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

[mjohnson]

Originally Posted by 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.

Closing this week on a house - conforming 30yr mortgage is ~2x our household salary income. For 10% down they of course wanted W2s and paystubs. They also wanted everything on our 401K/403Bs which totaled well over the mortgage value and still they "had to think about it".

I guess we're past the fogging the mirror test! All in all it's good, but a little annoying when you're in the thick of it.

Oh yeah - the best thing is to be detached enough to be willing to lose the bid. More properties will come around - the last thing you want to do is to fall in love with the place. Like the guy hitting girls up at the bar - only one's gotta say yes!

[KFC911]

Originally Posted by nostatic

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

Age, early/mid 20s, making good money, single, first job in a "corporate career", housing values excellent, interest rates historically low...it's not THAT much different than where I was 25 years ago from my perspective

[lowyder993s]

Originally Posted by Hugh R

That house for $125k is crazy

No Schit...what's say me and you each put 1/2 on our amex's, we'll rent him a room. Great hunting nearby, sporting clays is big out there. 4 hr flight to Costa Rica...hellza...I may
just go it alone!

[gprsh924]

Quote de nostatic

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

Age, early/mid 20s, making good money, single, first job in a "corporate career", housing values excellent, interest rates historically low...it's not THAT much different than where I was 25 years ago from my perspective

Yes but to get something worth owning in the Chicago area is probably more in the range of $200k...and something I would still want to be living in when I am 30 years old is at least $300k.

I'm 23 right now. Im in a training program right now. Once I finish it in 6-9 months I will have a much clearer picture of where I will be.

[BRPORSCHE]

Pat, It's in a fairly decent area. Not what I am used to down in Clear Lake but that doesn't mean it's in an awful part of town. The new EXXONMOBIL headquarters with 8000 employees will be ten minutes up the Hardy toll road. It's close to IAH and it's a reasonable distance from my office, only about 25-30 minutes.

KC, I do have a fairly stable job, and the market for what I do surely isn't going away overnight in Houston, but the fact remains that a downpayment is tough to come up with in such short time.

Guys, real estate is CRAZY cheap here in Houston.

Jim, I am suprised you have picked up a rental....

[KFC911]

Originally Posted by gprsh924

Yes but to get something worth owning in the Chicago area is probably more in the range of $200k...and something I would still want to be living in when I am 30 years old is at least $300k.

I'm 23 right now. Im in a training program right now. Once I finish it in 6-9 months I will have a much clearer picture of where I will be.

I hear what you're saying, and completely understand! To be clear, I think both you and Tom really have your acts "together" and are WAY ahead of most (myself included) at this point in your lives...good luck to both of you!

ps: Tom, I know it's hard to consider, once you're "on your own", but would your parents be willing (and able) to make an investment (and help you out on a down payment) that you can pay back later? I've always been fiercely independent, but did take my dad up on a "no interest" car loan one time, and I've "paid it back" many times over to him and other family members in later years when I was in a better position financially...just a thought.

[BRPORSCHE]

Originally Posted by KC911

ps: Tom, I know it's hard to consider, once you're "on your own", but would your parents be willing (and able) to make an investment (and help you out on a down payment) that you can pay back later? I've always been fiercely independent, but did take my dad up on a "no interest" car loan one time, and I've "paid it back" many times over to him and other family members in later years when I was in a better position financially...just a thought.

It's a thought. But realistically I doubt it. Just would prefer to do it on my own.

Too much of an alpha male for that. Sadly.

[nostatic]

Originally Posted by KC911

Age, early/mid 20s, making good money, single, first job in a "corporate career", housing values excellent, interest rates historically low...it's not THAT much different than where I was 25 years ago from my perspective

"Housing values excellent" - maybe, maybe not. I don't know Houston but I can say in LA there is no way I'd buy anything right now. Your down payment could easily vaporize in the next year depending on how things play out, especially for cheaper properties.

It may be ideal for Tom - if his job is fairly stable and he doesn't think he's going to need to move or liquidate in the next 5 years it could be a great win and an early start into the housing thing. There is some risk though - people just need to assess their own situation.

My main point is that I've seen friends obsessed with the whole homeowner thing and subsequently make some very poor choices. It totally depends on location and timing.

[stomachmonkey]

Originally Posted by nostatic

"Housing values excellent" - maybe, maybe not. I don't know Houston but I can say in LA there is no way I'd buy anything right now. Your down payment could easily vaporize in the next year depending on how things play out, especially for cheaper properties.

It may be ideal for Tom - if his job is fairly stable and he doesn't think he's going to need to move or liquidate in the next 5 years it could be a great win and an early start into the housing thing. There is some risk though - people just need to assess their own situation.

My main point is that I've seen friends obsessed with the whole homeowner thing and subsequently make some very poor choices. It totally depends on location and timing.

TX did not see the same bubble that CA, NY, FL did.

Appreciation tracked right along with inflation.

Dallas area was pretty much dead on, Austin appreciation was a bit above inflation but nothing to lose sleep over. Not sure on Houston but based on that price I think he'd do fine.

[JavaBrewer]

Tom - are you married? Have kids or plans on having them? I ask only because once you have kids the location of the home and the school district it belongs to become hugely important considerations...read the rental thread by Nostatic.

[stomachmonkey]

Originally Posted by JavaBrewer

Tom - are you married? Have kids or plans on having them? I ask only because once you have kids the location of the home and the school district it belongs to become hugely important considerations...read the rental thread by Nostatic.

Whether one plans on having kids or not school district is always in the top 3 of things to consider.

Resale value.

[aigel]

Loan applications won't hurt and are free. You just don't want do do one every week, as that will affect your credit rating negatively.

One thought I would like to add is this:

If interest rates go up, affordability will go down. And I would expect the home prices to go down with it. Waiting a year or two may have the advantage that you will have less principal to worry about at a higher interest rate (making the payment the same). I personally plan on paying off my home, so a lower principal is preferred.

George

[BRPORSCHE]

Originally Posted by JavaBrewer

Tom - are you married? Have kids or plans on having them? I ask only because once you have kids the location of the home and the school district it belongs to become hugely important considerations...read the rental thread by Nostatic.

Single/no kids. I do agree that school district is important.

[aigel]

Even if you are single w/o kids the school district is very important. Usually the safety of the neighborhood, the upkeep and the price stability scales directly with the quality of the neighborhood schools.

George

[1990C4S]

^^^^ Read that part twice. Then repeat until it sinks deep into your brain.

While schools don't matter to you (or may not); a) eventually they might and b) come selling time they WILL matter to your buyer.

[MotoSook]

Originally Posted by aigel

I personally plan on paying off my home, so a lower principal is preferred.

George

Don't you want the mortgage interest deduction? I guess it is different for everyone, but if you have other expenses, and the interest is deductable, you are better off using the money for other expenses. Right?

[Joel8005]

Tom,

Disclosure: Real Estate Broker

I must admit that I did not read the first few pages of this thread so another Broker may have already given this input.

In todays market there is no such thing as an insulting offer. All Sellers are happy to have a offer put in front of them even if they do not like like the price. Buyers are so few and far between.

There are so few markets where a low offer would be insulting, I would not worry, unless you live in DC. That is one of the only place in the USA that prices have never really fallen!!!! Uh.....take a guess why.

In my market, coastal Ga. sales are still closing at 90% of asking price.

Regards,

[David]

My agent balked at making the 20% under offer I wanted but finally did it. We ended up settling at 10% under. I'm sure if offered 10% under we would have ended up at 5% under.

Another thing, in Houston where real estate is so cheap, buy more than you can really swing while you're young. I didn't and now I'm in a house I really don't want to leave but that cost less than I make in a year. Of course low taxes and insurance is really nice.

[aigel]

Originally Posted by Soukus

Don't you want the mortgage interest deduction? I guess it is different for everyone, but if you have other expenses, and the interest is deductible, you are better off using the money for other expenses. Right?

I don't think the deduction is that big a deal, considering that your standard deduction for a married couple is already over 11k these days. If your mortgage interest is 20k, you only deduct another 9k over a standard deduction. That's only 3k cash in your pocket at a 30% tax rate. It isn't worth it IMHO, I'd rather chip away on the principal and if it gets too low, you can always move to a new house that's more expensive or keep the old one as an investment property.

It may not be something that makes me rich, but having a house paid off to live in when you are old certainly will help making life more comfortable and worry free. If you can have two, with one being rental income, even better!

George

[john70t]

Every party has a pooper so it might as well be me.

Not to put you off the idea, but there should be a few things added to the radar. As the addage "too god to be true" goes...

New manufactured in a HOA:
-Are all homes sold and occupied? The one next door could be slated for a housing program.
-Is there a warentee backed by a reputable firm? Some builders have seriously screwed up 50 homes in a row and then dissapeared. Talk to neighbors.
-What do the by-laws say? Some dis-allow plants on the porch and whatnot.
-Who runs the board, and where does any profit go to? Held in board savings for future need, or profit for some overseas company?

If a group of people are going to control your home, it should be the right group.