on the length of time the home has been on the market, condition (FHA apprasials can be tough), and what other homes in the area are selling for. Asking price (esp. FSBO) has nothing to with fair market value. Best wishes on a smooth transaction!
  • April 26 2011
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