Profile picture for jadedea

How low will they go???

I am looking at a house built in the 1960s. about 2500sqft on a .65 acre of land. its priced at 300k and thats after 2 price changes. the comparables are around the same range but are new builts, like 2010, 1999, 1980ish and have up to date furnishings (aka, granite countertops, garden tub, seperate shower, and finished basement). this house has a dated bathroom (original 1960s green sink and tub with pink tiling in all three bathrooms) laminate counter tops, windows appear to be original, an oil furnance and a partial finished basement. i saw in public records that they bought this house in an auction at 270k. they seem slightly eager to sell. how low of an offer would you think they go for???? technically they wouldnt lose out if they sold it for 270k would they???
  • September 30 2010 - Upper Marlboro
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Answers (31)

I think you should make an offer based on what you want to pay for it.  The worse they can say is "no."  If they reject your offer, then you can determine whether or not you want to increase your offer or walk away. 

Yes, the seller would be losing $ if they sold it for the same price they purchased it for since they would have to pay realtor commission fees and other closing costs.
  • September 30 2010
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Based on the information given, the sellers do show signs of motivation.  You would be surprised by the offers that are accepted, escpecially if presented appropriately.

  • September 30 2010
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Profile picture for Mills Realty
What the seller paid has no bearing on what the home is currently worth.  Offer what you are willing to pay and don't get emotionally attached.  If they accept your offer then great, but if not start looking for another property.
  • September 30 2010
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Yes, they are into it for more than $270,000.  Closing costs and carrying costs (such as interest on their loan, utilities, maintenance.  Keeping that in mind, you still only offer what you feel the house is worth and what you can afford.  Who knows, the might take the offer and get it off of their books.
  • September 30 2010
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Offer what you think is a fair price for the home.   You may have to expand your search area to find comps of the same age. 

What the seller paid or owes (in this market often more than the home is worth) does not have a place in the homes value. 

This should not have any impact on your offer but you should know, If the home is listed with an average commission the seller will have  additional costs of approx.  $20,000.

Best of luck,
Jenna Schreiber, CRS
Realtor, Re/Max Classic, SFR
 
  • September 30 2010
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Profile picture for blank screen EXILED
I think that if you want those radioactive granite counter tops that have to be sealed with plastic and solvents every 6 months, that you should just forget about this one and buy that "new" one that you want that will fall apart within 5 years due to poor quality materials and workmanship.

How low?  How about $750k?  Not low enough?  How about $900k?

Until you make your offer, you will have no idea, and if you think that only what they paid is relevant, they will not even consider your offer, nor provide a counter, and probably would just discard anything else you sent them.

What happened to all those CMA's that you had done?
  • September 30 2010
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they would loose due to closing fee that the seller will have to pay, figure anywhere from 6.1-8.1% of the sales costs...
  • October 01 2010
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Profile picture for jadedea
pasadenan, oh no i dont want new builds, im completely turned off to them. i hate granite countertops. the reason why i like this house is because its built in the 60s and shows very well. all the new builds around here are like you said, falling apart in 5 years, its horrible. i dont mind the laminate countertops or tiling or vinyl. if i get this house, ill save up money and get some recycled glass, concrete, or some other green or less "toxic" maintenance counters. ive seen houses with granite counter tops for like 225k, but the vinyl is peeling off the walls are scuffed and dented, and everywhere you walk with wood creaks like an old house, and it was built 2 years ago!!!!

im hearing that economists are saying housing prices will be dropping again at the end of the year, i may just wait....

cmas???
  • October 01 2010
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Profile picture for sunnyview
A CMA is an abbreviation for a Comparative Market Report. This article explains what they are here. A good CMA will tell what similar houses have recently sold, give you the current listing trend of similar houses either up or down and will give you an idea of how much per square foot the house you are looking at might be worth to the market.

CMA's are not perfect, but they are a good place to start when you are looking to structure an offer. You seller may be trying to make money on the auction price that they paid, but if you get a good CMA and make adjustments for the cost of the work that you want to do, you should be able to get a solid offer that makes sense financially.

I am with you. I prefer older houses that have good bones to new construction too. If the seller accepts your offer, just make sure to have a good inspection to make sure that the main house systems are solid before you buy.
  • October 01 2010
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Offer them what you can afford. Ask your agent to run a CMA (comparable market analysis), take your agents advise, then offer what you can afford and what your gut tells you to. They may counter your offer and reveal the minimum they are willing to accept.
  • October 01 2010
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Three words..."call your agent!" He/she will do an analysis of the homes in the area, to help you come up with a fair offer. If you are working with an ABR (Accredited Buyer Representative), they will help you to come up with an offer that meets your needs (monthly payments), and one that will get you the house you love (because remember, behind every 4 sale sign, is a seller with a bottom line!)! Good luck! We bought an older home, and we just love it! :) They don't make 'em like they used to...or that's what my parents say---LOL!
  • October 01 2010
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Remember, it is not just the "seller's bottom line"; but what other interested parties are offering...

If someone else wants to pay more than the market value, it is better for you to let them be foolish than for you to take their position.

Unless it is listed at the totally wrong price, you should not be the only person interested in the property.

But don't believe any rumors of "bidding wars" either, especially in this economy.
  • October 02 2010
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Dee Cain is right.  Most sellers today are fairly motivated to sell their property and move on with their lives.  You should never pay more for a property than what you feel it is really worth.  Best of luck!
  • October 02 2010
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Market value is just that, what a buyer is willing to pay for a property. Make an offer and see if the seller will accept it. If you can not come to an agreement, move on. There are plenty of homes on the market.

Sellers that have overpriced their home because they owe more than it is worth need to wake up. They will have to write a check at closing or stay in the house and hope to do a loan modification.
  • October 03 2010
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well apparently this house is a short sale and reo but didnt say so. my agent spoke with the bank rep or selling agent im not sure, and they said theyve had multiple viewings but no offers. i think that the house is so out of date no one wants it. i think ill go ahead and get a preapproval done and have my agent do a cma and then see where i can go from there. do yall know if coldwell bank is easy to work with?
  • October 03 2010
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Can't be both a short sale and a REO.  Find out who owns it and what the real status is.
  • October 04 2010
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Its an REO sorry. My agent was talking about a short sale nearby the house and the wording looked she was saying its reo and short sale. so what does it mean when its a reo?
  • October 04 2010
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Profile picture for sunnyview
REO stands for Real Estate Owned. REO's are properties that have gone back to the bank after no one bought them at a foreclosure auction for the amount owed on the mortgage. You can read more about it and about the bank's goals when selling an REO here.

If you haven't already done it, I would make your offer to the bank as "clean" and string free as possible, but do NOT wave your inspections or the inspection period in the contract. The decision times for hearing bank on our offer for REO properties is significantly less than for short sales so that is good. Offer what you feel comfortable with and an amount that will give you enough wiggle room to do the repairs or updates that you want.
  • October 04 2010
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sunny, thanks for the link, that was very helpful. i found it weird though that it said i should send a biography about myself to the bank
  • October 04 2010
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You're right that suggestion is weird so I would skip it. You can include a letter saying that you are buying as your primary home for your family and that you are not an investor. Some bank agents will give owner occupied offers the edge if your offer is competing with a similar investor offer.

You also may want to consider submitting your pre-approval letter for the specific amount of your offer with the property address listed. It can make your offer look stronger and signal the banks that you are a serious buyer that is able to perform on the contract if accepted.
  • October 04 2010
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The market is constantly changing and so are the prices.  We always say, a house is only worth what buyers are willing to pay and what Seller's are willing to let go of the home for.  The best advice I can give you in this market is go with your gut feeling.  Make an offer that is lower than market value, since the prices are adjusting down wards.  In our current market make and offer because you like the home and it is in your price range.  I would suggest ignoring what the Seller's bought it for and what money they put into the home.  Sometime it doesn't matter and it becomes a big waste of energy.  Concentrate on your situation and what you want and can pay for the home.  In short, make an offer that you feel comfortable with and see where it takes you, but before you do get a pre approval letter from a bank or lender. Good Luck!

  • October 04 2010
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What the seller paid for it really is a non factor. I would not even bring it up in negotiations. Investors I have worked with recently want to buy low, rehab the property and then sell below market and turn a quick profit and move on to the next deal. Sometimes you will run into an investor with deep pockets who requires a certain bottom line profit before they sell... 

Here's a great example of what to look for and when to move on...  I am looking to purchase a used car for my son. I have been looking on Craigslist. There are amazing deals on everything as consumers are in need of cash. I really like this particular car that has been advertised for the past 3 months. It is the exact car I want but priced way too high. I send the seller my same every other week or so explaining that I am ready and motivated. My offer never changes... And the response I keep getting is "no way will I take that little.. my car is worth more"   hmmm   It has been for sale for 6 months...

Remember this - you are driving the bus...

walking away from a deal is difficult to do.. trust your gut ..  and yes, I believe prices will fall further.. I live 10 mins from Upper Marlboro and know the area well...

This advice below from Pasadenan is the best you will find on this post "But don't believe any rumors of "bidding wars" either, especially in this economy"
  • October 07 2010
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well it looks like a waiting game now. i told my agent that im ready to take the next steps. Im seeing now if theres a first time home buyers class i can go to get the skinny on the process. I was thinking that i should get all the leg work done and wait for the price to drop. as soon as it does, ill give them an offer. im hoping all of this will happen with in the next 6 months.
  • October 12 2010
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well an update for anyone curious:

i sat down with a lender and got hooked up with a closing cost grant in conjunction with the VA loan, got it at 3.75%. The only downside is the seller will only provide 3% closing costs, arrrggghh! so i guess the next step is to write up the offer. i plan to put in there that my offer is voided if the appraisal and inspection is not up to par. i am hoping the appraisal will be less than the price. i went to the house again and took loads of photos, mostly the windows. i also found out that they are removing the oil tank and furnance and replacing it with two heat pumps.
  • October 27 2010
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Profile picture for sunnyview
Thanks for the update. It sounds promising. 3% toward closing is pretty good and those two heat pump should save you money every month in energy costs. Having an inspection and an appraisal clause in the contract is smart. Hope all goes well.
  • October 27 2010
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Baaaahhhhh!!!!
these people not choosing me to buy their houses are missing out!!
Anyways, i havent updated in a while but ive put it in hmmm 5 offers for different houses. 1 may still be a potential if they get desperate. pasa your gonna hate me but ive been looking at recent builds 80s-to early 90s. i found a nice house built in 1992 and offer has been signed and submitted. the house has been on the market for 90 days and no offers. this will probably be the house because it was the only one i felt hopeful but not estatic over lol. downside small lot, houses are kind of close and master bath has one sink. shower is kind of small. the house i really want to get some sucker got to it before i could. it had 2 acres, private lot, backed to cemetary with a creek running through it.over 3000sqft and only 299!!! most house sell for twice or three times as much in my area!
  • December 08 2010
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It most likly cost them mony for settelment, so i would work from there.
  • December 08 2010
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This is what agent are for; to help buyers discern the facts and make recommendations based on the facts. As a buyer you loose nothing an gain much buy having a licensed realtor.

The bottom line is you can offer what you want , and they can refuse.  Your realtor can help you document your case as to why you are offering what you are offering to get a better chance of getting your offer accepted. 
  • December 08 2010
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Profile picture for jadedea
thomas, i suspected that, there lost, ive moved on to other houses.
Maria, i have an agent and she is doing just that, however these banks and sellers seem to think its a sellers market. anyways i found a house that has been properly priced and sent in an offer, i was just updating this post as a few people on here are interested in what is happening.

thank you for the input though. :)
  • December 09 2010
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The buyer determines what the selling price is by paying for it. Have your Realtor present an offer and see how the sellers want to proceed.
  • December 09 2010
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