Profile picture for jmmeam

What should we offer for our "best and final" offer?

There is a REO in Redlands, CA - the asking price is $74,250.  It's in a nice area.  The house needs some work, and some of the rooms might not be permitted.  It's listed as 1300sqft, 2b/1.5b, 8850sqft lot.
Every room in the house needs to be painted.  ALL the floors need to be replaced (carpeting and linoleum).  Some doors need to be replaced.  The kitchen definitely need to be updated, and the half bath basically needs to be torn out and re-done.
Our first offer was $90,000 asking for 3% closing costs.  We really want this house - it's one of the few opportunities we've seen to buy a home in a nice part of Redlands that we can actually afford.  What would you suggest?
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September 09 2009 - Redlands
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Answers (8)

Profile picture for Mr Caveat
re-submit your first offer and keep looking... 1:20 homes in the nation are looking down the barrel of a gun, so to speak. you will have another chance... and another
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September 10 2009
Profile picture for ricon
If you belive that this house will appraise for 150k I am 99% sure somebody will offer 90-100k cash
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September 10 2009
Profile picture for jmmeam
FYI -- going conventional not FHA. We have excellent credit, but just don't want to use ALL of our savings - which is why we asked for 3% towards closing costs.  Some of our savings will go to fix up the home... the rest will be kept for emergencies.
We offered $90k because we believe (my husband, agent and I) that the house will probably appraise for a minimum of $150k.  The County Assessor's website listed it as $185k for 2009.  We just didn't want to bid too low and lose out on the opportunity.
Thank you for all your comments.
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September 09 2009
Couple of things to consider: Number 1, You should be satisfied that it is your highest and best and if you end up not getting the home you will have no regrets. Number 2, Depending on the loan you have, the home may need to appraise at or above the offer price. An all cash offer will not require an appraisal but keep in mind that in most cases the banks will require the buyer to make up the difference if it is outside of your loan covenants, or, the seller will need to lower their price.
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September 09 2009
Profile picture for frisky1
Well I can understand bidding higher if its priced low to induce a bidding war. perhaps the true value is 100k. its certainly happening here a little (in NJ). but your best and final should be whatever the true value is based on comps in the past 3 months minus 8k. and even then, you're probably overpaying as once the 8k is gone, prices are pretty sure to stabilize or continue sliding, depending on your area. and you'll have less competition as many buyers are getting taken out of the market now by the 8k.
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September 09 2009
Yeah, why would you offer $90K on a $74K house?  If you mistyped and meant it listed for $94K, I would say it will probably be accepted.
If not, you have a lot of thinking to do.  It's a terrible idea to be buying a house with nothing down using expensive FHA financing when the house needs extensive repairs as you have described.  How are you going to fix the house up?
If you won't be happy living in a dump and only completing improvements when you have saved the cash to do it, please don't buy it.  Do not fix it up by running up credit card debt or you'll be in foreclosure within 2 years. 
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September 09 2009
Asking for 3% toward closing costs invites me to think you're going with an FHA loan.  That alone makes you vulnerable to the cash buyers out there.  Wetdawgs is right on ~ the property must appraise for at least contract price, so needing paint won't matter.  What matters are the comparable sales in the area.  What does your Buyer's Agent recommend?
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September 09 2009
Profile picture for wetdawgs
Oh, my, you're offering >$15 k above asking price?   Be aware that while you can bid a million, if it doesn't appraise for that amount you are not going to get financing.

What does your agent offer from a CMA?

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September 09 2009
 
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