Home Buying in Midwood>Question Details

Lisa, Home Buyer in Brooklyn, NY

I am interested in a property but I believe that it is very overpriced. Having looked at several comps within

Asked by Lisa, Brooklyn, NY Mon Jul 14, 2008

.5 mile radius, I figure that the asking price would be fair only after 150K was put into renovating it. The house is in original condition and needs extensive repairs. Is it insulting to figure in repair costs and offer 20% below asking price if I am a truly serious buyer? Thanks!

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Antolin Du Bois, CFP®’s answer
BEST ANSWER
Who gives a s--t if the seller is insulted. If he needs to sell and yours is the only offer, he will sell. If he doesn't need to sell, he will either counter or not accept. In this business, people's feelings get hurt, wives get upset, buyers get anxious, its all emotional, but at the end of the day, when a deal has to be made, it gets done, even if everyone at the table wants to claw each other's eyes out. Ideally that is not the case, but sometimes it happens, and that is that.

Consider this: when the market was booming a few years back, were sellers worried about "insulting buyers " when they asked ever higher amounts? Why should you worry about that now? Its a zero sum game Lisa, and more money to him means less for you. Forget about 'insulting" him, its simply about a meeting of the minds, feelings notwithstanding, and if you two can't find a meeting of the minds- happy, sad, nuetral whatever- then move on.
1 vote Thank Flag Link Fri Aug 22, 2008
Dear Lisa,

Whether or not you are a first-time buyer, it can be difficult deciding what is a good offer to make when you find a house you like. I think you will find the following guidelines useful.

Before you make offers, you have to know your maximum financing amount/purchase price.

First things first: when making an offer, focus on what your monthly payment will be for the mortgage financing, including taxes and insurance. If that payment is within your means, then your Mortgage Banker will determine the maximum loan/purchase price for you based on all the factors of the monthly payment, your down payment and your mortgage qualifications.

Begin making an offer with the following standards:

1. WISH LIST. Does the home meet MOST of the requirements from your Dream-Home-Wish-List? The Dream Home exists only in our minds; it's NOT out there waiting for you to stumble across it one Saturday afternoon. But you can find the right home using your Wish List. When you find the home that meets most of your requirements from the wish list, then it's time to make an offer.

2. FORGET LIST PRICE. Based on your own research, shopping in your chosen area, select the price you're most comfortable with, regardless of list price/asking price. In other words, you'll find a home listed at $268,000, but you've seen at least a dozen other similarly constructed homes in the immediate area priced or sold at $235,000. What makes this home so special that it's priced $33,000 more than the average price? Remember, your Lender will appraise the home based on similar homes and those prices.

3. MAXIMUM OFFER. Never exceed the price based on your mortgage qualifications, no matter how much you LOVE the home. You have to be able to afford the payment for the next thirty years. That in-ground swimming pool you love isn't going to pay the mortgage for you!

4. OFFERS ARE NOT PERSONAL. An offering price can NEVER be misconstrued as an insult to the homeowner. This is business; you're not going to hurt anyone's feelings! Make the offer based on a price you're most comfortable with!

5. OPENING OFFER. NEVER open with your maximum offering price. Test the waters with your opening bid: you want to see if this Seller is a SERIOUS Seller who understands this is a BUYER'S MARKET. If there's no reaction to your offer---assuming the price you offered is within the reasonable range of current market prices---you may be wasting your time with this home/Seller. It might be time to move on to another home.

See my "Five Steps To Making An Offer" for the best way to negotiate on your home purchase.
http://www.tcurranmortgage.com/2010/04/09/five-steps-to-maki…

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Tue Jun 19, 2012
we do renovation loans up to 97%. You can finance any repairs if you find a home for a discount. sunny_hong@countrywide.com
0 votes Thank Flag Link Fri Aug 22, 2008
Some people will take offense and others won't. I recently had an offer for exactly 20% below asking and the agent said sorry about it when she gave it to me. I took it with a grain of salt but my wife got upset. The funny thing is when we made an offer on the house we just purchased our agent suggested also asking for 20% below to start and my wife didn't have a problem with doing that. Go figure!!
0 votes Thank Flag Link Mon Aug 11, 2008
Hello, actually you are correct. If the comps you have are for home in mint or renovated condition and the property you are interested in is in the same price range but needs over $100K in repairs then you have every right to ask if the repairs are either fixed or to give you a credit for the repairs.
Web Reference: http://www.KandHhomes.com
0 votes Thank Flag Link Mon Aug 11, 2008
You are wise to ask this question. If you are not working with a Realtor you are at a distinct disadvantage. That is where the information, experience and good judgment lies. You make your offer based on your best estimates but do work with a Professional to get the job done correctly and well.
0 votes Thank Flag Link Fri Jul 25, 2008
You should really have a broker working with you on this transaction and all transactions. We are here to watch your back and help guide our clients through any situation that arises.

With that said, it is perfectly reasonable to deduct the cost of repairs from the offer. If they are pricing it too high for the renovation level or condition of the property, your offer should reflect that. Is the home for sale by owner or represented by a broker? If the owner has a broker, you really should have one. And if it's directly with the owner, you both should be employing lawyers to negotiate for you.
0 votes Thank Flag Link Mon Jul 14, 2008
One way to present such an offer so that the seller is not insulted and also takes your offer seriously would be to tell them that you are not meaning to say that the number you are offering is what the house is worth, but you are meaning to say that this is what the house is worth to you. That way, the seller is less likely to take offense, and at the same time, they understand that there is very little room for improvement in your offer, if any. Good luck with your purchase.
0 votes Thank Flag Link Mon Jul 14, 2008
I believe you should pay what you believe the value of a property is. If it has laminate counters and you want granite, that should not be the responsibility of the seller. If the roof is on its last leg, certainly that is something to consider in making your offer.
Web Reference: http://GailGladstone.com
0 votes Thank Flag Link Mon Jul 14, 2008
Give me a call at (718) 698-2179 or ( 646) 302-1470 at Prosperity Real Estate Group, We are on Richmond ave as well, I can help you answer any questions you may have, this is not commitment to come with us. YOu can come and inquire about this even if you are already working with someone. Buying a property is a constitutional right, and we are here to make sure you are not provided with erroneous information.

My Name is Caesar Galindo Office manager, and Law Student at CUNY Law School.
0 votes Thank Flag Link Mon Jul 14, 2008
You need an agent involved working with you providing feedback us on Trulia here we dont have all the facts to assist in a comment if you work positively in concert with your real estate agent I am assured you will have solutions to all of your questions resolved. Good luck http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Jul 14, 2008
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