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Putting in an offer for a house--Updated
Sig220_Ruger77
Member Posts: 12,748 ✭✭✭
We are meeting with our real estate agent tomorrow, to put in our first ever offer on a house. [:0] Nothing fancy, but it's a very solid(well built & good foundation) house and I believe it would have been worth every bit of the list price in the "good times". With everything being down like it is, I think we are going to put in a fairly low first offer. Any tips, advice, or words of wisdom from those who have been there?
Jon
Jon
Comments
It was standard during the economic boom, 4 years ago, to give an offer 10 percent below asking price.
I would go lower than that now, I would go 25 percent below asking.
Don't worry, you are not going to make them mad, don't get the idea they will be insulted and kick you out of the room.
You can always go up.
In this market, the buyer is in the driver's seat, because there are so few buyers, you have all the power so play hard ball, you can save a bunch of hard earned money.
Also, you are crazy if you don't pay the $250 and get the house inspected by a professional. You can save yourself from a real disaster by hiring a pro. Also, good way to chisel that price down, the inspector may say "Only a few years left on this furnace, replacement cost will be $2K" etc, you can knock most of that off of the price.
For an example, we bought a nice brick ranch house that we were going to rent out.
You know the big 3 inch diameter steel mast that sticks through the roof, that the main power line enters the house in?
A limb had hit that power line, and that mast was bent. Looked weird. Our inspector had noted it on his report, but, of course, I had noticed it as well.
On top of our ten percent knock off from retail, I put in the contract that it was going to cost $400 to get that mast fixed. I didn't call an expert out there, I just pulled the figure off the top of my head.
The seller said "OK" and we had $400 knocked off the price!
Just put a clause in the contract that the sale is pending upon it passing inspection, and YOU will decide who the inspector will be. Put in that you have ten days to get the house inspected.
This is a standard clause in a real estate contract.
Before ten days are up, you get the house inspected. If your inspector tells you of more problems than you feel like fixing, just invoke your cancellation clause, and the contract is null and void.
Also, DO NOT make the mistake of letting the seller make any repairs.
Knock off the cost of repairs from the price, and you make the repairs.
The seller has no incentive to have quality work done, he has an incentive to get cheap sloppy work done, he wants the hell out of there and it is not in his interest to pay top dollar for quality repair work.
Remember, the realtor officially works for the seller, which means the realtor is your enemy, and they will tell you a lie in order to swing the deal.
In fact, the realtor works for himself, and he will lie to the seller and to you to swing the deal, just he will lie to the buyer twice for every lie he tells the seller.
You should be able to get a lawyer for $300 to $400 to do the closing.
You already know you can't trust the realtor, well you can't trust the lawyers that are working for someone else.
The first house I bought cost $50K. It was a $150K house, but I had built it myself, so this was just construction costs, materials etc.
So I had lengthy discussions with the mortgage company over the phone.
I got a good rate, and they agreed there would be no points.
A point is a sweet deal for mortgage company, it is a charge that they hit you with, it equals one percent of the sale price. So a point on my house was $500.
Some people pay 3 or 4 points, some pay none, it may be you get a lower interest rate, if you pay 3 points, etc.
So my deal was no points.
This was the first house I had ever bought, I was naive. I did the closing in the office of a lawyer hired by the mortgage company.
There are about 30 pages of papers you have to sign, it really is bewildering. All kinds of big legal words, you don't understand half of what is written, you just sign away.
But, I did notice on the main statement, "1 1/2 Points. $750."
I said to the lawyer, "What is the deal, we agreed on no points."
She said, "This is standard, $750 on 1 1/2 points, pay up, what is your problem."
I had taken notes on all my discussions with the mortgage company, I pulled my notes out of my briefcase and showed this lawyer that there were to be no points.
She said, "Well, if you will just sign these documents, we can close today. If not, I will have to send all this paperwork back, and we won't be able to close for 3 more days." This shyster knew I was in a rush to close.
I stood up, told that lawyer "Get this paperwork straightened out, and do it fast, or I will find another mortgage company. Good bye."
And I walked out of the office.
What do you know, that shyster was calling me the next day, the paperwork was all straightened out, and NO points.
There is no doubt in my mind that the mortgage company deliberately tried to stick me for $750, and also, that shyster was in on the game, I bet she was going to get 50 percent of that $750 if she could swing the deal. What a bunch of crooks!
So, I decided from then on, whenever I bought real estate, I would hire my own lawyer, and get him to review all the paperwork.
Has been both, a very fun and nerve wracking experience so far. [:D]
Jon
Input the zip code in redfin.com (www.redfin.com) and make sure you are paying no more than the zipcode supports.
Slip,
I tried the site, but it says that the zip is "out of the search area."
Jon
I don't know about home warranties, if anyone does please chime in. I know we were advised to get one when we purchased our home. It insures against certain things going wrong the first 12 months with appliances, heating/cooling system, etc. You can have the seller pay for it as part of the closing.
Depends. I would rather just save your money and cover everything myself. But, if you buy one for $500 and your furnace or A/c goes out you'll be glad you had it. I typically don't like to purchase a warranty for anything, the only way they pay for themselves is if something breaks. If it looks like it's gonna break don't buy it.
They have NO intention of selling it for that price, it is just to get the bidding started.
I put in an offer on a condo in Lake Havasu on the day I went to the NRA convention. I offered 20% below the asking price & expected to recieve a counter offer. Instead four days later they dropped the listing price on the internet to what I had offered. More than a month later they still would not accept my offer even though it was what they had it listed for so I cancelled the offer.
Then we went through the same thing on three different houses I tried to help my son buy in Southern Kalifornia. In those cases we offered a little over the list price. On two of them they sold for over $20,000 more than the list price. There was a bidding frenzy in each case.
The third one was suppossed to be a short sale. The bank holding the first mortgage agrees to the sale price but the second mortgage holder says no way.
And of course full fare means higher commission.
I don't think RE agents are all weasels per se, but I think their role is not well understood and the whole home buying procedure is susceptible to certain "finesse" - and despite the adverts I see, they're not a buyer or seller's "friend".
I have had great service using HSA home warranties both selling and buying a house.I would recommend them to anyone buying a home.I had a furnace,air conditioning,hot water tank,door bell,and a dishwasher fixed all in my first year in my new home.Thier phone #1-800-367 1448
Im not saying the agents are weasels either, but to EVER "trust" them to have YOUR (buyers) interest at heart vs theirs and the sellers...your asking for it. Jon0322, you reading and understanding...your better off not "trusting" the agent as a buyer...no matter how they act, they CYA and the sellers, not your buddy...not knocking them, just the way it is...[;)]
dfletcher...see my above post...I HOPE Jon0322 sees it and GETS it too.
Im not saying the agents are weasels either, but to EVER "trust" them to have YOUR (buyers) interest at heart vs theirs and the sellers...your asking for it. Jon0322, you reading and understanding...your better off not "trusting" the agent as a buyer...no matter how they act, they CYA and the sellers, not your buddy...not knocking them, just the way it is...[;)]
I agree - and I think anyone buying a home should have a real estate attorney paid for by them. My Pop worked for a bank and listened to many tales of woe regarding real estate deals gone bad, his first question was always "who was your attorney?" and the answer was almost always "we didn't use an attorney". My own friends have had similar experiences. I figure for what they cost, making certain there are no encumbrances or tax surprises it's worth the money to have a pro working just for you and whose pay isn't dependent on doing the deal.
During my lifetime I have bought five houses & sold six. (Includes two estate sales.)
The rules of the game have changed greatly. For one thing foreclosures are sold as is. All the clauses you are used to inserting will be very hard to get in. You will be able to include a provision providing for an inspection (at your cost) but they will probably not agree to repair any defects. If you want repair insurance be prepared to pay for it yourself. I took over the existing loan on the first two houses I bought but I haven't seen any that are available now.
In many areas a lowball offer will go in the round fileing cabinet.
The listing price is just the begining. On one of the houses we tried to buy there were thirty-five offers. The list price was $112,000 & it went for $135,000. Low price houses are being scooped
up by investors.
...DONT forget for ONE MINUTE that the Agent is WORKING for the SELLER and has the SELLERS and HIS/HER interest in mind, FOREMOST...or you will could get screwed...[;)]
Agree with Colt. I don't know about any other state but in this state any real estate agent can sell any property listed in the state, so when we bought our place we "hired" our own agent to work with.
I also agree with the attorney thing. We did not do that, but we were guided by my FIL who is very experienced at real estate deals.
Jon
Let us know how the inspection goes.
Congratulations!
Let us know how the inspection goes.
Thanks Allen. I don't forsee the inspection causing any problems, but then again thats why I am having it done. [:D]
Jon