Need a little guidance on making an offer on a home, please.

[KCCutie]

Yes. We have an appointment on Saturday at 2pm. We can''t wait.

LOL! I see lots of trips to HD in our future too. Seems like any time you buy any house you spend the first month going to HD every other day. Thank goodness my little sister is good at this stuff SO and I are going to need all the help we can get.

Good luck with the moving! YAY! I know it''s not fun but once you''re in your new home it''ll feel so good!

 

[KCCutie]

I should have known this was too good to be true!

Our agent just called that REO is already under contract....in less than a week.

Oh, well the search goes on.

 

[movie zombie]

unfortunately, while this may appear to be a buyers market and is such for most properties, the real deals go quickly as many are in the same financial position you are and looking for those real deals. when we bought the house we''re currently in escrow with i knew it was a deal and that if i didn''t buy it right then, it wouldn''t be available the next day. we were the first to see the property and wrote the contract then and there. be prepared to see property as soon as it is listed.

i don''t think the seller was being greedy. of course, i''m also a seller right now. don''t forget the seller also paid interest on that house each month and is probably wanting to recoup that cost as well. in our case with the first offer, the potential buyer just couldn''t afford the house and the closing costs. to ask me to make it possible for them to get into a home was unreasonable. i''m not investing in a property in order to give away cash to a stranger [which is what asking for a large price reduction AND 3% to cover closing costs AND anything else really is]. i did consider offering to carry a 2nd for them but the 2nd offer came in for more than asking price and the rest was history.

yes, as a buyer there is a lot to learn but wait until you sell a property! you will want to recoup each expense you had....and want to walk away with some extra cash as well. the seller is under no obligation to potential buyers to explain their financial situation and why they don''t want to pay costs for you. it is their property to dispose of as they see fit and you will do the same.

a word of advice: always be prepared to walk away from a property. there is no such thing as one perfect house. each property has pluses and minuses. you did the right thing by walking away from the first property as you know your financial situation and what you''re willing to risk or not risk as the case may be. i don''t believe in stretching your budget to the breaking point just to get into a house....especially with the economy the way it is.

i know the personal frustration of looking for a home and not quite being able to afford to get into one. as a single woman i looked for 6 months and made many lowball offers to only be rejected time and again. in the long run, i''m glad none of the offers were accepted as the house i finally bought was the best for me and i spent 15 years in that little house. and i didn''t lowball the seller so badly that he rejected me outright. i countered his counter and i think we both got a fair deal. and to be honest, the 6 month search allowed me to save more $ to use for closing costs.

good luck. you''re learning a lot .......and you will find a house to buy!

movie zombie

 

[applequeen]

Sorry you missed out on that house... sounds like it was a great deal. We had a similar experience last summer with a foreclosure...a guy (with a cash offer) beat us to it. The house has been totally remodeled (it needed it) and looks amazing now.

Did you look at anything else over the weekend?


movie zombie (or anyone that knows).... quick question to you (and please excuse my ignorance)... is it typical to ask for more than the appraised value of the house? I know that real estate (in a stable market) should increase in value so if you paid more than the appraised value then over time your investment will grow and the value will catch up (and hopefully exceed) the purchase price but I would just have a really difficult time paying more than what the house was currently worth. Am I missing something here? I"ve always considered myself an intelligent, well educated person but I admit that the whole home buying thing was a huge learning experience and I don''t know nearly as much about it as I should. I think the fact we didn''t use an agent really prevented us from learning as much as I wuold have liked. We bought our house at the appraised value (which was $10,000 less than their asking price)... I really would not have paid one penny more (especially considering the amount of time and $ we''ve put into it in the short month since we closed). I hear you though on wanting to recoup your investment when it''s time to sell. I''m anxious to see how much our house will be worth when we finish our investments and when we sell it I''d want to make a profit on it (otherwise we should have just bought a house that was move in ready).

 

[KCCutie]

Thanks MZ!

I understand the FSBO sellers have their reasons for not accepting our offer and whatever they are they are entitled to them. So we are completely happy with our decision to move on.

applequeen - No we didn''t look at anything else this weekend the area we have out hearts set on is rather small (probably 5x10 small blocks). We''re going to be in a holding pattern just waiting for something to open up. I did find another REO that was below what we used a minimum that is right in the area we like, so I''m going to look at that this week (my SO is working nights so he won''t be able to go, but I''ll take one of my parents and a camera in case it''s any good). I have a feeling it needs a fair amount of work but it''s worth a look.

 

[movie zombie]

it took us 4 years plus to find the house we''re in now......our strategy was much as yours which is to be in a holding pattern as i knew something would eventually show up and we weren''t in a hurry. however, if there was something to be looked at, i went immediately and then reported back to my husband whether or not it was worth considering. saved him a lot of time and trouble, made sure we saw a place before too many other people did, and it helped me to define what it is we were really looking for. i can''t stress enough getting out to a property right away. we saw this place in january before the market was recovering from the winter slow down. we placed an offer about a week later....and as we were writing the contract with our agent, she got a call from another agent wanting to know the status of the property! [she was representing the seller and us as buyers]. had we waited to do that contract, we might have lost out. but the sellers liked us, we offered $3000 more than asking price and we agreed to their desire for a very short escrow period [come to find out they had a very large balloon looming march 1]. we also had our loan approval so they didn''t even consider not accepting our offer. during escrow they also did the pest control work AND they built risers [$1200] for the septic tank outlets.

i actually think you''ll get a better bargain at the end of summer and perhaps later. the market is going to fall further and there will be more REO with more banks/lenders trying to unload them. each property has its pluses and minuses. its always a tradeoff. and it really does take a lot of time and $ to fix a place if you don''t have the tools and knowledge already. another trade off!

i worked for American Savings and Loan back in the 1980''s in many departments: credit card, underwriting, loan servicing, property management, and then REO. i learned a ton. i also took the courses to become an agent but decided it wasn''t my thing..... however, i''ve been able to use all the things i''ve learned. oh, and that was during the time of the savings and loan crisis and the government bailout......much like today. however, i''m not sure that today many lenders will want to gear up and have a large REO group that manages and sells properties like they did back then....hence, i think they''ll be looking to sell as fast as possible which means getting to the properties first. i think the minute they have a decent offer, they''re going to take it. if an REO property sets on their books too long, it costs them $. and if its been sitting there for any length of time for you as a buyer it could mean there is something wrong with it or someone would have snatched it up right away.

you''ve got a good plan in place, and i''d encourage you if at all possible not to delay in looking at any potential property. the camera idea is great!

movie zombie

 

[movie zombie]

Date: 6/23/2008 9:58:20 AM
Author: applequeen
Sorry you missed out on that house... sounds like it was a great deal. We had a similar experience last summer with a foreclosure...a guy (with a cash offer) beat us to it. The house has been totally remodeled (it needed it) and looks amazing now.

Did you look at anything else over the weekend?


movie zombie (or anyone that knows).... quick question to you (and please excuse my ignorance)... is it typical to ask for more than the appraised value of the house? I know that real estate (in a stable market) should increase in value so if you paid more than the appraised value then over time your investment will grow and the value will catch up (and hopefully exceed) the purchase price but I would just have a really difficult time paying more than what the house was currently worth. Am I missing something here? I''ve always considered myself an intelligent, well educated person but I admit that the whole home buying thing was a huge learning experience and I don''t know nearly as much about it as I should. I think the fact we didn''t use an agent really prevented us from learning as much as I wuold have liked. We bought our house at the appraised value (which was $10,000 less than their asking price)... I really would not have paid one penny more (especially considering the amount of time and $ we''ve put into it in the short month since we closed). I hear you though on wanting to recoup your investment when it''s time to sell. I''m anxious to see how much our house will be worth when we finish our investments and when we sell it I''d want to make a profit on it (otherwise we should have just bought a house that was move in ready).

here in california an appraisal is usually not done until the contract has been signed and the loan papers are being processed. it is paperwork required to demonstrate that the property is really worth what the lender is being asked to lend. so at the time of my buying a house, i woudn''t know the appraised value. i could, however, look online for sources to see what comparables are selling for. the tax appraised value is not the market value. at the time of selling a house, i''m going to want to recoup my buying costs, interest, fix up costs, selling costs, etc.

movie zombie

 

[Haven]

I''m sorry you didn''t get the home, KC, but I just wanted to say good luck finding something else!

My fiance and I looked for months, and put offers in on three other homes before we found THE house. We also put in an initial offer that our realtor said was "embarrassingly low", but lo and behold--they were ready to bargain. We discovered that if any seller is going to be offended by a "lowball" offer then they''re just not business-minded. Buying a home is a business transaction, so don''t be afraid to offend someone or turn someone off. We ended up going back and forth with offers and counter-offers for TEN days, the sellers'' realtor kept telling us that they absolutely refused to go any lower, so we kept walking away, and they kept coming back. We ended up getting the house for exactly what we hoped to get it for.

The same thing happened with the second house we bid on--the sellers said they wouldn''t go any lower, we walked away, and they came back to us a few weeks later and said they''d accept our final offer. Too late, we had already realized we were happy to move on.

The other thing to remember is that your realtor, as much as you may love him (or her), is still in business, and it''s much better for him if you buy the house. So, of course he''s going to want you to drive up the price to make a deal so he can get his commission and move on.

GOOD LUCK!

 

[applequeen]

Date: 6/23/2008 12:17:44 PM
Author: movie zombie

Date: 6/23/2008 9:58:20 AM
Author: applequeen
Sorry you missed out on that house... sounds like it was a great deal. We had a similar experience last summer with a foreclosure...a guy (with a cash offer) beat us to it. The house has been totally remodeled (it needed it) and looks amazing now.

Did you look at anything else over the weekend?


movie zombie (or anyone that knows).... quick question to you (and please excuse my ignorance)... is it typical to ask for more than the appraised value of the house? I know that real estate (in a stable market) should increase in value so if you paid more than the appraised value then over time your investment will grow and the value will catch up (and hopefully exceed) the purchase price but I would just have a really difficult time paying more than what the house was currently worth. Am I missing something here? I''ve always considered myself an intelligent, well educated person but I admit that the whole home buying thing was a huge learning experience and I don''t know nearly as much about it as I should. I think the fact we didn''t use an agent really prevented us from learning as much as I wuold have liked. We bought our house at the appraised value (which was $10,000 less than their asking price)... I really would not have paid one penny more (especially considering the amount of time and $ we''ve put into it in the short month since we closed). I hear you though on wanting to recoup your investment when it''s time to sell. I''m anxious to see how much our house will be worth when we finish our investments and when we sell it I''d want to make a profit on it (otherwise we should have just bought a house that was move in ready).

here in california an appraisal is usually not done until the contract has been signed and the loan papers are being processed. it is paperwork required to demonstrate that the property is really worth what the lender is being asked to lend. so at the time of my buying a house, i woudn''t know the appraised value. i could, however, look online for sources to see what comparables are selling for. the tax appraised value is not the market value. at the time of selling a house, i''m going to want to recoup my buying costs, interest, fix up costs, selling costs, etc.

movie zombie

That makes sense. In our case the sellers did an appraisal to determine their asking price (135k versus the 125k we paid). We had to do another appraisal through our lender to close on the loan. Their appraisal was 125k and ours was 126k. I''m comfortable with the amount we paid but wouldn''t have paid more than the appraised value (wouldn''t have been willing to increase downpayment or anything to get the loan). We''ll probably do one in the 2 years in order to get rid of the mortgage insurance (only did 5% downpayment so we''d have some cash for the improvements). We''ve done so much work to the house already and it''s looking great.

 

[applequeen]

Date: 6/23/2008 10:39:47 AM
Author: KCCutie
Thanks MZ!

I understand the FSBO sellers have their reasons for not accepting our offer and whatever they are they are entitled to them. So we are completely happy with our decision to move on.

applequeen - No we didn''t look at anything else this weekend the area we have out hearts set on is rather small (probably 5x10 small blocks). We''re going to be in a holding pattern just waiting for something to open up. I did find another REO that was below what we used a minimum that is right in the area we like, so I''m going to look at that this week (my SO is working nights so he won''t be able to go, but I''ll take one of my parents and a camera in case it''s any good). I have a feeling it needs a fair amount of work but it''s worth a look.

Good luck!

 

[Dee*Jay]

Date: 6/20/2008 9:25:39 AM
Author: KCCutie
Well, after waiting for almost 24 hours for clarification the sellers responded that they would not be paying any of our closing costs.

We just can't be 100% sure we'll have enough money to cover all the closing costs at this point. So we have to walk away. We're a little sad b/c this is one of very few 3 bed 2 bath houses in the small area we like that's even on the market right now but we'll just keep looking. If we're still looking in a few weeks and they get desperate to sell maybe we'll hear from these sellers again, that is if we don't find a better house first.

MC- We're in KC MO. Looking just north of downtown. There are lots of areas in town where this house would sell for 150K+ but we like being close to downtown....we're not really big on living in 'the burbs.'

Saw an REO new on the market that could be promising. Hopefully we'll see that this weekend. It has some red carpet that would have to go but it's priced really low so new carpet wouldn't be too much of a problem.

I'm late to this thread, but let me make a suggestion. I've written several contracts where the buyers pays an extra amount on top of the agreed upon price and then the seller gives a closing cost credit. So, for instance, if the agreed upon price was $100K the contract would be written for $103K and then there would be a $3K closing cost credit. In essence you're wrapping your closing costs into your mortgage. The lender has to agree to this but as long as it's under 3% of the total price I've never had a problem. Note that it's better to work with flat dollar amounts rather than %s though because $3K = $3K but 3% of $103K = $3,090.

 

[KCCutie]

Date: 6/23/2008 3:04:18 PM
Author: Dee*Jay

Date: 6/20/2008 9:25:39 AM

Author: KCCutie

Well, after waiting for almost 24 hours for clarification the sellers responded that they would not be paying any of our closing costs.


We just can''t be 100% sure we''ll have enough money to cover all the closing costs at this point. So we have to walk away. We''re a little sad b/c this is one of very few 3 bed 2 bath houses in the small area we like that''s even on the market right now but we''ll just keep looking. If we''re still looking in a few weeks and they get desperate to sell maybe we''ll hear from these sellers again, that is if we don''t find a better house first.


MC- We''re in KC MO. Looking just north of downtown. There are lots of areas in town where this house would sell for 150K+ but we like being close to downtown....we''re not really big on living in ''the burbs.''


Saw an REO new on the market that could be promising. Hopefully we''ll see that this weekend. It has some red carpet that would have to go but it''s priced really low so new carpet wouldn''t be too much of a problem.

I''m late to this thread, but let me make a suggestion. I''ve written several contracts where the buyers pays an extra amount on top of the agreed upon price and then the seller gives a closing cost credit. So, for instance, if the agreed upon price was $100K the contract would be written for $103K and then there would be a $3K closing cost credit. In essence you''re wrapping your closing costs into your mortgage. The lender has to agree to this but as long as it''s under 3% of the total price I''ve never had a problem. Note that it''s better to work with flat dollar amounts rather than %s though because $3K = $3K but 3% of $103K = $3,090.

Thanks Dee*Jay. That''s what we will probably do on the next go round.

I''m looking at another REO Wed. It''s been on the market for a while so my gut is telling me there''s something not right with it or it would be gone, but I want to look to make sure.

Thank you all for sharing your experiences and advice!

 

[movie zombie]

Date: 6/23/2008 3:04:18 PM
Author: Dee*Jay

I''m late to this thread, but let me make a suggestion. I''ve written several contracts where the buyers pays an extra amount on top of the agreed upon price and then the seller gives a closing cost credit. So, for instance, if the agreed upon price was $100K the contract would be written for $103K and then there would be a $3K closing cost credit. In essence you''re wrapping your closing costs into your mortgage. The lender has to agree to this but as long as it''s under 3% of the total price I''ve never had a problem. Note that it''s better to work with flat dollar amounts rather than %s though because $3K = $3K but 3% of $103K = $3,090.

when i sold my home and after we''d agreed already on a price, the buyer asked if i''d accept more money on the contract. i was selling my home through help-u-sell and was not willing to pay buyer''s realtor fees. i had been upfront about that and my agent had told all other agents that seller was unwilling to pay for buyer''s realtor fees. the buyer wanted his own guy and had to pay those fees but didn''t have the $ so the solution was to do this. i still walked away with the same amount of $ and the buyer had his $ to pay his realtor. however, the appraiser had already been out but had not submitted his report. phone calls were made indicating the increased loan amount needed. the appraisal came in for the loan amount. had it not done so, the deal would have fallen through as i was not willing to pay the realtor fees and the buyer didn''t have the $.

movie zombie

 

[KCCutie]

Well I went to see another REO last night. I didn''t hold out much hope b/c it was list at just under 50K and I was right it was pretty much trashed. It looked like someone had bought it to do a flip but lost the house before much work got done. It was a mess complete with dog poop in one of the bedrooms....not a bad house if you want to do A LOT of work, but I''m not ready for that much work.

I did see another house just up the street that I really liked. My SO wasn''t able to go with me so we''ll go back this weekend so he can see it. It''s only been on the market since May and the price has dropped twice it started at 130K and is now at 120K. It''s listed as a 3 bedroom 2 bath but it really only has 1 full bath and there''s a weird almost bathroom in the basement. I think the plumbing is there so it wouldn''t be too hard to make a real bathroom later. The basement is the nicest I''ve seen in these older homes and could be finished and there''s a small bedroom in the attic space that I think could be expanded now that there''s a detached garage and the attic won''t be needed for storage.