What is the house truely worth? Did your realtor say a price they think it will appraise for?
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.
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
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
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.
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.