OT Advice Needed: Home purchasing and first offers

[93legendti]

Sorry, I don't buy it.
I bought a hud house 1 year ago. List was $15,400. My agent suggested an offer of $11,000. I knew the house was seriously underpriced (2nd full bath upstairs - very rare for a bungalow, not to mention new roof) and I didn't want to lose it, so I told him to bid $15,450... $50 over list and I got it. $6000 in rehab costs and I am getting $750/month.

Brokers who only seek to benefit themselves won't last. For financed buyers, homes still have have to appraise. Either comps support a price or they do not. Either a house fits your budget, or it doesn't. So people are so stupid to be able to be duped by a broker, yet at the same time, smart enough to get the best price for their house??
And, who is listing and showing the house?? The home owner? Is his/her time and energy infinite?

There is no free lunch.

A broker could try telling to me to bid $40k on a house that is really only worth $30k, but I wouldn't do it as the returns aren't there and what does it matter to my broker if I spend $120k for 3 homes or $30k for 4 homes?

[paredown]

Originally Posted by Nooch

Well, submitted our low offer. Now we wait to hear back!

Thanks for all the advice, guys. We have very firm limits with how much we can and are willing to spend. The problem is, most of the properties in this area that come in asking that amount are likely to require a ton of work, have damp basements, water issues, etc.. So, we're taking a shot and seeing if it sticks!

Came late to this discussion, but wanted to add that if you have to reconsider your budget numbers for a second offer, we had a great independent mortgage guy help us get into a house that we stumbled on when we were not quite ready to buy.

In order to come up with a bigger cushion and cash for the down payment, we chose a 90 day closing. Then we both filed new W4s at work, claiming the interest rate deduction (more take home pay).

We then sold my car (as a temporary thing) and some other stuff to raise a little more cash and started a serious 90 day austerity program.

We had the cash we needed when we closed!

And as I face year six in a house that needed a lot of work when we moved in this time--IME, buy the house that is in best condition that you can afford--as this one sounds like it is.

[Ken Robb]

Originally Posted by paredown

Came late to this discussion, but wanted to add that if you have to reconsider your budget numbers for a second offer, we had a great independent mortgage guy help us get into a house that we stumbled on when we were not quite ready to buy.

In order to come up with a bigger cushion and cash for the down payment, we chose a 90 day closing. Then we both filed new W4s at work, claiming the interest rate deduction (more take home pay).

We then sold my car (as a temporary thing) and some other stuff to raise a little more cash and started a serious 90 day austerity program.

We had the cash we needed when we closed!

And as I face year six in a house that needed a lot of work when we moved in this time--IME, buy the house that is in best condition that you can afford--as this one sounds like it is.

This was some clever maneuvering to achieve your goal. The opposite of this is when buyers who are pre-approved for the home loan they need buy a new car during the escrow period and the new loan and/or reduced cash reduces the size mortgage they can get and blows the deal.

[cfox]

It's not too hard; look at comps and where they sold vs. they're asking price (it's important to know if the property has had many re-pricings). In any mildly efficient market, you will get a feel for the spread. We are actually looking at houses in our own town. Every property sold in the past year has traded 4%-6% lower than the asking price. Unless the seller is especially motivated, it's unrealistic to think we'll do much better than that. The only time I would low-ball is if the owner is delusional about their starting asking price.

Every market is different, but if you take the time to look at actual transactions, not listings, you'll see that houses do sell if they are priced fairly.

[4Rings6Stars]

...nevermind. Came off more dickish than I intended.

Carry on!

[malcolm]

I don't think they are being duped or ripped off and I do think brokers serve a purpose and we use them, but I don't think most of them try as hard to get the best deal as they would for themselves. There are always exceptions.

[avalonracing]

Originally Posted by Climb01742

that play-nice attitude benefits them, but not necessarily the buyer. with the last house i bought a little over a year ago, i found a buyer's agent who was a pitbull and discovered what i'd been missing working with play-nice agents. the guy i found is one of the least popular (among other agents and brokerages) and most successful brokers in our area. he's very smooth, polished and will go for the jugular for his buyers. not an a-hole but relentless and doesn't mind a few bruised feelings, because he realizes his future depends on making clients happy, not other brokers.

I disagree with this. I've seen that backfire as listing agents who are working for their sellers may say to the seller, "Well, we have a couple of offers here but the agent representing one of the potential buyers is a huge pain to work with and will nickel and dime on on inspections and other terms".

In this case the sellers may choose to work with the other buyers (who may have a more agreeable agent) and the buyers who chose the "pitbull agent" will lose the deal.

[Ken Robb]

Originally Posted by avalonracing

I disagree with this. I've seen that backfire as listing agents who are working for their sellers may say to the seller, "Well, we have a couple of offers here but the agent representing one of the potential buyers is a huge pain to work with and will nickel and dime on on inspections and other terms".

In this case the sellers may choose to work with the other buyers (who may have a more agreeable agent) and the buyers who chose the "pitbull agent" will lose the deal.

AMEN!! Almost all agents who are successful over the long haul never annoy anyone if they can help it, always put their clients needs first, and are willing to do extra work to hold a deal together even if "it's the other guy's responsibility". Without referrals and repeat clients an agent is always experiencing his first year over and over.

[jlwdm]

Originally Posted by malcolm

I don't think they are being duped or ripped off and I do think brokers serve a purpose and we use them, but I don't think most of them try as hard to get the best deal as they would for themselves. There are always exceptions.

I work harder on my clients' deals than my own, and my clients expect and appreciate that. In the last year I have represented a buyer and a seller on $1m plus sales where the client just tells me the maximum he will pay and the minimum he will accept and I negotiate until the deal is done. In both cases I negotiated much better deals then the client would accept.

Jeff

[malcolm]

Originally Posted by jlwdm

I work harder on my clients' deals than my own, and my clients expect and appreciate that. In the last year I have represented a buyer and a seller on $1m plus sales where the client just tells me the maximum he will pay and the minimum he will accept and I negotiate until the deal is done. In both cases I negotiated much better deals then the client would accept.

Jeff

Like folks that go above and beyond in any field you are an exception to the rule. If and when I buy or sell again I hope I get an agent/broker like you. I meant no disrespect as I do appreciate the work you guys do when I need it. I just speaking from things I've read and to some degree my feelings from having bought and sold in the past.

My wife is from Garland. I just happened to see you were from dfw.

[djg]

Originally Posted by Nooch

153 days on Zillow

updated the original post to ask more opinions!

That's a good long while.

Different sellers feel differently, at different times, and I don't know of any hard and fast rule about what might seem reasonable or not. If you know you want the house, and know what you are prepared to pay, I don't see anything wrong with making an offer. They might not like it, but they might, or they might be pretty darn glad for the chance to make a counter-offer before they hit the six month mark. There's always the question how you pitch it -- or how your realtor pitches it to the seller's realtor -- but the sellers always have the option of saying "no" (or "yes" or making a counter-offer) and at 5-plus months sellers might take a long hard look at an offer that they would have rejected outright 3 or 4 months ago.

We bought our house in the spring of 1998, making an offer two weeks after it had been taken off the market. There was a bit of back and forth, but it did not take too long for us to reach an agreement with the seller, and the sale price was lower than an offer that the seller had rejected out of hand a couple of months before (and we got a couple of points on top of that). For me, it wasn't about honoring or dishonoring the property -- just about coming to an agreement that the wife I thought manageable. As luck would have it, it turned out to be the best financial investment I've ever made. No offer, no contract.

[old fat man]

If your offer is rejected, remember, it is for the best. We're in our second house now, but when we bought our first (condo), we had tried to buy at least 3 or 4 prior and our offers were all outbid or rejected. Looking back at them, we were so glad that every one of those fell through.

Keep emotions out of it as best as you can. I feel strongly that when it comes to home purchases, if it is meant to be, it will work out. Don't force it, don't overpay.

[likebikes]

Originally Posted by Nooch

Found a house the wife and I really like. Unlike most in the area that we've seen, it's one that we wouldn't grow out of for a long time, it's in the best school district in the area, and it's conveniently located.

.....

Are you sure you're ready to buy a house & settle down for x amount of time?

Just asking as about 6 months ago you started a thread about starting over in another city.

[MattTuck]

Originally Posted by malcolm

I don't think they are being duped or ripped off and I do think brokers serve a purpose and we use them, but I don't think most of them try as hard to get the best deal as they would for themselves. There are always exceptions.

Originally Posted by avalonracing

I disagree with this. I've seen that backfire as listing agents who are working for their sellers may say to the seller, "Well, we have a couple of offers here but the agent representing one of the potential buyers is a huge pain to work with and will nickel and dime on on inspections and other terms".

In this case the sellers may choose to work with the other buyers (who may have a more agreeable agent) and the buyers who chose the "pitbull agent" will lose the deal.

I have heard stories about attorneys playing softball in court when they should have been much more aggressive. Many of these guys (I'm talking the attorneys here, but could apply equally to RE agents) are not independently wealthy and need good working relationships with the people they deal with on a regular basis (judges, other attorneys, etc.). It sucks for a client when you realize your lawyer isn't fighting with 100% ferocity for you because he has other cases in the same court and doesn't want to piss the judge off.

Originally Posted by Ken Robb

AMEN!! Almost all agents who are successful over the long haul never annoy anyone if they can help it, always put their clients needs first, and are willing to do extra work to hold a deal together even if "it's the other guy's responsibility". Without referrals and repeat clients an agent is always experiencing his first year over and over.

[cnighbor1]

Seller can always make an counter offer so a low offer can be send back to you with a higher counter offer
Agent Is it your agent or the sellers agent?
I prefer to use my own agent has she has my interest's first and not the buyers being first
When making an offer you need to figure out an offer that takes advantage of any weakness he may have i.e. Wanting out fast
I would find a mortgage broker to work with I have and it pays big time He can find innovative ways for you to afford the house your after
Say a 1st and 2nd mortgage and set up so 2nd would pay off in fewer years