About to make an offer on a house

slakjaw · 09-03-2009, 09:16 PM

I posted about looking for a house about 8 months ago and as usual I got some great advice here.. Well I am finally about to make an offer on a place in North Saint Paul, MN

Exciting

pwd72s · 09-03-2009, 10:38 PM

Care to give details?

Porsche-O-Phile · Porsche-O-Phile's Garage

So make it. Offers don't mean anything until they're accepted. We must've put in about 30 offers before one actually was accepted and went ahead...

Good luck to you.

Fishman7 · 09-04-2009, 03:21 AM

Porsche-O-Phile you are correct, I have a very expensive piece of property for sale right now and a local undertaker has made three offers so far and we rejected all three. We have finally told him to hit the road and the next offer must be in writing with a non refundable deposit, I think he finally got the message.

Porsche-O-Phile · Porsche-O-Phile's Garage

Honestly I think if your first offer is accepted, you offered too much.

In this market, you should make offers that you think are "lowball" and keep throwing them at properties until you get one to take. Just my $0.02.

Fishman, a guy gave you a non-written offer? That's utterly ridiculous. I'd have told him to bug off too. If it's not in writing, it doesn't exist.

Eric Coffey · 09-04-2009, 07:03 AM

Quote:

Originally Posted by Porsche-O-Phile

In this market, you should make offers that you think are "lowball" and keep throwing them at properties until you get one to take. Just my $0.02.

Every target-market is different. You would be waiting a LONG time with that strategy around here.

rnln · 09-04-2009, 11:22 AM

what kind of number is considered "lowball" to you guys?

MysticLlama · 09-04-2009, 11:29 AM

Actually considering the same thing here.

Going to go in at 10%ish under asking, which has already been reduced a couple of times and ask for closing costs.

Not insulting low-ball low, seem reasonable.

Porsche-O-Phile · Porsche-O-Phile's Garage

Subjective. Depends on the property. "Asking price" isn't really worth giving much consideration to - it's a made-up, meaningless number manipulated by sellers and agents all the time to try and effect certain results.

When we were making offers at the mid-to-end of last year, I typically would research the history of sales through the County Recorder. If there was a recent sale (last 10 years), I'd whack 60% off that and start about there (actually the offer that got accepted on the place we almost bought ended up being LESS than this, since the FHA appraisal came in at $5,000 under my offer, which made me feel a little sheepish for having offered too much... I had offered $155k on a house which sold for $385k in 2005, the "accepted" amount/appraisal amount ended up being $150k).

If there's no sale in the last 10 years you need to look at comps including the Recorder history for THOSE, Zillow (which sucks, but is sometimes worth a look), etc. A little bit of "gut instinct" comes in here too. The point is that in this market, you can offer WAY lower than you might think at first glance (especially on a foreclosure or REO) and make it work.

Don't buy the RE agent bullcrap about "if you offer too low, you might offend the owner". Like hell. And why do I care anyway? Those jokers are paid on commission and have every incentive to get you to pump up your number. Hell, I even considered making a few five-figure offers on a couple places we looked at. A couple of them I even entertained the idea of bidding "$1" just to see what happened...

Ball is in your court, bottom line.

Be patient. Prices aren't going anywhere anytime soon and interest rates are probably holding more-or-less steady for at least the next 6-12 months. There's no hurry here. If you get pressured/impatient to "get it now", you WILL pay for it - dearly.

MysticLlama · 09-04-2009, 11:38 AM

In our case it's more of a thing where once you drop that amount the house becomes a good value in comparison to what other things are selling for.

We're offering about 5% more than the closest compareable we could find, which is 800sqft smaller and not as updated.

It's also owned outright by the owners and having it sit empty doesn't really hurt them much, and wasn't in a big runup zone, and hasn't changed hands since '94, which are a few other factors.

Rick Lee · Rick Lee's Garage

Quote:

Originally Posted by Eric Coffey

Every target-market is different. You would be waiting a LONG time with that strategy around here.

Don't I (we) know it! My wife finally learned this the hard way after watching many nice properties pass us by for about what we ended up offering on the one that was accepted.

Rick Lee · Rick Lee's Garage

Jeff, I can't wait until you get a house, have been in it a few years and then to read your stories about trying to sell it.

The one I just dropped off an earnest money check on the other day is a short sale for about half of what it last sold for in 2005, but before they added a pool for $50k. It's one of the nicest houses I've seen and we've probably toured 50 since April. Oh, and we're getting 3% toward closing costs. I can't see how this can be a bad deal. We might not make a ton selling it in less than five years. But the mortgage payment (after tax write offs) will be about what we're paying in rent now and for a way, way nicer house. I'd rather pay my own mortgage than the landlord's. The place we're renting now is older than the one we're buying and it hasn't had any maint. problems at all.

Porsche-O-Phile · Porsche-O-Phile's Garage

FWIW I think the asking price on the place we were going to get was $219k - more evidence of what a joke "asking price" is. Had I not been getting an FHA loan and taken 10% off that, I'd have paid $197,100 - fully $47,100 more than what was accepted. My point is don't put too much stake in asking price. Especially when dealing with a bank as the seller.

It would have been "force-reduced" to $150k because of the FHA appraisal, but honestly I think we got lucky (I found a fairly pessimistic appraiser) and to simply say "oh the FHA appraisal number will protect me from getting screwed" is taking an awful chance.

I'm very patient when it comes to this kind of stuff. I won't be rushed into paying a penny more than I need to.

Sorry for any hijack - I wish you well and hope you are able to keep emotion out of it and land yourself a good deal, be it on this house or any one of the millions of others out there.

john70t · 09-04-2009, 02:30 PM

I'd be looking at neighborhood statistics as well: homestead vs rentals, average income, crime rates, good schools/parks nearbye, etc.
Walking around on a weekend night will tell you a lot about the area.

Close to downtown/shopping but in a quite location with parking is ideal.

deanp · 09-04-2009, 04:36 PM

Jeff - are you staying local or pulling up stakes and heading east?

look 171 · 09-04-2009, 04:42 PM

Quote:

Originally Posted by Eric Coffey

Every target-market is different. You would be waiting a LONG time with that strategy around here.

Really, if its a starter home around here, and the house is ok shape and just need a coat of paint, its going to go 30+ above the asking price around here. Ask me how I know.

onewhippedpuppy · 09-04-2009, 06:43 PM

The thought of paying MORE than the asking price is insane to me. I'm with Jeff, if they don't say no at least once you paid too much. That's always been my grandfather's philosophy, he's a very successful entrepreneur.

Porsche-O-Phile · Porsche-O-Phile's Garage

Heading east. It's a 95% certainty at this point. Waiting for a signed piece of paper that I've already got an e-mail version of, then make a bunch of moving plans. I was back your way a couple weeks ago actually and will be heading back in two weeks for some other follow-up stuff. Probably won't be fully moved out there until November or so. Job starts mid-Nov.

notfarnow · 07:10 PM

Quote:

Originally Posted by onewhippedpuppy

The thought of paying MORE than the asking price is insane to me. I'm with Jeff, if they don't say no at least once you paid too much.

Depends. Sometimes underpicing a listing by 5-10% is a strategy to generate lots of interest and sell it quickly. It's most effective if there are 2-3 similar homes listed nearby, you can create a buzz and tap into their traffic.

Rick Lee · Rick Lee's Garage

We looked at a house a few mos. ago that was intentionally way underpriced. It would have easily been a $1.5 million house where I used to live. Perfect condition, 3500 sq./ft., infinity pool with fountain, all Jenn Air appliances, just an amazing place. Asking price was $300k. Obviously, that was just a starting point for the bidding war. I don't know what it went for, but I'm sure it was no less than 30% over asking, which was still a smoking deal.

If you were a seller, would you rather have your asking price get nothing or maybe just lowball offers? Or have it get bid up way over? Around here a lowball (as my wife learned the hard way) gets ignored.