It needs of a lot of work. But in a great neighborhood. The current owner just didn’t take care of. Come to find out I actually know the current owner as we ran into one another when going to view the home. I found out through looking at public records that the house was in the Lis Pendens stage of forclosure in Febuary but as of the end of March I guess it was dimissed so he still owns the home. And he is getting divorced so the home is priced to sell fast. But its needs a new roof,gutters, carpet,pressure washing,paint plus the bathrooms and kitchen needs some updating. And thats just what we saw viewing the home. Who knows what an inspector would find. I found out how much he orginally paid for home which was 115,000, then saw he refi at 129,000 last year. The home is listed at 179,900. Whats a good starting offer point? Or am I am being to pressumptious thinking we can get a decent deal on the home? Any advice appriciated.
For an "as is" property first remove $20,000.00 from the retail value of the property. Next, take the square footage of the property and multiply this by $14.00 per square foot. Take this figure from the retail value of the house. You should now have a starting point for decision making on the purchase of this house. The listing price and the the selling price are 2 different things, ask for a market sales analysis. Remove the 2 figures from the market sales analysis as well. Example: Asking $179,900, actually sold for $176,000. That’s an additional $3,900 in savings to you. So you would actually take this additional $3,900 from the asking price. If you are still above his $129,000 financing back off some more $. You will need for 3 contractors to give you an estimate for the repairs that are needed. If their estimates are higher than the square footage times $14.00 per square foot budget set earlier you will need to decide to either reduce the offer further or allow this to eat into the $20,000 first reduction. You can allow the ,eat into, to come from the seller making a counter offer. In any event, $20,000 plus the cost of repairs reduced from the asking or market sales price would seem to be a good starting point for offer making. The $20,000 is your compensation for taking over a property the seller failed to maintain. If you feel this is over compensation, which it isn’t as you will found out. You, of course can change this amount, either up front or in the negotiation process. remember, you can buy every $179,000 house out there, if he needs to sell you this house he will negotiate.
February 25th, 2010 at 2:24 pm
Roughly figure what the cost of repairs would be and deduct that, plus $10k, from asking price.
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February 25th, 2010 at 2:46 pm
You need to start by reviewing the comparable homes in the area and neighborhood of the home you want to purchase. See what the homes in decent condition with similar square footage and property size are going for and deduct for the proposed fixes to get an idea what to start your offer at. Even if you make an as-is offer on a home you still have a right to an inspection. If the fixes are going to be more than you anticipated you can back out of the deal if you make the offer contingent upon approval of inspections. Keep in mind that properties marketed as fixers are very popular because many people are looking for a deal, thus they usually don’t stay on the market long. A good Realtor in your area should be able to help you with a starting number.
Good luck!
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February 25th, 2010 at 3:20 pm
Its possible to get a lower price, but it may not be a "deal". I would recommend having an inspector go through the house first before making an offer. Its better to know your getting into before making an offer.
The seller may have already factored some of needed improvements into his price so you’ll want to try to figure out what comparable homes in the same area are selling for. You can ask your realtor or if you want to find some data on your own try:
realtor.com
zillow.com (good in some locations/ bad in others)
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February 25th, 2010 at 3:41 pm
I would honestly look elsewhere because those cable shows about crappy houses being restored are usually bankrolled by the advertisers who hawk their wares on such shows.
If you really wish to make an offer, I would offer him $134,900 – I would not allow him to walk away from the settlement table with a dime. If he says no – look elsewhere.
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February 25th, 2010 at 3:49 pm
For an "as is" property first remove $20,000.00 from the retail value of the property. Next, take the square footage of the property and multiply this by $14.00 per square foot. Take this figure from the retail value of the house. You should now have a starting point for decision making on the purchase of this house. The listing price and the the selling price are 2 different things, ask for a market sales analysis. Remove the 2 figures from the market sales analysis as well. Example: Asking $179,900, actually sold for $176,000. That’s an additional $3,900 in savings to you. So you would actually take this additional $3,900 from the asking price. If you are still above his $129,000 financing back off some more $. You will need for 3 contractors to give you an estimate for the repairs that are needed. If their estimates are higher than the square footage times $14.00 per square foot budget set earlier you will need to decide to either reduce the offer further or allow this to eat into the $20,000 first reduction. You can allow the ,eat into, to come from the seller making a counter offer. In any event, $20,000 plus the cost of repairs reduced from the asking or market sales price would seem to be a good starting point for offer making. The $20,000 is your compensation for taking over a property the seller failed to maintain. If you feel this is over compensation, which it isn’t as you will found out. You, of course can change this amount, either up front or in the negotiation process. remember, you can buy every $179,000 house out there, if he needs to sell you this house he will negotiate.
References :