How low can I bid on real estate without insulting the seller?

[Rick Lee]

If you want an FHA loan, you need to go somewhere that does them. Not all credit unions do them. In my experience, CU's can't be beat for car loans, but are easily beat for mortgages.

[BRPORSCHE]

Hmmm the more I think about this an offer of $115,000 doesn't sound too crazy at all.

5% of 115,000 is 5750 which I already having laying around.

Tough part is trying to find a bank that will give me a loan.

Thanks a lot Rick, Scott, and Souk.

[Rick Lee]

Your realtor can put you in touch with a loan officer who can hook you up. If you're buying from a builder, they often have very good incentives to use their lender.

[stomachmonkey]

Originally Posted by Soukus

Tom,

You may need 20% down to get a mortgage, or at least the loan to value ratio needs to be 80%, so on a house appraised at 126K, you'll need $25.2 down or get the house for 80% of appraised value. Or some combination in between. Don't know what the lenders are downing down there, but it's pretty hard to get a mortgage these days without a lot down.

But I agree with buy now instead of renting. The mortgage on a 152K home is likely a lot less than your rent, and if the market improves 5 years from now, you'll have enough equity to buy yourself a much nicer home for you and the future wife and kids...with a spare bedroom for me to crash in when I'm in town

Never dealt with FHA...but hell, I bet your credit is pretty good, and you've been employed at the same place for a while now, so you might as well give it a try. If it doens't work...you just keep on trucking.

Well the benefit of it being a model is the builder should have no problem getting him financed even at 5% down.

[MotoSook]

I agree with Rick. Most credit unions don't do mortgages but they simply act as an agent for a large mortgage company. If you have a friend in the mortgage biz go talk to them. Or try a local bank. They are sometimes more interested than BofA or Wells Fargo to work with the locals. They my be 1/8 or 1/4 point higher than th large national banks, but you wheel and deal on the ultimate interest total. Example, try to get out no escrow for insurance and tax without being charge an 1/8 point higher. Regardless of what they tell you, there is always potential to get a lower rate.

Hell, when we bought the farm the local bank was extremely eager to get our business. They tried to beat the other bank and tried to pressure me to commit but I got such a good rate with the bigger bank I couldn't pass it up. The big bank holds my other mortgage and I know the head of the group from the frat house...

[MotoSook]

Not sure the builder has much stroke these days with the bank but I've never dealt with a builder in these times.

[1990C4S]

OMG that seems cheap. I couldn't get a 20' wide lot for that where I live. You can't go too far wrong in that range.

[sck007]

Go to HAR.com (Houston Association of Realtors) and put in price range, zip code, subdivisions (ex. Heights, Meyerland, Bellaire), single family, etc., to narrow your search. It will provide listings in a particular area. You can put in street address and it will show what is for sale and what was sold in the past 12 months with a price range. You can do much more like identfying foreclores but this should get you started.....

Also, I look at HCAD (Harris County Appraisal District) for tax values including adjacent home values. I like to look at the ownership detail so I can gauge what prices I would offer on a particular home. If someone has owned it for 10-15 years, I feel my lower offer would be okay.

I happen to invest a little in the Houston real estate market. I have had some success making low-ball offers in Estate sales. It helps that I have an established relationship with my realtor. We have done sevral deals so it makes it easier to make low offers. If it is too low, they just don't counter and don't take you seriously. It's happen to me but that's okay! There was a study out there that if you put out 20-25 offers one is sure to hit.

In conclusion, this is a buyers market. There are a lot of people out there giving low ball offers. If the real estate your looking at has a huge upside than offer a reasonable amount. I love a home that looks terrible cosmetically (siding, paint , carpet,etc) but in a good location. Are you a DIY'er? If not, try learning or getting some experience painting , siding repair, etc.

Hope this provides a little help....

[Hugh R]

That house for $125k is crazy

[imcarthur]

Originally Posted by sck007

I love a home that looks terrible cosmetically (siding, paint , carpet,etc) but in a good location.

If you are handy, this is great advice.

More: Always buy the cheapest house that suits your needs in a desirable neighborhood.

Ian

$125K gets you a one bedroom condo in a so-so neighborhood here.

[nostatic]

While money is cheap, the rules have tightened considerably. I doubt you'll get a loan with 5% down unless you've got other assets and/or a large salary.

As for the rent vs. buy, totally depends on location, property, where you are in your life, etc. There is no single answer. I will say that the "American Dream" is a powerful myth that drives a lot of people to buy houses when they'd be far better off renting.

[nostatic]

Originally Posted by imcarthur

$125K gets you a one bedroom condo in a so-so neighborhood here.

$125K will get you a garage in a marginal neighborhood here. But the weather will be nice

[gprsh924]

Originally Posted by nostatic

As for the rent vs. buy, totally depends on location, property, where you are in your life, etc. There is no single answer. I will say that the "American Dream" is a powerful myth that drives a lot of people to buy houses when they'd be far better off renting.

With housing prices like that, it probably makes more sense to own than rent (especially if you rent out your extra room for a year or two). However, like Nostatic said, there a bunch of other factors at play, especially at your age.

Do you know this is the area you are going to be living a year from now? 5 years? There are no absolutes in life, but at your age, I would think you would be much more potentially mobile...I know I am, which is why I rent when it would technically make more financial sense for me to buy my own place.

[KFC911]

Originally Posted by gprsh924

....Do you know this is the area you are going to be living a year from now? 5 years? There are no absolutes in life, but at your age, I would think you would be much more potentially mobile...I know I am, which is why I rent when it would technically make more financial sense for me to buy my own place.

That was EXACTLY the same logic I used for not purchasing my first house at 24 years old. I was making "good money" in my 20s, but didn't want the hassle and knew I wasn't gonna be there (Jax, FL) more than five years or so. In hindsight, it's also a decision I wish I had made differently...I would now have another fully paid off house ...live and learn (preferably from others' mistakes )!!!

[911Freak]

I'd suggest studying your local area's list vs closed sale #'s. In several areas I've seen on avg 15% off list/asking price.

Study the comparable closed sales within the last 6m/o and within 3miles of the home/homes you are interested in, that's what the appraiser will do. If you do your homework a low ball offer can be substantiated with data and you won't look like you're just throwing out #'s.

If you DTI is below 36%, I'd suggest pulling the trigger when you have 6 m/o mortgage/home insurance/ property tax payments in the bank (PITI) and 5% down (FHA). You'll have to pay PMI (mortgage insurance) up front and monthly (budget for it, you can finance the up front premium .9% of PP if I remember correctly) until you pay down the principal to 80% loan to value. Buying below market value helps shorten this timeline.

Take advantage of the low 30yr fixed mortgage rates and discounted R/E.

You're a smart guy, with careful planning and preparation you should do very well.

There are lots of good resources for the FTHB, read up on them, learn the purchasing R/E process including the loan application/approval process.

Good Luck!

[nostatic]

Originally Posted by KC911

That was EXACTLY the same logic I used for not purchasing my first house at 24 years old. I was making "good money" in my 20s, but didn't want the hassle and knew I wasn't gonna be there (Jax, FL) more than five years or so. In hindsight, it's also a decision I wish I had made differently...I would now have another fully paid off house ...live and learn (preferably from others' mistakes )!!!

Different time, different market. Timing is everything.

[KFC911]

Originally Posted by nostatic

Different time, different market. Timing is everything.

How so? Not trying to be a smartazz...but I don't see much difference from my perspective. Buy a "good value" at historically low rates (lock in a 30, even if you pay it off in a fraction of that time) and it's a virtual no-brainer to me. Financially, it made sense, yet I didn't want to be "tied down"...I would do it differently given a second chance.

[stomachmonkey]

In my area N of Dallas that house with those upgrades would be $110-130 a sg ft.

Asking price is currently $100 sg ft. It's a pretty good deal.

We tried to have the 5% discussion in another thread.

The delta in the default rate between 5 and 20% is not significant, something like 0.14 percent for those with a 20 percent down payment to 0.26 percent for those who put just 3 percent down.

You can drop 50% on a house and still buy more than you can afford and end up in default.

It's about qualified borrowers.

[nostatic]

Originally Posted by KC911

How so? Not trying to be a smartazz...but I don't see much difference from my perspective. Buy a "good value" at historically low rates (lock in a 30, even if you pay it off in a fraction of that time) and it's a virtual no-brainer to me. Financially, it made sense, yet I didn't want to be "tied down"...I would do it differently given a second chance.

Depends on your age, location, marital situation, job situation, etc. Today is not 10, 20, or 30 years ago.

[patssle]

As a fellow Houstonian, pay very close attention to the neighborhood if you're buying or renting a house in the sub-150k range neighborhood. "Undesired* type of people" easily get houses like that here in Houston.

*Can vary on definition