I found a home in Lawrenceville that i like but the asking price is 20,000 more than i wanted to spend. The

Asked by Derick Williams, Lawrenceville, GA Mon Jan 21, 2008

homes is foreclosure. My realtor think I need to put in offer at full price because the bank already took 30,000 off the price. I am thinking about offer 10,000 less plus closing cost.

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Joshua Jarvis, Agent, Duluth, GA
Mon Jan 21, 2008
I agree with Lorie. The market and the list price are not related.

HOWEVER!

Your ability to afford the home and the market price are not related either.

Whatever you are offerring if it's market value then it's a fair offer. If you're offerring what you can afford, then you might be wasting yours and the agent's time. Shame on them for showing you the home if this is the case.
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3 votes
Don Tepper, Agent, Burke, VA
Mon Jan 21, 2008
Joshua's absolutely right.

Look, Derick: You say the price is $20,000 more than you wanted to spend. OK, it's fine to reevaluate what you wanted to spend. But if it's dictated by the amount of cash you currently have and the monthly payments you could afford, then stick to that figure. I can show you lots of houses that are true bargains at $600,000, that've been reduced in price by over $100,000. But would it be smart for you to buy one of them? Of course not.

I'm also concerned about your statement: "My realtor think I need to put in offer at full price because the bank already took 30,000 off the price." It doesn't matter if the bank took $1 off the price, or $50,000 off the price. The first question is: Can you comfortably afford it? And the second question, also a make-or-break question, is: Is it a good value at the asking price? I've seen plenty of houses (even foreclosures) with $30,000 price drops that are poor values. What you need are comps. Have your agent run a CMA and have her tell you what she thinks the house is really, truly worth. Not how much the bank's reduced the price.

Then you take the number from the CMA, you take the number you've come up with as the most you'd be comfortable spending on any house. Then you make an offer at the lower of the two numbers. (Or even lower, in the event the bank feels like negotiating and counters.) If your agent doesn't like that strategy, find another agent. Remember, bottom line, you're the buyer. You make the decisions. Yes, you weigh and consider advice from your agent. But you're the decisionmaker.

Good luck.
2 votes
Lorie Gould, Agent, Duluth, GA
Mon Jan 21, 2008
It does not matter how much the bank already reduced the price, it matters what the home is worth in todays market! What I would rather your agent tell you is that the home is priced below value; therefore, it is a steal at asking price and not the bank already reduced $30,000.

Look at the most recent sold comparables (homes that have sold within the last 2 to 3 months and current pending sales). Calculate a price per square footage and also look at how the homes compare in rooms and condition then make the property adjustments...meaning at 2000 square foot four bedroom home is going to bring a higher dollar value then a 2000 square foot three bedroom home. You will also want to look at the trends for the area and neighborhood. If the sale prices have consistently dropped from 3 months ago to today then I would have my offer be below the last sold comp.

If the home is a steal as it is currently priced then you agent is telling you to place a full price offer to give you the best opportunity at having your offer accepted and not someone elses. Foreclosure homes create a certain frenzy among buyers because buyers think that foreclosure equals a deal when that is not always the case but because of this perception multiple offers often happen thus allowing the opportunity for you to be out bidded. You have to determine how this home compares to all other homes that you have seen and how devastated you would be if someone else beat your out.
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