How much negotiating room do we have on an unfinished house (needs flooring, electrical, light fixtures, a complete kitchen) that has been on the?

Asked by Amy Bray, 98642 Tue Apr 20, 2010

market for almost 2 years unfinished. It has been advertised as being able to be completed within 30 days. Recent homes sold in the area for pretty cheap compared to their "zestimate". They are selling it as-is for $90k less than they had it listed to be completed at two years ago.

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Jirius Isaac, Agent, Kenmore, WA
Tue Apr 20, 2010
Every negotiation is different and needs to be deal with that way. You need an agent that is good at negotiating to do this for you. And it is not just about how much wiggle room there is. It is about how good of a deal you are getting relative to market value. Again, a good agent. If you need a referral, get in touch and I will get you to someone. You should either pay cash, or get a construction loan. I can help you with the loan if you want.

Good luck whatever you do.
Web Reference:  http://Metromgi.com
1 vote
Teresa Lamb, , Vancouver, WA
Thu May 6, 2010
Hi Amy, I think I know what house you're talking about. I've seen it. If you plan on doing the work yourself and have experience, if it's the same house, it's a good deal. If you plan on hiring the work to be done, probably not a good deal. I mentioned this one to my son who could do the work himself. He decided to pass and he is a general contractor.

It is true that the home has to be finished to finance with usual loan programs but there is the FHA 203 program that would probably finance it.

If you intend on buying without benefit of a real estate professional, (not advised) and you do not have construction experience, at least hire a licensed, general contractor with experience, to view the home and give you an idea of costs associated with finishing it. For sure, have an inspection of what has already been done! In the long run you could end up paying more for this "deal" than if you bought a finished home for more.
0 votes
Dan Tabit, Agent, Issaquah, WA
Tue Apr 20, 2010
Amy, If the house is still, "to be completed" than the final price should be based on what other finished homes in the area that are most similar sold for. The 2 year old asking price and the Zestimate are meaningless when you get down to a specific property in its current state.
Ask your agent to do a CMA of the best comps, ideally by the same builder or one of similar quality. If you are required to finish the work, subtract the full retail value of each part that needs to be done and then subtract and additional amount to compensate you for your time, trouble and willingness to oversee the work.
This is a tricky transaction and you would be well served by a knowledgeable, competent agent to assist you in your calculations. Best of luck.
0 votes
Tonya Brobeck, , Everett, WA
Tue Apr 20, 2010
Amy, it's hard to say without looking at the home, sellers tax record, existing loan amount, auction dates (if any) and listing remarks. I agree with others below you should get an agent that can walk you through the in's & out's of this property and pull the above information I mentioned. Then a good inspector & contractor should be able to give you an estimate for work.

Good luck!
0 votes
Brad Fix, Agent, Yacolt, WA
Tue Apr 20, 2010
hi Amy there are many questions to answer 1 get an estamate on how much it is going to cost to finish the home. 2 find out what like homes sold for in the area. 3 check on financing if you are not paying cash . the owner may not have much room to lower the price sound like your best negotiation point might be to get the owner to finish home if he is a bonded contracter at a reduced labor cost but make sure you have a good contract with instone deadlines for time with teeth if they are not met . good luck
0 votes
Richard Leci…, , Tucson, AZ
Tue Apr 20, 2010
You should get current comps and then allow for whatever repairs it still needs. This is a market where a low offer is not out of the ordinary. Offer low and see what happens.
0 votes
Bob McClure, Other Pro, Walled Lake, MI
Tue Apr 20, 2010
good morning amy....if you are paying cash..you are fine to offer whatever you wish......if you are financing it...conventional financing won't work because the home is unfinished......you could go for an fha 203 loan...or possible a combo- construction/end loan....best regards-
bob mcclure-
first preferred mortgage- southfield, michigan..
0 votes
Robert Pratt, Agent, Chicago, IL
Tue Apr 20, 2010
Amy - the question of "wiggle room" is going to be dependent on so many different options it would be wise to consider working with an agent (if you are not already) who is familiar with your area.

If you provide more information it would help answering your question. Are you paying cash or financing? Is the home bank owned, owned out right by someone or does someone have a mortgage on it? Has your agent (if you have one) done a Competitive Market Analysis to determine the true market value? Is the listing price above or below the market value? All of these answers will help in determining how much room there is on the asking price. Could be they're asking way too much, could be that they're way below market value waiting for someone to snatch it up.

Your best bet would be to treat this like any other home purchase, find a good agent, and take it step by step. If you don't have an agent and refuse to get one, you could always have a bank appraise the house (a few hundred dollars, maybe 500) and see what they would loan on it. That will be an excellent way for you to determine how much room there is on the price, if any. If you are financing, you will have to get this appraisal done anyway, so make sure you use an appraiser from the bank you plan to get your loan with, so you don't end up paying twice.

Best of luck!
DreamTown.com
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0 votes
Terry Eccles…, Agent, Battle Ground, WA
Tue Apr 20, 2010
Amy my guess would be that they are close to the actual cost,paying off any remaining debt and be free and clear to sell. With construction costs going up, and the mechanic liens the bulider has to clear in order to hand over clear title on a home 2 years in the making, plus they'll have excise tax and commissions if Realtors are involved. I'd be happy to take a look at the property if you need actual data for comparisons.

The more important question is are you trying to finance this purchase. I am not aware of many if any programs out there where you could purchase an "unfinished" home. Your first stop needs to be to the lender unless you are paying cash, then girlfriend make an offer that fit your pocketbook!
0 votes
Donald J. Le…, Other Pro, Tacoma, WA
Tue Apr 20, 2010
Hello Amy,

Do NOT rely on Zillow or other online quickie estimates of value. Its a buyers market. I would highly recommend that you get a Licensed Contractor to look at the house and give you a bid on finishing it, how long it will take and whatever his bid add 15 to 20% more. Then you need to have your Buyers Agent do a free CMA to determine true value on that type of home versus others in a one to two mile radius.., take off the cost of finishing and you will have your real value. - I have two deals in Escrow right now and sell about one to two homes a month, not much but I never recommend buying a home unless you can get a Great deal out of it in this market.

Depending on the area you are in of course, you may want to also look at Tax Assessed Value. In our area I will use that as part of my guide and if the CMA is about the same you are on track. I generally offer 15% or so below Tax assessment... but you must be careful of course. I would want to look at everything if I were your agent.

Kind regards,
-Don

Donald J. Leske II
Broker / Property Manager
BCI PROPERTIES, LLC
10909 Portland Ave., Tacoma WA 98445
Office: (253) 531-1010 | Fax: (253) 531-5358 | Cell: (253) 241-6695
http://www.BCIrent.com - rental homes
http://www.Homesandproperties.com - home sales
http://www.Realhomes.us - Foreclosed Bank owned properties
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