Home buying thread

Kamven said:

I"m offering 245 plus i want them to pay about 10k in closing.

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That seems like a high closing cost. Are you buying the rate down or something?

I"m thinking of taking one of the three rooms and turning it into a game/office room and renting the other one out. I"m sure i could charge at least 500 dollars for a room + a garage spot, if not a little more. That would reduce my payments to 1100 a month or so. I also have no debt and no car payment. Which makes a 1600 mortgage payment on 3500-4000 a month (after taxes) a bit easier.

Cad said:

Even if you operate from the assumption that it will be difficult to sell later on (which is asinine, btw)

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I understand that living within your means is definitely necessary. I don"t want to sound like I"m advocating piling up so much debt that you just aren"t going to make it.

What I"m saying is that for many years (my whole adult life + more) we"ve been following the assumption that property appreciates. And as much as I blame stupid people for living outside their means for our current crisis, I also blame this assumption not being challenged. Banks really didn"t care if you defaulted on a mortgage 5 years ago- the property was worth more than you owed, so other than the headache/hassle there was no major financial risk.

Enter today- property isn"t appreciating. Hell, right now you have no idea what the value is, because things are staying listed for so long, so many foreclosure/short sales, and so on. So here"s the real question. If I lost enough money due to market shifts that it"ll take me another 5 years before I can even pull my downpayment out of my condo then it isn"t like you can turn around and sell your condo anytime.

I know on the greater scale, property appreciates. Just like any other investment. But here"s the difference- provided you"re don"t need the money for any reason, holding on to a stock for 5 more years than you planned is inconsequential. Holding on to a dwelling that you"ve outgrown for 5 years is... less comfortable.

And just to restate again, I"m not advocating going above your means. Honestly, had I done it again, instead of getting a newer condo (5 years old) a block from public trans in a perfect neighborhood, I"d buy an adequately sized house with a "tolerable" commute in a "good enough" neighborhood... probably spending the same amount of money.

So back on topic, I like the house + roommates idea. I understand I"m not in the majority, but there are people who do agree with that thought process!

Cad said:

Living in such a fashion that youneedyour paycheck each month or you"re screwed is juststupid.

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And just to bury the hatchet, I agree with this 100%.

I have ~2 years (annuities, 401ks, bonds, liquid cash, etc.) maintaining my standard of living before I"d run out. I"m just saying I might trade 1 year of "reserve cash" for not feeling trapped in a group living environment when I want to raise kids in a single family home.

1750sqft is just right imho , the extra bedroom is a waste unless you have guests and all but the rest of the space is very usefull at least for me.

I Have:

Big Kitchen: Big plus for comfort when making stuff and not being cramped, has breakfast table to
Dining Room: Great for having people over and eating a nice meal without tv trays etc.
Living Room: TV , couch, chair and coffee table... just right for a big TV
Finished Basement: Computer room, lots of space to work on stuff
Master Bedroom: Nice big master bedroom that is comfortable, dark at night and quiet.
2nd Bedroom: Office space to keep records, have work laptop etc. Contains a desk and some file cabinets
3rd bedroom: Guest room and reading room with bookshelves.

Update on the home search...

I"ve found a property that I"m strongly interested in. It"s in a well-established neighborhood with quick access to backroads I can take to work. I drove it this morning, and the commute is almost exactly the same as the time it takes from my current apartment. The home sits on a surprisingly large lot, is set back from the road, and the yard maintenance is low. There"s lots of trees for privacy, which I love.

The biggest hitch is the price. It"s priced right near the maximum of the range I was going to allow myself, so I"m planning to make an offer that"s fairly low and go from there. After viewing the house and having a contractor friend check the exterior, it"s obvious that the seller"s claim of renovations meant interior-only. The siding is showing some signs of wear, and at least one window sill needs replacing. The back porch is another problem area; it looks to have been a late addition to the house by a hobbyist. Construction quality isn"t nearly as good as the rest of the property.

None of the repairs are needed immediately, nor are they the kind of problems that would keep me from moving in. If I can work with the seller to find a price that"s agreeable and leaves me something to pay towards the repairs, I think I"ll be in business. The rest of the neighborhood is well outside my price range, but this particular house looks to have been a late procurement by an investor who"s gotten stuck with the home. It"s been on the market 8 months, and the listing says the seller is very open to negotiation, so I"m hoping I have a good shot.

Heylel Teomim said:

The biggest hitch is the price. It"s priced right near the maximum of the range I was going to allow myself, so I"m planning to make an offer that"s fairly low and go from there.

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Your first offer should be at least 10% less than the asking price, and probably double that or more in a market like this. You can always go up if they stick to their guns. I bought my house early last year at 20% under list. I made what I thought was a really lowball offer and they rolled over almost immediately. I should have asked for less. =/

Tallyn said:

Your first offer should be at least 10% less than the asking price, and probably double that or more in a market like this. You can always go up if they stick to their guns. I bought my house early last year at 20% under list. I made what I thought was a really lowball offer and they rolled over almost immediately. I should have asked for less. =/

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I made an offer 15% under list price. There are definitely repairs to be made, but my family is in the construction business and I can get them done for a fraction of what it would cost most people. My dad"s already made plans to redo the siding and replace all the windows for about 3-4k. The windows alone would cost 8k normally, and I"ll be adding a great deal of home value while reducing energy costs.

if I can get a price in the range I"m hoping, I"ll have more than enough left to make repairs and even some additions I want to do, like replacing the back porch. The current one is too small, and poorly done. With luck, I could have it rebuilt by the end of summer.

Tallyn said:

Your first offer should be at least 10% less than the asking price, and probably double that or more in a market like this. You can always go up if they stick to their guns. I bought my house early last year at 20% under list. I made what I thought was a really lowball offer and they rolled over almost immediately. I should have asked for less. =/

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It really depends on the seller. When we were negotiating with our builder, it got to a point where I was satisfied with what they had agreed to already and our agent felt we still had a little more wiggle room and we should try to get a little more more out of them (closing costs and bigger design studio allowance). Initially I was like "isn"t that asking too much" but he said no. He did say that you do approach negotiations differently if it"s an individual seller versus a home builder.

I have heard of many instances where some sellers are dead set on their price for whatever the reason (wants to make some money, can"t take that big of a loss, etc) and worse case get offended if the offer is too low (which I think is ridiculous in this market). My opinion is if your a seller, you should think long and hard on any offer as you may not get another one.

I think the thing to keep in mind with offers is have a drop dead limit you are willing to offer. If the seller is not willing to work it out with you, don"t get so emotionally involved that you can"t walk away. That was the advice we got, as long as your not emotionally invested, it doesn"t hurt to make a low offer. What"s the worst they are going to say, no?

Vandyn said:

I think the thing to keep in mind with offers is have a drop dead limit you are willing to offer. If the seller is not willing to work it out with you, don"t get so emotionally involved that you can"t walk away. That was the advice we got, as long as your not emotionally invested, it doesn"t hurt to make a low offer. What"s the worst they are going to say, no?

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This is what I"m trying to do. When I first spoke with my real estate agent, I was very clear with how much I would be willing to pay up front, and what my limits were on a mortgage. I didn"t want to (and have no intention to) buy as much as I"m qualified for. I"ve managed to zero in on exactly what I"m after, and only look at properties that fit those criteria.

The house I offered on today is really great, and I"m definitely in love with the idea of owning it. However, I"m not going to allow that to interfere with the purchasing price. If the seller won"t play ball, I"ll walk away. Despite offering 85% of the list price, I can assume based on sales figures and the work done to the home that the seller will still be making a profit. He bought the home for 109k last February, and I"m offering him 135k now (it lists at 159k). Last spring he installed new countertops, new flooring and carpet, but he did no work to the outside. It"s about a 20 year old house, so it"s going to be due for some additional work soon. If he accepts my offer, he"ll pocket about 12-15k in a very bad market. I feel like it"s a legit offer in spite of being low.

Cad said:

Just as a side note, do you have a buyer"s agent or is "your" real estate agent just the person who has driven you around to properties and conveyed offers to the seller? If the latter, that is not your real estate agent, and telling them your limits obligates them to communicate that info to buyers and use it against you.

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It"s a buyer"s agent. I"ve been doing most of the property research myself, which he"s been supplementing with new listings that match my criteria. I have the seller"s agent"s name, but I have"t had any direct communication with him. My two points of contact have been my buyer"s agent and the property manager for the home owner"s association. I had to call them and ask about approval for some exterior repairs which the sale is contingent upon.

Something else I found out for anyone who"s in the market. The recent first time buyer tax credit of $8,000 can be applied retroactively to your taxes this year. If you"ve already filed and are in the market, you can file an amended return and receive the money back. If you haven"t filed but are planning to make a purchase soon, I would recommend applying for an extension on your taxes this year, that"ll make it easier.

The home I purchased listed at 246k, I opened with 208k, and we settled at 218.5k with them paying closing. That was a year ago, so probably do better now? And WTB that credit retroactive to Jan 2008 plz.

Another update... this one I need some help on.

I received a response on my offer. The seller"s agent claimed that they were considering two additional offers at the moment, and to make our highest and final offer by 9am tomorrow.

Now, this immediately threw me off. The house has been on the market since last June, so the likelihood of three simultaneous offers in this market is pretty hard to believe. Beyond that, I"m told that most offers are considered and either accepted or rejected within 48 hours. If that"s the case, then I"m wondering when the other offers would have ever seen the house. I was at or near the property for most of the weekend, and saw no one else at the property, nor evidence that anyone else had been there. If there are other offers, they either haven"t been to the house in days, or were made sight unseen.

What do you guys think? Am I being hard-sold by the owner? My inclination is to think they"re bluffing, but regardless it puts me in an odd situation. I"m quite partial to the home. It fits all my criteria, and is one of the very few choices within my search area that has met all my expectations so far. However, we"ve already established how important it is to not let emotion cloud judgement, so I don"t want to significantly raise my offer out of fear.

I"m considering raising my offer from 135k to 140k, which is right around my own cutoff point, but still markedly below the list price. If there really are other offers, they"re probably similar to mine. However, I feel like it"s just a tactic. 140k is the price I was willing to negotiate up to, so if they"re asking for a final offer, that"s really what they"ll get. If they won"t take that, I"ll walk away and find another house.

Opinions?

The "other buyers" thing is a classic lie from people selling a house. Even if its true, its a bad reason to raise your bid.

I would reply with your original bid. Only move if you feel you really low-balled them (like i did, but I probably could have been more aggressive and saved more) and always had a higher price in mind for a realistic buy point.

I have to be honest with you when I say I think you allready bid too high. Prices are down not up in the last year and the renovations he did are probably worth 15-20k max.

If I could get 20k more for my place than I paid last year, I would take it in 30sec and buy something bigger hehe.

CnCGOD said:

The "other buyers" thing is a classic lie from people selling a house. Even if its true, its a bad reason to raise your bid.

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That"s my thought exactly. However, if they"re genuinely asking for a final offer, then I"m willing to tell them up front how high I"ll go, but not a cent over. I won"t accept that there are other offers and they want my "highest and final" if they plan to negotiate it further after the fact. The neighborhood is selling at 190 to 200, so even at 140 I"m still coming in well under value.

I spoke with both my parents, who recommended I come up a little but not much, mostly to avoid having to deal with counter-offers.