Ask your Realtor: "How much would this house be worth if it were in fixed-up condition?"
Then have your Realtor help you (probably with referrals to contractors and repair services) determine the cost of the repairs that are needed to fix it up.
Subtract the needed repairs from the value of the house in fixed-up condition. Then make an offer no higher than, and preferable less than, that figure.
Example: Your Realtor says the house would be worth $300,000 in fixed-up condition. You get estimates saying the house needs $50,000 in fix-ups and repairs. Subtract $50,000 from $300,000. Your offer should be no more than $250,000. And, really, it should be less. Your Realtor can advise you on that.
One tip: There's a type of mortgage--a 203(k)--that allows you to include repair costs in the mortgage. So, in the example above, with a 203(k) mortgage you could borrow close to $300,000. Your Realtor or a lender can tell you about that.
Hope that helps.
if the costs to fix the home are greater than the value once it is repaired, then the home is not a good purchase.
Do you have a good idea of what would need to be fixed on the home?
I disagree with Kamal with homepath financing they will fainance whatever you offer without an appriasal so concievably you could pay more for a house than it is worth.
The price of a property is fluid if it is priced to high it wont sell and price will be reduced. If you make an offer and it will not appraise you can cancel the transaction. If you purchase with homepath financing they do not require an appraisal so conceivably you could overpay for a homepath financed property. In the end it comes down to buyer pays what they feel the property is worth. So make sure you get a third party appraisal even if you pay cash or purchase with homepath finanacing.
If you are using a lender to get financing, the lender will not loan you money if the home is over priced or in need of so many repairs. You also should be discussing this with you realtor as to the right price to offer.
As others have said all homes are sold "as is", it is part of your agent's job to help you evaluate the pro's and con's of each property, review the recent sales and active listings for comparision to give you the knowledge you need to make an offer at the price you feel the property is worth to you. It is up to the seller to decide if that works for him. Sometimes even though they say "as is' the seller may be open to repairs that will make the home financiable, each case is different. Your other option (if you are not paying cash and this will be your residence) is to try for a 203K rehab loan, along with a EEM.
Also the home has to appraise at your purchase price, so if a seller is asking too much, the home may not appraise at their price.
It's all about the research.
Teri Andrews-Murch, RealtorÂ®, SRESÂ®
DRE CA Lic # 01734030
Lyon Real Estate
1900 Grass Valley Highway, Suite 100
Auburn, Ca, 95603
Direct Ph: 530-798-0215
Here are a couple of tips.
First, all residential purchase contracts from C.A.R. contain verbiage that says you are buying the home in its "as is" condition. If the seller feels the need to advertise this home as an "as is" sale, the seller is telling you no repair requests, but it also doesn't necessarily mean the seller won't make repairs. It means the seller doesn't want to. In the case of a short sale, repairs are very rare.
Therefore, before you make an offer on any home, look at homes that have sold over the last 3 months. Compare those prices to the homes that are on the market today (not the short sales but the regular active listings and the bank-owned homes). Are prices going up or down? Because if you see homes lingering on the market that are in better condition and for immediate sale that are priced lower, you can use this argument with the seller. Why would anybody pay more for that seller's home when there are better choices available?
In addition, get repair estimates -- at least 3 from 3 reliable sources. Submit those estimates with your offer.
However, bottom line, if this home is not attractive enough to buy at the price listed, then go buy one of those that are priced less and which require less work.
Sacramento Short Sale Agent
Lyon Real Estate
I've been in the real estate business for a while now.. and one of the phrases that is mis-used so many times is "as is"...
The fact is every transaction is an "as is" transaction. Every real estate deal these days will have your "due diligence clauses" that allow you to research the condition and it's effect on the value of the house you are thinking of buying.
Now... in your question you don't say what needs fixing, so I'm assuming the house you are considering probably has some deferred maintenance... such as paint, carpet, some dry rot/pest control repairs and probably some landscape help. maybe some appliances are missing or need replacement such as an HVAC system.
To determine if it's really over priced... as Kathy has said... have your agent run the comparable sales information for the immediate area surrounding this home and only go back about 3 maybe 4 months. When you have that information then you can apply your "estimated costs of repairs" to bring this home up to snuff and determine whether or not if its overpriced.
You never know... it may be priced right for the area, but in a poor enough condition in your circumstances that it won't work for you. In that case, see if you can re-negotiate the deal and if not...? just withdraw and move on to the next one.
I hope this helps...
Make it a great day...
Your problem is a common one today. There are plenty of homes available that are being offered "as-is" and are overpriced. Are you working with a Realtor? Have them run a Comparative Market Analysis. This is where they find comparable homes that have recently sold, so you can get a feel for what a home like this one is worth. Then, base your asking price on the other recently sold homes as well as what you feel repair costs will be. Once an offer is accepted, you still have an opportunity to do further inspections. If you find other items that need fixing, you can still try to negotiate the price down, or have those items addressed by the seller (even though it is as-is). If they are unwilling to address any further issues, you will still have the opportunity to walk away.
Good luck and good house hunting!
Please see my blog for a complete list of tips and advice on buying a bank owned home.
It sounds as if you have taken a close look at the subject property and have a good feel for its overall condition and what needs to be done to bring the property to your standards.
An important part of shopping for a home is determining value. This of course includes many factors including location, price, condition, etc. One of the things we try to get our buyers to commit to is identifying multiple properties that are satisfactory to them. This affords them a means of comparison as well as a home to fall back on if things do work out for the one they are persuing.
"AS IS" sales generally develop as a result of the following: The seller has repeatedly lowered their "asking price" in an effort to find a buyer and therefore feel that putting more money into the home would be excessive. OR....the seller knows that there are issues with the property that they don't want to deal with.
As a buyer, it's important to be able to make the decision that protects you. Unless you can negotiate the price to an acceptable level, which includes necessary repairs, it may be best to consider your options carefully.
If you are trying to purchase a home that is in need of alot of repairs and overpriced, you may need to have your agent negotiate with the seller, or move on.
It 's the "norm" these days, that homes are being sold "as is". Many times meaning just that. No repairs.
Have your agent run a Comparative Market Analysis for the area to see what the market value is. If it's tha overpriced and won't appraise, it's moot point to stay with that home.