Hb:

Are you the only buyer bidding on this home?

If so, you may wish to stick to your guns if you can provide comparables to support your offer.

If you are in a competitive bidding situation, you should take a deep breath and offer the maximum you are willing to pay for this property--with appropriate contingency periods that allow you an out if financing or inspections don't match your expectations.

Best wishes for successful negotiations!

Thu May 8 2008, 21:07

Hb,
Robert asked a very appropriate question about the appraisal. Have you considered getting your own appraisal and a home inspection done? Appraisers are under pressure to satisfy the client (a recent article I read said that 90% of appraisers have indicated they have been pressured to inflate prices). In this case, the lender is the client and really wants to get the most for the house. You need to have your own team working to get you the best price.
The other thing you should consider is asking for the lender to buy down your loan interest rate by paing for points. For example, if you would be getting a loan of $130,000, then one point would cost $1300 , two points is $2600 etc. Using this strategy, you could get a much better interest rate and save money each month. If you ask for six points (usually the maximum a lender would accept), it would only cost the bank that is selling the home to you.... $7800. Possibly offering to pay close to their asking price, assuming you don't get your own appraisal, but also asking for the six points and closing costs, might be a win win. I have more information about interest rate buydowns, names of buyer friendly appraisers, home inspectors and contractors available if you need them. See our buyer section of the site below for an article I wrote about contrarian investing.

Thu May 8 2008, 07:43

A lot of banks let short sales goes into foreclosure, even with offers. Hard to explain why.

Thu May 8 2008, 04:58

A home right down the road closed for 133 recently. The home is small 800 sq feet. I know that the current homeowner bought the property 3 years ago for 344. The bank is adamant about the 149 asking price but it has been on the market for 100+ days. They already countered my 120 and homes in the area have sold for anywhere from 133-300, the most comprable to the property selling for 133. what should i offer or should I just walk away at this point?

Thu May 8 2008, 01:13

When was the appraisal done? Are there any more recent sales of comparable homes and are they lower or higher? You may have enough ammunition with the answers to these two questions to call into question the banks appraisal.

When you counter, you can also remind the lender that if they get stuck with the property, the foreclosure will cost them $$$, they will likely have the property on their books for ## months, and the property will probably sell for a fraction at auction or at a deeper discount (and possibly get trashed) if it goes into foreclosure. Calculate an estimate and tell the lender you will split the difference.

Then it is all a matter of brinksmanship. Are you willing to lose the home? What is the absolute most you would be willing to pay for it? who cares what the appraisal is. Is the bank likely to be stuck with that property on the market if you walk away? How long has the property been on the market so far? Have you had any verbal communication with the lender to get any sense of whether or not they are anxious and motivated? (Right now, it sounds as if they are not.)

Based on all the above questions (because we don't know your desires, or the property, or the area from your description), come back with a number well below your upper limit, maybe 1/2 to 1/3 of the way there, to give you further room.

Good luck.

Robert T. Boyer, Ph.D.
Real Estate Investor Advisor
America's Finest Real Estate
San Diego's Finest Real Estate
www.SanDiegosFinestRealEstate.com
SanDiegosFinestRealEstate.blogspot.com
Phone: (858) 755-2111

Thu May 8 2008, 01:02