Home Buying in Burnsville>Question Details

shrema, Home Buyer in Minnesota

I am planning on putting an offer on a house, need suggestion on bid?

Asked by shrema, Minnesota Sun Feb 17, 2008

I am looking at a house which has 4 bdroom, 1 full bath and one 3/4th bath. The basement is 90% complete, (need some paint and finishing touches).
This house has everything I am looking except for that it only has 1 bathroom around the 3 bedroom and one 3/4th bathroom on the basement. (I wanted to have a private attached bath for master bedroom). The house needs partial new carpet and fixtures.
The seller just dropped the price to 260 from 270. (initial asking price was 300 )
I would like to put an offer on the house but I am hesitant of the amount, how much to offer.
Btw, this is a short sale.
Looking online, I see that people get houses 60K off the asking price.
Based on real state value in trulia etc, its rated around 270.
Can you guys suggest what my initial offer price should be?
Tips & Ideas would be appreciated as I am a first time home buyer.

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8
Todd Norsted’s answer
Hi Shrema.......

Have your Realtor do a market on the home including those sold in the area recently, and the answer should be simple. I'd be aggressive on the offer, as it is a short sale, but you need to offer what you're comfortable with. Ask yourself how you'd feel if you lost this home?

I hope that helps......

Thanks, Todd Norsted
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Mon Feb 25, 2008
BEST ANSWER
There's no predicting on a short sale whether the lender will approve or not. (Well, there are some ways to get a better sense--condition of property, how much of a "bath" the lender will take, the BPO, etc.) But even a full-price offer on a short sale is no assurance whatsoever that you'll get the lender's OK.

So, what do you do. First, you determine the real value of the house. Not the listing price. Not how much it's been discounted from the first listing price. Not how much it previously sold for. Not the tax assessment. No. None of those. Determine the darn value. Look at the comps. Factor in the condition of the property versus the comps. Once you've done that, that's your ceiling. Your maximum price. Go one penny above that, and you'll be overpaying. (One additional comment: If there weren't any offers at $270,000, then we know that $270,000 was too high, regardless of any other calculations. It may be $260,000, or some number between $260,000 and $270,000. Or it could be less than $260,000).

So now we've established the ceiling.

How much can you afford? Reasonably afford? Take that number. Put it next to the ceiling number we've just established. Take the lower of those two: what you can afford and the ceiling number. That's the most you can spend on the house. That's your revised ceiling.

Then, and only then, do you make an offer. You can make it at your ceiling price--essentially paying either full price for the property or paying up to the maximum you can afford. You COULD do that. I personally would suggest a somewhat lower number than your ceiling price. How much lower? That's up to you. Maybe 5%-10%. But that's your call.

As the other agents here note, short sales can take a long time. They can be frustrating processes. Frustrating both because of the time involved and because of the sometimes seemingly irrational decisions of the lenders. So be prepared.

Hope that helps.
0 votes Thank Flag Link Mon Feb 18, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Shrema,
If you want the house you should be prepared to offer 90 to 95 percent of asking price or more. Your Realtor will be able to tell how close to asking price the average house in that MLS district sells for. I wouldn't expect 60k off, at that point the bank will just go through with the foreclosure.
Michael Doyle Realtor
0 votes Thank Flag Link Mon Feb 18, 2008
It sounds like you don't trust (or value) your agent's professional opinion. While it pains me, it does happen.

I have wrote offers on these short sales several times in the past few months and what the other agents here are stating in regards to the mortgage amounts, situation, and even whoever is running the file at the bank can come into play. Do a little research on the previous sale of this property and figure out where the bank might be willing to go.

Also, as Brian stated, prepare for a wait in the bank's response. I wrote one offer for a client over asking price on a short sale. We received our response from the bank 1 1/2 months later and it was "No". Just because they have a price listed doesn't mean that the bank will accept the offer. They might chose to just let the foreclosure run its course.

Keep talking with your agent and voice these concerns to him/her. If they have dealt with this type of property before, their input could prove invaluable. Have them show you why they think that a full price offer is necessary and have them back it up with some numbers.
0 votes Thank Flag Link Sun Feb 17, 2008
I do have a real state agent but he is suggesting me the full price as an offer. Trulia analysis etc shows house is under priced by 10K. But, the county taxes evaluation is 10K less than asking price.
0 votes Thank Flag Link Sun Feb 17, 2008
There are many things that need to be answered before going after a short sale. Has the sheriff sale happened yet? Is there one or two mortgages on the property? How defiecient are they on the mortgage(s)? Has the listing agent worked out short sales in the past? What is the hardship? You could be in for a one to three month wait for an answer. A savvy buyers agent with short sale and foreclosure experience can guide you through this process.
Web Reference: http://www.nowshowingmn.com
0 votes Thank Flag Link Sun Feb 17, 2008
I would advise you to use a licensed real estate agent! It will not cost you anything because the agent will get paid by the seller. You will also have somone representing your best interests. I would not use the listing agent because they can advise you through dual agency but their representation is limited. If you would like more information on what price this particular home is worth click on the web references link below. I am always here to answer questions and help in anyway I can.
0 votes Thank Flag Link Sun Feb 17, 2008
Hire a buyers broker to work on your behalf. Let them do the work on determining what a good offer is for this home. It doesn't cost the buyer anything to have a professional working on their behalf. The money that a real estate professional makes for selling a home to a buyer comes from the seller.

It pays to have a professional working in your best interests. Without seeing the home, everyone here would just be shooting from the hip and guestimating prices. That doesn't do you any good.
0 votes Thank Flag Link Sun Feb 17, 2008
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