Help me make an offer on my first home...?

Question

My husband and I are going to look at our dream home tonight. It has been on the market for a year+ now and has come down in price a lot. I believe they were oringally asking for $279,900 and have now come down to $189,715. The home has 5 bedrooms 2 3/4 baths, 2 car garage, a hot tub built into the deck, and is located in a small town of 1500 people. The home is currently occupied by the owners 18 year old daughter, her boyfriend and their friend, who all live there for free. The owner has already moved into a new place in a different town (which makes me think the owner is eager to sell) I'm looking to do a lower offer, and also ask the seller to pay for closing costs, so I'm wondering what some of you feel would be a good "first" offer. I would like to get her into the $170's if possible... Suggestions and adivce are all welcome.

Answer 1

With out looking at comps we're all just guessing at what the market in that are is looking for.

Lets assume its near market value.

If you are qualified and have money down, you can try to offer maybe upper 170s with closing costs.

But if they have another offer, then your out.

If this is truly your dream home, peace of mind might be more important than a few thousand bucks.

Answer 2

You don't want to be too cheap either--a $279,000 that has already been lowered almost $100,000 is a pretty good deal, especially if you want the seller to carry all of the closing costs, which could be quite expensive depending on the transaction. That alone could take about $5,000 off their profit, so they'd actually be selling for $184,000....

I would try to go MAYBE $180,000, but honestly, I don't know how other people feel, but if the home has been lowered almost a hundred grand to take off another 20 is really lowballing them; I probably wouldn't accept. So you'll need to evaluate how much of a good deal you think you're getting and how much of a loss it would be to not get the house. Good luck.

Answer 3

Generally you can ask 10% below asking, and they will probably come back  and you will end up at 5% below asking. Don't get insulted by the counter offer, if there is one. However, keep in mind that they have lowered their asking by almost $100,000 which is 1/3.  That is quite a reduction, even in this market. If it is not listed with a real estate agent, you might want to still get a buyers agent to work with you. It won't cost You anything, and the seller will probably be glad to have someone draw up the papers. If it is listed, still get an agent to get you comps in the area that have SOLD, so you have an idea of what to offer. Good Luck.

Answer 4

A couple of points. Some are in line with the other comments, some aren't.

Here's the process to follow. You're going to come up with three numbers (none of them the asking price):

First, you really need to know what the house is worth in today's market. For that, you need a CMA (competitive market analysis). A Realtor can do one of those for you.

Second, how much have you been prequalified or preapproved for?

Third, how much would you be comfortable spending per month...translated (with today's mortgage rates) into a purchase price?

Take those three numbers--the comps, your preapproval or prequalification, and your comfort level number--and take the lowest one. That is the ABSOLUTE MOST you can spend on the house.

Now, take the asking price of $189,715. Is it higher or lower than the number you came up with above? If it's higher, then your maximum amount drops to $189,715. If the number above was lower, then you stick with your own number and ignore the listing price.

Now you finally have the most you can spend on the property. Your offer probably should be less. How much less? There are two popular strategies.

One is "splitting the difference." Let's say your maximum number was $185,000. In this case, you'd choose a number under $185,000, so that the average of your number and theirs is about $185,000. In this example, it'd be around $180,000. (TIP: Never use a round number like that. Always use something more precise--$180,324, for instance.) Generally, with offers and counter offers, you'll end up somewhere close to the middle...around $185,000.

The other strategy is a "best and final" or "highest and best" offer. You make an offer that's as strong as possible, fairly close to your maximum. In our example here, let's say $184,225. It's presented as "take it or leave it." The offer expires in 24 or 48 hours. And they either accept it or they don't.

Now, let's read the owners' minds. They're probably sick and tired of their daughter, her no-good boyfriend, and the other friend camping out in their house. They really want to get rid of the house. It's as much about getting the daughter, the boyfriend, and the other friend out as it is about selling and making money. Besides, the owners are still paying the mortgage and taxes, and probably paying the utilities.

Check the tax records (they're probably online; if not, have a Realtor get a copy) and see how much they paid for the house. Although that tells you nothing about what the house is worth, it can tell you (unless they've refinanced) about how much they owe on the house. That's really the baseline, the bottom of what the owners can accept for the house.

In the example, let's say they bought the house 10 years ago for $145,000. They've paid down the mortgage a bit, and they may have put something down when they bought. They probably owe about $130,000. If they're using a real estate agent, they'd have to pay a commission. Depending on their level of motivation, they'd accept some number between $189,715 and $145,000. So there's a new range to play in. On the other hand, if they bought 5 years ago for $170,000, they're close to the bottom already. Your Realtor can help you with those numbers.

A final note: The house probably doesn't show well, considering who's been living there for a year. Don't let that bother you. However, when you make an offer, make sure your agent plays up that fact. It'll help the owners "feel the pain." Your role is to help relieve them of that pain by buying their property.

Hope that helps.

Answer 5

You need to engage a qualified buyer real estate agent and ask that agent to provide you written evidence of comparable and recent sale prices so that you can gauge the market worth of the property.  If the asking price is in line with the current market, asking for a $15-$20K reduction isn't going to cut the mustard.

Answer 6

Why don't you get a Realtor to see if the house is even worth $189 to start with?

Is the seller giving you a 3% discount for not using one?  Of course not, they are pocketing the commission that they aren't paying.

No one here can tell you what that house is worth...we haven't seen it, we dont know the address, we don't know what it looks like, we can't pull sales.

Don't assume that just b/c the price has been dropped, that you aren't getting ripped off or assume you are getting a "deal".

If $189 was such a deal, it would have been under contract the first day on the market.