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I don't want to insult the seller or lose the house but the improvements are significant. Is offering $210 too low?
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Posted: Jan 01, 2009 at 9:14 PM
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Hi Janice:
As has been mentioned by others, you should determine an as-repaired value which you would then weigh against the actual cost of repairs to determine how to structure your offer.
However, one problem you may have, and assuming you will be obtaining a loan to fund the transaction, is that that the property condition may be such that the home will not qualify for conventional financing.
If that's the case, you must then either 1. Obtain owner financing, 2. Find a hard money lender, 3. Complete lender required repairs prior to closing.
As underwriting standards have become more stringent, it has become difficult to escrow for repairs, so that may not be a viable option.
Hope this helps!
Jan 2, 2009 at 11:52 AM
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Janice,
First of all, Judi is correct. Any suggestion you receive from this forum regarding price is very sketchy at best, unless it comes from someone working the specific market you are in. You need someone who will do the comps for you, as often as it takes. Doing comps isn’t as easy as it seems either. It takes doing a lot of comps before you get good at it. If your agent has only done comps for his/her sellers, then maybe he/she isn’t qualified enough for this market. Someone doing 10-15 comps per week definitively knows the market better than someone who does 10-15 per year.
Secondly, if you feel you need to check everything your agent is telling you, then maybe he/she is the wrong agent for you. A real estate agent certainly wants to sell a home for the most money, but by the same token, a sale at a lower price, if warranted, is certainly better than no sale at all. If you don’t trust your agent, then you need to find someone you can trust, after all, this is a buyer's market.
Happy house hunting!
Jocelyne
Jan 2, 2009 at 7:20 AM
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Hopefully your are working with a Realtor-because that is one of the reason you should be. Asking prices should have some for of relevance as to why so low; talk to a Realtor.
Jan 2, 2009 at 5:40 AM
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Janice,
Are you working with a Realtor,if so they can best advise you in this situation.
IF not then I would suggest you consult with a Realtor. That is you best avenue.
Come from a position of contribution. The only way.
Rick.
Jan 2, 2009 at 3:31 AM
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This really depends on many factors. Our advise to you is to consult with a reputable Realtor who has experience in the area in which the property is located. The reason we suggest this is because they will know the true value of the property and can guide you into making a reasonable offer that will benefit you and not offend the seller. The Realtor will also be able to show you the actual houses that have sold in the area and there true selling prices.
Jan 1, 2009 at 11:19 PM
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Thanks, Judi and Jim. Appreciate the quick help!
As some more information about my situation, I do have an agent but I'm basically looking to do a little of my own research to make sure I am being told the right thing. I want to play this smart.
The renovations are not huge but it will add up. The kitchen is very outdated and needs appliances, one bathroom needs updating and the roof I'm being told only has a couple more years before needing to be replaced. I figured the more cosmetic improvements should be around $15-$20k and then the cost of the roof.
My agent did run through a market analysis and the house is somewhat overpriced for the neighborhood. Should be in the area of $230k for the house I'm looking at. That, plus the $20k in renovations got me to $210. My agent is saying to come in with an offer at $225.
Jan 1, 2009 at 10:21 PM
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Have you done the comps? have you figured out how much it is gone to cost you do the repairs? Are the house moving in the Neighborhood? are you using a Realtor? Make sure you use someone who will do a really good comparative market analysis. Make sure you know how many REO and short sales are around you this will effect the price down the road.
each neighborhood is different DO YOUR HOME WORK MAKE A OFFER YOU CAN LIVE WITH.
Jan 1, 2009 at 10:00 PM
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This should be something you discuss with your buyer's agent. Market values vary significantly and some markets are increasing while others are decreasing these days. Your agent can provide you with comparable listings, what has recently sold, what it sold for, how did those properties compare to the one you are interested in, what are market conditions in the neighborhood where this property is located, of the ones that are on the market today, how does this property compare in terms of size, location, floorplan, ameneties, condition, etc. What type of financing are you using? Will you have sufficient reserves after closing to cure the defects?
If you don't have a buyer's agent, you might want to consider hiring one to guide you. Particularly in THIS market, everything is so volatile you'll be much safer with good guidance from someone who knows YOUR MARKET. Do you know how the property is priced compared to what it's likely market value is? For someone here to tell you whether the price you want to offer is ok, or too low, or too much, without knowing all the specifics is like throwing darts at a dartboard blindfolded...you might get lucky and get a good "number", but you might also miss the target completely.
Best of luck!
Jan 1, 2009 at 9:28 PM
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