Home Buying in Collegeville>Question Details

Slp0313, Home Buyer in Collegeville, PA

When asking for seller assist how low can you offer on a property in the market today?

Asked by Slp0313, Collegeville, PA Wed Nov 4, 2009

Being a first time home buyer, I'm not looking to go out of my means. I found a townhouse property listed at $179k. The property is 33 years old and in ok condition. I would like sellers assist, but unsure how low to go with my initial offer. My realtor stated I should go $4k with sellers assist, but there's also not much room to negotiate the price. Any suggestions?

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Keep in mind Sellers assist has to be an amount allowed by the lender
0 votes Thank Flag Link Thu Jan 21, 2010
Juat about everything is negotiable in your offer to purchase, this includes the amount of the seller assist you request. Have your real estate agent check recent comparable home sales and determine if these sales included seller assist and what percentage has been typically paid in the area of your desired home purchase. Using the highest and lowest recent sales prices and knowing what seller assist was given will be helpful in guiding you and your agent through negotiations.

Good Luck!
0 votes Thank Flag Link Tue Jan 19, 2010
The amount of seller assist reduces the net to seller . Take it into consideration and base it on comps for the area and the type of morgage. The price you offer should be based on recent sales and upgrades etc. Sometimes the listing agent will tell your agent if there are otehr offers coming in , you can take it into consideration as well.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Sun Jan 10, 2010
So if they are asking $180,000 and it needs some work, what do you think the property is minus the cost of work?

Also how many days on market?
0 votes Thank Flag Link Fri Nov 6, 2009
The owners had an appraisal done about a month ago at which it was appraised at $180k, but also required some additional work to be at that price. New shingles had to added to the property, fence repair and some required painting. None of these items were repaired to date
0 votes Thank Flag Link Fri Nov 6, 2009
Well your friends are suggesting go 15k lower based on what values? Lets say its priced right. Homes are selling at asking or slightly less than asking if priced right.

What is the house truely worth? Did your realtor say a price they think it will appraise for?
0 votes Thank Flag Link Fri Nov 6, 2009
I'm currently approved for an FHA loan...so I plan to put 3.5% down on the property. In speaking with my realtor, I found out that the property was originally purchased back in 1995 for $87,250.00 The owners now have it on the market for $179,900. I tried searching online what the appreciating value is per year, but was unable to locate such information. Some specifics on the property, it's a 3bd, 2.5ba with about 1575sq ft. Has oil heat and hot water. A few people told me that I should go 15k below what they're asking with sellers assist. I believe closing cost is in the neighborhood of $8k. Any suggestions or thoughts from another point of view?
0 votes Thank Flag Link Fri Nov 6, 2009
How much money do you have to bring to the table? Do you NEED more than $4,000 in assist in order to make the deal happen?

What about using some cash to do a buy down? How long do you plan on living in the home?

This is another option to consider in terms of saving money. Discuss with your mortgage professional what the scenarios would look like for you if you bought it down 1 point. But the only way I would do this if you can afford the property at the current rate. Consider the extra savings gravy. Because adjustable rate mortgages were built on the "im getting a promotion in a year so Ill be able to afford it" concept. If you can afford the mortgage at 5.5% or whatever you were quoted great. Getting it at 4.5% for the life of the loan if it makes sense numbers wise is icing on the cake for the deal.

Sean Dawes
0 votes Thank Flag Link Thu Nov 5, 2009
Good Morning Slp,

There is no formula when making an offer on the house. As stated below you should have a complete list of all the comps in the area. I believe I actually know which home you are speaking about. It is located in Perkiomen Woods. Also as suggested before get your closing costs together with your Realtor and figure out what it is you need to make the deal happen. If you are purchasing with a conventional mortgage with less than 20% down then you can receive a 3% Seller Assist and if you are purchasing with FHA a 6% Seller Assist depending on what the seller is willing to accept.

As far as the pricing, remember when you ask for a seller assist you are in essence offering that much less for the property. For instance if the property is 100,000 and you want a 10,000 Seller assist you are offering the seller 90,000. Your Realtor should have a good idea of where you are financially, should have a good understand of not only the Collegeville Market but that particular development and guide you.

Sean made a good suggestion with the escalation clause which is always an option. But I can tell you that homes in this area are selling much more quickly and you may not have much time so get the answers quickly. Good luck with your purchase.

Jennifer Daywalt, Realtor
Re/Max Results Realty
Top Realtor 2004, 2005, 2006, 2007, 2008
Author of "Ask the Realtor" every Saturday in The Phoenix
610-999-7693 Direct Line
610-489-7355 Main Office
Licensed in PA since 2001
0 votes Thank Flag Link Thu Nov 5, 2009
Have you been provided a worse-case scenario snapshot of your anticipated closing costs? Have you reviewed a comparable market analysis of the townhouses in and around the subject property? What type of financing are you seeking and what is the maximum seller's assist that the lender will permit? Why has it been suggested that you ask for $4k seller's assist? Based on the units that you have previewed, is this unit the best of the crop; if so, are you willing to walkaway and continue your search if your offer is rejected? Have you determined the seller's motivation? Making an offer is as much science, as it is psychology. Good Hunting!
0 votes Thank Flag Link Thu Nov 5, 2009
What are your friends basing their knowledge on? Other than cheaper is better.

You can start down there but do you expect to be in competition with other offers? If so have your realtor throw in an escalation clause not to exceed the final price you will pay.

Escalation clause basically allows you to start a bid somewhere lower and if someone is higher you can outbid them automatically by say $1,000 not to exceed your final offer. Think of how ebay works. Very similar

Sean Dawes
0 votes Thank Flag Link Thu Nov 5, 2009
Talked to my realtor and there are no other properties in the area to pull comps from. So the price of this property is all that I can go with. My realtor said it's probably best to go with $174,500 with sellers assist from the $179k asking price. My other friends that recently bought houses told me to go lower and have the$174,500 as my final price. If I go any lower with sellers assist what that be an insult to the seller?
0 votes Thank Flag Link Wed Nov 4, 2009
I am having this discussion with many of my first time buyers.
The most important thing is to BE REASONABLE!
Many buyers are watching the news and reading the papers and hearing that it is a buyers market. They are making very low offers and then asking for closing costs on top of that . This leads to the Seller getting offended and flat out refusing the offer thus cutting off all chance for negotiation.

The best way to go is have your realtor pull the comps of homes in the area. Once you have the comps come up with a fair price for the home you have chosen and then add the closing costs to that price.

There is fierce competition right now for homes priced for the first time home buyer and if they are well priced to begin with, they are selling rather quickly.
0 votes Thank Flag Link Wed Nov 4, 2009
I do not see you closing by the end of the week unless you used cash to purchase as you need at least 30-45days to close.

But most likely the tax credit will be extended until april 2010.
0 votes Thank Flag Link Wed Nov 4, 2009
Thanks for everyone's input. My other question that I forgot to ask is....will they extend the first time buyer tax credit? I heard mix reviews on this topic; however, a final decision was to be made this week. If not, putting an offer on the property by this saturday, is that enough time to obtain the $8k credit?
0 votes Thank Flag Link Wed Nov 4, 2009
Easiest way in my opinion is to find how much you want to offer for the house and then add the closing costs (sellers assist) to the price and that is your offer.

Its a matter of getting the home for a fair market value + getting it for less than what it will appraise for otherwise you will not be able to get a mortgage.

Sean Dawes
0 votes Thank Flag Link Wed Nov 4, 2009
You need to always keep in mind that whatever you ask for in seller assist is directly coming off the bottom line for the seller. If you are serious about making an offer on a place, you need to understand that you essentially are asking the seller to take the money out of their pocket and put it into yours.Your Realtor sounds like they took a look at the comparables and what the seller probably still owes and made a recommendation. It is doubtful the seller will want to come to the settlement table having to pay to sell their house.
0 votes Thank Flag Link Wed Nov 4, 2009
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