get moving on your home purchase now before time runs out on you!
Let me know if I can provide any more details for you,
Jeff Marr, Stanford Mortgage
Thank you for coming back and telling us ( switching to Paul Harvey's deep radio voice ) "the rest of the story"
It sounds like you and your agents are smart and savvy. I expect you will eventually get a good deal on this or another house.
Your first offer does not have to be your final offer so just get started, if you really want the house.
I think you said that your realtors have asked to present the offer directly to the seller. That is allowed, but then your realtor is supposed to excuse themselves so that the seller can talk directly to their agent confidentially. That might be the best approach, if your realtor can make it happen, like you said.
Good luck! The house sounds wonderful.
The house has solid comps of $350k per my realtor (very knowledgeable in my opinion). I have looked at gobs of houses and I think he's spot on.
It is not literally a Nehemiah loan, per my lender (Vitek) but a similar one. There is no other option for us.
We will only be recarpeting. No ugly wallpaper (shockingly). Just neutral/boring paint. Yes, dated kitchen and dated/original bathrooms but, interestingly, all are in pristine condition and kitchen has all new appliances (they put a new KitchenAid stovetop on top of bumpy brown and white tile!). We would not have to replace any appliances til we're ready to remodel. Aged widower/owner has housekeeper and I have never seen a house this dated so squeaky clean with dated peach tile in bathroom with sparkling white grout that has no cracks or anything. Matching peach tub looks like new. Master bath walls are tiled with pale blue tiles with white doves/birds flying on them (sort of 3-D). I cringe but, again, it was amazingly spotless and well kept up. We will do nothing to it initially beyond paint and carpet or flooring. Every room has a different bright colored carpeting (lime in master!) and all 3 bedrooms, hall and living room have original hardwood beneath. Sigh.....
It's 2072 sq. ft on a 9700 sq. ft lot with pool. Built in 1960. Yes outside front and back totally fine for now. Pool was resurfaced 2 years ago.
Initial price of $409k was totally unrealistic and unsubstantiated. I think seller's agent advised seller very poorly. Part of our offer is the condition that our pair of agents present the offer. We do not think the seller's agent could present it objectively. Seller's agent was bloviating about all the houses he had sold in the neighborhood and how much he got for this one or that one. When I asked "how long ago did you sell them for that price?" he replied stating a time that was at the height of our local market 3 or 4 years ago with the last sale being last November across the street (literally) for $364k. That is not the benchmark for setting a price now. Selling agent is stuck in a time warp and as my male realtor said "he is probably doing realty 4 hours a week as a retirement hobby" though he had been in the business a long time. He was rude when we first walked in and told our agent, in my earshot, that those Nehemiah loans were a "dead horse". He said it in a scoffing tone. I kept my mouth shut as did my agent but I thought he was ignorant to make any statement not knowing one thing about the prospective buyer who just walked into that house.
My agents are a man/woman team who are professional, kind, savvy and very nice friendly people. It took me 2 months and by talking to 8 other agents before I committed to them. They are fantastic! They are a couple and the guy has a very gentle demeanor. I know he'll be great when it comes time to present the offer. When we looked at the house a 2nd time, he stayed outside with the elderly owner and had a really nice chat with him while we looked around. When I saw it with seller's agent present, he followed us room by room and would not stop talking. It was irritating and very distracting. He seemed to think everything in this dated house was way above par and it might have been.... 20 or 30 years ago.
I am glad to know that it's typical to expect a 3-day reply. I can live with that.
To all, again, loved what I read so far and look forward to more dialogue!
First, get your analysis of property values, including structural/cosmetic upgrades to bring it in line with your comparative properties. If you can (but it sounds like the house is occupied) see if you could have a contractor/knowledgable person go with you to assess costs of the items. (an experienced realtor might have some ideas of cost but they're normally not extremely technical on items such as electrical or plumbing- costs on painting, carpet, counters are easy...) Other considerations are how long it's been on the market, etc. That should give you some idea of price/value.
The second item is terms. Sometimes people balk at the Nehemiah program (this is not a specific loan but a home assistance program run by a non-profit agency) because they don't understand it. If you provide a little education, along with your offer, you might be able to relieve his fear. The key to a seller's decision is normally highest net sales price, and 'easiest offer' to guarantee a close of the transaction. So if your terms are more difficult, consider that they won't be as flexible on the price.
But the bottom line is- do they have a better offer, and how motivated are they to sell?
Forget the 48 hour question....it really has turned out to be a non-issue (since banks haven't respected our timeframes in our contracts at all and they've got the majority of sales in the market right now). After three days, if you've left it standard, your offer is expired but I'd still send a cancellation of the offer notice on your short sale offer.
Good luck to you!
On the other hand, it is a buyer's market and anything is worth a shot. If the Seller is serious about selling, he may consider it. In my area, an offer that's 10% off the asking price is not considered unreasonable. Regarding your loan, the Nehemiah program is expected to end on October 1st so if you don't think you will close escrow by that point, you will want to look at other options, like perhaps Cal FHA - your lender should be able to give you some direction. And in California, the typical time allowed for a Seller to respond is 3 days, unless you specify otherwise in the contract. I'm not sure shortening that by 24 hours is a big deal, unless you think other offers may be coming in.
So, that's my advice. I would ask your Agent for new comps (no more than 3-4 months old) to get a true picture of the neighborhood & how homes are selling. With all the short-sale & REO competition out there, traditional sellers are having to deal more than ever to get their homes sold. So, I hope this helps and good luck!
This time I don't.
Most of what Don describes is cosmetic in nature. - The lender cares that the house is structurally intact, its systems are in good operating ondition, ,and that there are no health or safety problems.
The fact that the house needs updating will not stop the lender from making a loan. It may result in the property having a lower appraisal, but it is still lendable if the problems are only stylistic and decorative.
Paula brings forth an important new issue. The Nehemiah progam is either in limbo or about to be shut down or is on temporary life support,(depending on who you talk to). Even if the loan officer can show that this loan is approved prior to the cut off date, the sellers agent will probably continue to be skeptical about the Nehemiah program.
If you were my client, I would advise you to make the offer that you feel comfortable at without regard to whether you felt it was fair to the seller, or had a strong or weak chance of being accepted. I would tell you that the higher your offer, usually the better chance you have to be accepted and the lower your offer, the more chance your offer will be rejected. You probably would already know that, but buyers ( in their own interest) sometimes forget that sellers prefer good offers to low ones.
Buyers tend to put a lot of stock into the psychology of how long until the offer expires. That stock is overvalued. The seller is not going to rush into a deal they don't like because of a short expiration period.
The standard time on the CAR purchase form is the third day after the offer. You can make it anything you want.
I can say that standard offer acceptance, by contract default, is 3 days. When I write offers, I generally give the seller about 24 hours to respond, depending on the circumstances.
I can also say that Nehemiah will fund until about October, and after that, it goes away.
For comparison purposes, I closed a Nehemiah sale last month. The home was listed at $260,000. My buyers paid $235,000. The seller paid their down payment and closing costs. The seller also put on a new roof prior to close of escrow, paid for all the termite work, paid escrow, title and transfer tax fees, and gave the buyers a home protection plan. You can do the math and figure out how much the seller gave away. :)
You really need to know what the comps are. You think it's $350,000, but you really want to make sure.
If that's the case--and I don't know Sacramento at all, and I only know the house from your description of it--you still may be going in too high. (Even though the seller probably wouldn't welcome an offer of $342,000 on a house priced two months ago at $409,000.)
Consider: The carpeting will be a minimum of several thousand dollars. You note that the house is "horribly outdated." The bathrooms probably have the lime green tiles, right? The kitchen is from the 1960s or 1970s: Yellow double-oven. Painted wood cabinets? (Or, from the 1980s, those Euro-style cream with the brown trim.) Formica patterned counter top? (Or, 1980s, butcher-block Formica.) There's some wallpaper, probably in the baths, maybe the living room, maybe even a bedroom. That'll have to come down.
Outside, there's nice landscaping, but seriously overgrown. Same in the back yard. In fact, the trees are so big that there isn't much lawn anymore.
How am I doing?
Depending on the size of the house, and assuming no major problems (roof is OK, HVAC is OK), you'd still be looking at $20,000-$30,000 to really bring it up to today's standards.
So: Consult with your Realtor. If you don't have one, get one. Get the comps. Find out from the Realtor what some of the major drawbacks are. And while Realtors aren't contractors, some can give you decent ballpark estimates on the cost of rehabbing.