1st time home buyer ?

[heartsy77]

My Dh and I are putting in a purchase offer tomorrow on our 1st home. I'm nervous our offer is to low and they are never going take it.

The house has been on the market for 1 1/2 years with no offers; it started in the 180's and is currently listed @ 168,900. This house has everything we want/ need; but there is no way it is worth there asking price. (please bare in mind these are rural upstate NY housing prices)
Our offer is for $145,00, is it to low?

We are pre approved for 161, 400 including closing costs.

Thoughts?

 

[GOOFY4DONALD]

My Dh and I are putting in a purchase offer tomorrow on our 1st home. I'm nervous our offer is to low and they are never going take it.

The house has been on the market for 1 1/2 years with no offers; it started in the 180's and is currently listed @ 168,900. This house has everything we want/ need; but there is no way it is worth there asking price. (please bare in mind these are rural upstate NY housing prices)
Our offer is for $145,00, is it to low?

We are pre approved for 161, 400 including closing costs.

Thoughts?

How exciting and scary. It is a bit low but since it has been on the market this long I don't think they will reject it but probably counter. The only question is are they able to go as low as you want. Many times houses sit forever because they can't lower the price because they are in too deep. Are you asking for closing costs as well because that will play into the price as well.

 

[dakcp2001]

Yikes, as someone with a house for sale I would say yes. How did you come to this number? Are there comps in the area that sold for your price or are you just trying to stick it to the seller? If they are legit asking way too much for the house your offer would be less offensive than if you just generally are assuming they are desperate. I think they will be forced to negotiate with you due to their lack of offers, but selling a home is emotional and you are going to make them dislike you immediatly which can make negotiating harder.

If I got an offer 25K below my current asking price (which has also dropped a few times) I would be offended. Be prepared for them to counter with a full asking price counter offer. Hope you don't have any concessions.

 

[heartsy77]

How exciting and scary. It is a bit low but since it has been on the market this long I don't think they will reject it but probably counter. The only question is are they able to go as low as you want. Many times houses sit forever because they can't lower the price because they are in too deep. Are you asking for closing costs as well because that will play into the price as well.

No we are not. That might be option if we go higher!

 

[heartsy77]

Yikes, as someone with a house for sale I would say yes. How did you come to this number? Are there comps in the area that sold for your price or are you just trying to stick it to the seller? If they are legit asking way too much for the house your offer would be less offensive than if you just generally are assuming they are desperate. I think they will be forced to negotiate with you due to their lack of offers, but selling a home is emotional and you are going to make them dislike you immediatly which can make negotiating harder.

If I got an offer 25K below my current asking price (which has also dropped a few times) I would be offended. Be prepared for them to counter with a full asking price counter offer. Hope you don't have any concessions.

I know it's low but comps in our area are about 150,000 max for similar houses. It's assessed for taxes on $105,000; I know that isn't always a reflection of fair market value but still...

 

[FlyingDumbo]

That is a bit low. Hopefully it won't upset the buyers too much, they may be expecting it.

 

[GOOFY4DONALD]

No we are not. That might be option if we go higher!

Our realtor told us to not go below 3-4% of asking price (this also takes closing costs into consideration) we were very lucky in the fact that our counter was very good. Asking 325,000 our offer 310,000 + 7k closing he countered at 313,000 7K closing.

 

[heartsy77]

I also forgot to mention they paid 129,000 7 years ago. I heard around town they are desperate to sell it; and my realtor told me that as well today.

I'm not trying to insult them; but I'm also not going to pay way above and beyond its worth!
Even if we did offer near asking there is no way it's going to appraise for that!

 

[ceecee]

Depends on the comps in the area. I would think if it started in the 180's then 145 would be low, but if they paid 127 just 7 years ago that seems like high appreciation (our area certainly isn't like that) unless they put a lot of $ into renovations, etc.

 

[Evi]

Don't be afraid. I'm so excited for you. This is a great time to buy your first home. As long as your walk through with an inspector went well you should be fine. Considering no one else has placed an offer seller may just want to get it off the market and if they want more they'll let you know so you'll still get a chance to negotiate.

 

[ellone]

Our realtor told us to not go below 3-4% of asking price (this also takes closing costs into consideration) we were very lucky in the fact that our counter was very good. Asking 325,000 our offer 310,000 + 7k closing he countered at 313,000 7K closing.

Of course a realtor would say that - he doesn't want you going too low to cut into his commission.

Hubby and I looked at a house last week. We like it, but no way is it worth what they are asking. It's a large ranch and most people here would rather have a 2 story. Hubby looked at recently sold large ranches for the area and the price per sq ft was nowhere near what they were asking.

Hubby went to look at it again today with a friend of the family who is now a contractor (and used to be a realtor). Some problems he could see off the bat - support beams in basement weren't done correctly to begin with and the 'fix' they did was shoddy. Deck also has a support beam missing. Central air compressor is also near the end of its life. Plus other smaller things.

We are going to make an offer 15% less than what they are asking AND we will ask for concessions. The friend of the family didn't think it was out of line.

 

[Rafiki31]

If you think the house is truly worth that little then I would think it is ok. If you are banking on their desperation, I would say watch out for karma. What goes around comes around. Realtors actually don't take that much of a hit based on sale price if you do the math. It is better for them to make a quicker sale rather than haggle over the price. Think about it 6% of 169000=10,140 whereas 6% of 145000 is still = 8700 which is not too shabby. They don't get the whole 6% either some goes to the other agent and some to the broker. So when all is said and done, that extra 1000 split that many ways doesn't add up to enough to haggle over. The realtors best bet is to have a sale asap.

 

[Hannathy]

The worst that can happen is they say no. In this market I'm sure there are more houses you could buy. That house is costing them money every month it is on the market and the market isn't getting any better any time soon.

It is business, too many people buy a house with their hearts instead of their brains. It isn't your responsibility to make them happy or care about their egos, you are buying a house and trying to get the best buy you can.

 

[cats mom]

Assuming they paid $129,000 in August 2004 (for ease of running numbers) their current asking price of $168,900 puts them at approx 3.9% annual appreciation, which is not out of line based on long term averages. And your offer of $145,000 puts them only at approx 1.6% annual appreciation.

So they may very well be offended by your offer, especially if they've bought into the myth that housing always appreciates. But the reality is that appreciation is not a given. And housing prices can and do decline.

If they've been actively trying to sell for a year and a half and haven't received any offers, my money says they're priced too high for current market conditions.

Given the nonsense I witnessed during the housing bubble in my location, I'm not convinced of the wisdom of pricing via comps. Personally I now call it the greater fool pricing scheme. But I guess it's what we have to work with. If sold comps support your price, don't worry about your offer being too low. You're right, they might not accept it. But then you'll be free to continue your search and hopefully find another house that works for you juat as well, and one that you won't have to over pay for.

Good Luck!

 

[Helene]

I also forgot to mention they paid 129,000 7 years ago. I heard around town they are desperate to sell it; and my realtor told me that as well today.

I'm not trying to insult them; but I'm also not going to pay way above and beyond its worth!
Even if we did offer near asking there is no way it's going to appraise for that!

Don't worry about offending them. Handle it like a business person....make the offer you are comfortable with. They take it...they take it. They don't ....well that's what negotiations are all about.

We had a similar situation when buying our home 12 years ago. The owners were divorcing and their initial asking price was $120K. It was on the market for more than a year before we even looked at it. By the time we saw it, they were down to $90K. The home was built in 1973 and the original owner hadn't done much in terms of updating it, it needed alot of work. DH was willing to only offer $60K...I was mortified, afraid of offending them, etc. Well, because this was the one issue standing in the way of finalizing the divorce settlement, they accepted the offer.

We've invested a good deal of money back into it, but it is now appraising at $190K.

Good luck...I hope you are able to get a good deal as well

 

[alexensmom]

Congratulations! There is nothing more exciting and scary at the same time as buying a house. We have been in your position several times. We have made offers before that we felt were fair for the market value. Even making an offer on the house where the owner was "desperate to sell." Most gave a counter offer. Only one was offended, but then again, their house has been on the market for four years now. Low and behold, their house is now reduced close to what our offer was three years ago! Anyway, you almost need to go into a contract like your playing the lottery. You make an offer based on your finances and a fair price to the sellers. Then you sit back and realize it is out of your hands and "what will be, will be." If you dont get a counter offer, then you re-evaluate your offer or decide to move on (which can still be heartbreaking) because the budget you have chosen for your family has be take precedence. If you do get a counter offer and its close enough to make a second offer, do a happy dance and then home inspection, home inspection, home inspection.

 

[timmac]

Depends on the comps in the area. I would think if it started in the 180's then 145 would be low, but if they paid 127 just 7 years ago that seems like high appreciation (our area certainly isn't like that) unless they put a lot of $ into renovations, etc.

I think OP said 129k was original purchase price, which means it's 12% appreciation. Given the changes in the housing market in the last 3 years, I'd say that's very high. If we were looking over a longer period of time (say 20-30 years) then I'd be expecting more like 3% per year, or roughly the rate of inflation.

The sellers may simply not realize that houses don't appreciate in value as fast as they may have been led to believe.

 

[timmac]

Assuming they paid $129,000 in August 2004 (for ease of running numbers) their current asking price of $168,900 puts them at approx 3.9% annual appreciation, which is not out of line based on long term averages. And your offer of $145,000 puts them only at approx 1.6% annual appreciation.

So they may very well be offended by your offer, especially if they've bought into the myth that housing always appreciates. But the reality is that appreciation is not a given. And housing prices can and do decline.

I hadn't read all the way through the thread when I posted my first reply, but yep, this is exactly where I was going

 

[dakcp2001]

I think OP said 129k was original purchase price, which means it's 12% appreciation. Given the changes in the housing market in the last 3 years, I'd say that's very high. If we were looking over a longer period of time (say 20-30 years) then I'd be expecting more like 3% per year, or roughly the rate of inflation.

The sellers may simply not realize that houses don't appreciate in value as fast as they may have been led to believe.

This is true. I bought my house for 275, with 20% down. I then redid the kitchen, put in hardwood floors, completely rewired and redid the plumbing. I updated the bathroom and purchased all new stainless steel appliances. The most beautiful fridge in the world!

I expected all these renovations to help imprive the value and I had planned to live in this house forever. LOVE this house. It makes me want to cry just thinking about it sitting empty and unloved. But I was forced to move for work or be unemployed so I had to do what I had to do.

Now it is listed for 199K and I am losing all of my downpayment and investment money. The house still is not selling, either. All the upgrades did not help the depreciation in my neighborhood which is filled with forclosures and short sales. No matter how many people say it is just a business decision, when this house sells I will be both relieved and heartbroken it is a very emotional thing for me.

On the other hand if it does not sell, there is the hope I can move back there eventually, but the carrying costs are putting me in the whole bigtime right now.

 

[kt_mom]

We're firm believers in trying for what you want.

We purchased our home about 3 years ago. Keep in mind it was a foreclosure. But when DH looked it up online he found that it had sold to the previous owners a couple years before for 275. Our realtor told us he thought the bank would list around 230. They actually listed at 207.

DH told our realtor he wanted to offer 175 with 5k toward closing and our realtor about had a heart attack. He told us we were crazy and the bank would laugh at us. But he finally put in the offer.

The bank countered at 200 and Dh wanted to counter at 180 but the realtor talked him into 185. The bank accepted the 185 and paid the 5k toward closing.

So I say go with your gut and try for what you want. The worst they can do is say no and you move on to something else. I was really nervous because I really wanted this house but DH said if they just flat out declined us we would have moved on and found something else.