Gizmo

Hi Zack,

We bid on one house in Chappaqua and one in Bedford asking both for about an 8% off the asking price. They both turned it down! We can go up but we're thinking whether we should see what else will come out on the market. Although it doesn't look like many houses are coming out on the market anymore.

Cp, I know it's unfair but NYS is very strict about real estate contracts being in writing. So a verbal offer/acceptance doesn't mean much. I think the seller's agent is kinda stupid though. If I were him/her, I would have come back to you and asked you whether you want to outbid the other offer (at least gave you the choice even if you turned it down). - Mon Apr 21 2008, 15:17

Yes because the seller did not sign anything. - Mon Apr 21 2008, 14:19

Don Tepper and Deborah, thank you so much for your responses. Your responses were very helpful. Honestly, I would offer $2 million if I could afford that easily but that would be really stretching it for me, which is why I think $1.85 is perhaps the best price. This way, I can pick up the outstanding mortgage, the seller gets compensated for the closing costs and make perhaps a little more, and then he can walk away without any debt. I have been thinking about this because it is hard for me to even broach the owner about this because I feel uncomfortable even letting him know that I know he is facing disclosure. I'm sure it is a sensitive topic and I feel really really bad for him. At the same time, I know it would be a great house for me (this would be my very first house and I love it), a great investment as well in the long run, and I feel like I am giving him an opportunity to at least cut his losses. But I think you put things in perspective when you said they are angry or in denial and they would rather a bank take it than a predatory investor (although I don't consider myself one since I have never even invested in anything before and love this home). I was just confused as to whether there were any other reason for them wanting to face foreclosure instead or whether it was just an emotional, kneejerk reaction.

As for JR, my frustration is with him not reading posts carefully... I have seen him do this in other posts where he fires off some one-sentence wise a$$ comment while misunderstanding the poster. But even so, that is fine, but he did touch a nerve here by questioning why I wouldn't pay a fair market value as if I were a predatory investor. And my point merely is that of course in a normal real estate transaction, offering a fair market value makes sense, but my point in this case was that this was not a normal real estate transaction because of the preforeclosure issue. And I don't know why he even brought up the inheritance issue when I explained clearly that this house was in preforeclosure. JR, it would just be more helpful to people if you can address the actual problems in these questions as Deborah and Don have done. Of course, you are free to give out any advice you like and free advice should be appreciated... but you may want to be sensitive to what you're saying sometimes. - Mon Mar 31 2008, 07:37

Wow, there really are some knuckleheads on this site. - Sat Mar 29 2008, 18:48

Mikem and JR, what are you not getting? If no one else wants the house and the guy is about to lose his house any minute because of foreclosure, and I am willing to pay him $1.7 to just walk away without having a debt and a bad credit history (and he is losing nothing since he owned no equity in the first place), what is so wrong about that? And why should this guy reap the rewards of his investment when he didn't even have any investment/equity in the first place? It seems rather careless to me that someone would even try to buy a place without paying a solid deposit at all; so I think I am doing this guy a big favor if I offer him $1.7 to walk away since no one else is even coming close to his asking price.

Why do you think people even invest in preforeclosure properties in the first place - because you get a good deal. Are you getting this at all or do you still not get it? JR, I noticed that you usually ramble on some nonsense without reading other people's posts. If you want to give a solid advice, try to read their posts. The guy did not get it as an inheritance. He is facing foreclosure. Get it, now?

without When you say fair market value, it would only be a fair market value if someone wants it for that price, correct? Well, what if no one does and I'm the only one who thinks it is worth $2 million? The question is f someone is facing foreclosure - Sat Mar 29 2008, 18:45

JR, i know that. In my scenario below... I said the guy owes $1.7 but I said the fair market value was $2 million. - Sat Mar 29 2008, 09:05

Don Tepper, I have a question. This one house - the owner took out a mortgage for $1.4 million to build the house. He has almost zero equity in the house. Then he took out 3 other loans on the house from other banks (probably to make the mortgage payment on the original mortage or to make improvements on the house) totaling $300,000. He is listing this house for sale at $2.4 million and is even marketing for rental. (Don't worry - I would never rent a house in preforeclosure and I am perfectly aware of dangers of liens from the other 3 banks for $300,000.) But putting that aside, if I were to make an offer on this house, would the reasonable amount be $1.4 (the amount of the original mortgage and the cost to build); or would it be $1.7 (amount of the original mortgage plus the $300,000) or the market price (let's just say it is $2 million)?

What is confusing is this $300,000 he borrowed after the original $1.4 million mortgage -- how would I know if he just borrowed against the house and used it for other purpose or whether he used it to make improvements on the house? Thank you. - Sat Mar 29 2008, 08:27

And now, we the responsible tax payers have to pick up the tab for the wall street bank greed and these reckless, gambling, greedy home-seekers. And here I am, having worked hard my entire life to save up to make a 45% down payment on a house in order to be responsible. And they won't sell to me despite my more than generous offer because they want to maximize their profit despite facing foreclosure. Really sucks, doesn't it? - Fri Mar 28 2008, 22:44

Yes these home sellers know because they get a notice of default by the bank. Also, should it matter how much other similar houses are selling when they have 2-3 months to pay up on their mortage backpayments or face foreclosure. It doesn't seem to me to me that they have the luxury of trying to make a profit; rather I would think they should just try to walk about without a loss and without a bad credit history (which they can if they would sell to an eager buyer willing to pay the amount that is owed to the bank - which is the same as the amount they invested since they didn't make much of a down payment). - Fri Mar 28 2008, 15:36

Just to explain what I mean - these three house owners paid only about 1% down (crazy, I know) and mortaged 99% (about $2 million dollars from their respective banks to either buy or build a house). Now, I see those houses on the MLS listed at $4 million. These reckless home sellers are trying to double the house price even while facing foreclosure. I just don't get it - am I missing something here or are they just plain greedy and reckless? - Fri Mar 28 2008, 14:43

Korn, you can't tell from the MLS alone. You need to go into realtytrac or another website that will provide the loan/financing history of the house. - Fri Mar 28 2008, 22:38

I'm confused. Why do RE agents have to deal with loan officers? I thought only buyers had to. So far, (I am a buyer) no agent has asked me about my finances or pre-approval or anything. Of course I'm not worried since I have awesome credit history and can make a 45% down payment... but I'm surprised no one has asked me and yet it seems that it is a common practice below by buyer's agents.

Tman, I was not not giving Barbara credit. Please read carefully. I am saying what Barbara mentioned about asking for credit history/approval sounds wise but obviously, these sellers didn't even care as they hadn't asked Donna about her finances. But it was rather presumptuous of Barbara to imply that Donna didn't have a good credit history by grouping Donna with just regular, reckless buyers. Anyway, I am all for sending a bunch of people there low-balling the hell out of these people until they come to their senses. Good luck, Donna. I am in the same boat as you and am even contemplating a 15% discounted lowball! - Fri Mar 28 2008, 22:34

Donna, maybe you should pick the top 3 houses of your choice (the ones who are sitting on the offer) and then send a friend there and lowball them to get these people to come to their senses. Then your offer will look so much better in comparison. And if a seller happens to accept your friend's offer, your friend can just say she was just looking at houses for a friend and give it to you. Just a wild thought.

And I am confused about Barbara's point -- do sellers really look at the credit points of buyers before even accepting the offer? Obviously, Donna doesn't have a credit problem; to the contrary, her problem may be that perhaps sellers aren't even considering her good credit history and are just rejecting her offer downright based on their unreasonable expectation of what they think the price should be. I think sooner or later, Donna will come across a seller who HAS to move as opposed to those who just put it out there to see if what they can get. - Fri Mar 28 2008, 09:17

I'm confused... why are you considering a lowball offer if you have a contract on your house already for 5K above the asking price?

As for feeling insulted, please don't. I am on the other side now. I am thinking of bidding 15% less than the asking price (even though I think it is fairly priced) because I heard that the seller is very, very eager. I like the place but why would I want to pay more than I have to? Would you be offended by a 15% discount (just curious). Because I would be very disappointed if the seller flat out rejected it without giving me an opportunity to up the ante, and I would feel too awkward and embarrassed to make another offer (because I would think insulted sellers wouldn't want to deal with me again, and I'm just not a pushy person). I would want the seller to make a counter offer and then we can happily meet half way.... So don't be offended. It's not a reflection on your house. The buyer is just hoping he'll get lucky because we're all being optimistic especially with the down market. - Fri Mar 28 2008, 22:17