How much should you offer when buying a house?

Question

I live in a small town and have looked at a few houses. Ive looked at one I really like and they are asking $86,000. How much less is normal to offer. I know there are always things to consider with the house. Year built, roofing etc. With all that aside, how much do you take off when you put in an offer on average. Ive never bought a house before. I don't know what to do and my realator says she will never tell a client how much to offer.

Answer 1

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thru a realitor, and the seller has to pay the realitor their fee which runs from 3-6 percent of the selling price, and you ask for 3-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.


Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.

Decided on the type of program (loan ) you are wanting. A 30 yr fix is still roughly at a 6.5 rate right now - but if you are needing a 90 percent ltv the rate is around 7 percent and a 95 ltv is 7.375 and a 100 percent rate is 7.5 ( This is a estimate only, since I do not know what your credit score's are....There are also, interest only loans - adjustable loans, option arms (where you pick the payment, from 4 payments, including interest only). Interest only are lower payments, but nothing is being paid on your home. Some self-employed ppl like the payment options, in a lean month when money is tight., they can pay a lesser amount.

Good Luck to you - A Broker, who cares, will go over it all with you and be in contact with you daily. The one on one customer service is important, to you, the client, to let you know the whole loan process. If I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information.

Answer 2

The correct answer depends on the market right now. Let's assume the house is in average good condition and needs an average amount of work - like maybe some painting and has some small, fixable, non-structural problems.

If you're in a buyer's market (like most cities right now, where few buyers are actively buying), then offering say $ 80,000 (almost a 6% discount) may be reasonable (or 77,500). At that point, the owner may accept your offer or may counter-offer a price of say $83,000, which you could accept or reject. Or, they may accept your offer "as is".

Not too many homes in the USA today cost less than $100,000, so the owner may insist on the full price. If you offer say 70,000, they may be insulted and refuse to even provide you with a counter-offer.

There are other things you can include in your offer - like maybe they'll leave you some furniture or buy you a 1-year warranty on the applicances - hopefully they are leaving window treatments so you don't move in to bare windows.

Who pays what at closing can also be negotiated and what date you want to "close". and move in. Your offer should include these things as well as the price offer and a DATE BY WHICH THE OWNER MUST ACCEPT OR REJECT YOUR OFFER - SAY 48 HOURS. If not, they could just sit on your offer as long as they want, trying to get a higher offer, before responding to your offer.

You need your agent to present your offer in writing right away with everything you want included in it. Since you do not have to sell another home first, your offer will be considered before any other offers that are "contingent on selling a current home".

I hope I have helped.

Best wishes, new home-owner. You couldn't fiind a better place to put your money. However, be sure you know what taxes you will be paying - annual taxes could be anywhere from $1,000 - 10,000 per year, depending on where you live and home owner's insurance is rocketing.

mabear

Answer 3

Fire your realtor and get a Buyer's Agent!

Any GOOD realtor, unless it is the realtor who is working for the seller, should help you come up with a good offer.

sallygirl wrote
"I'd ask them to lower about 5% but not more because the real estate agent's commission is usually around 8%, so I doubt the seller would want to discount too much. If they're selling it by owner, you can definetly try for a better deal. I got $5,000 off a $150,000 condo and that seemed reasonable. "

sallygirl - Stop given advice! First - commission are NOT 8% then you tell her to offer 5% lower then the asking price, yet you only took off less then 3.35%! There is no simple formula for figuring an offering price as MUCH has to be considerd, however, a GOOD realtor WILL help you determine what price you should offer. Just remember, the final desision is up to you to make.

And for those of you who know me well enough on here, here it comes -

Need a good Realtor?
If In Alabama - e-mail me
If not in Alabama - I can still recommend an experienced Realtor from your area that will give you OUTSTANDING service! I work with a network of Realtors across North America.
http://www.pauld-kw.com
http://www.bhammls.com/dziedzic

Answer 4

Can the agent at least tell you how much she thinks the place is worth based on her expertise and her knowledge of the local market or is she just a pretty wall flower collecting commission? There is no rule of thumb. You offer as much as you think the house is worth and/or what you think they will accept as an offer. For example, I would hate for someone to reply to your question with 10% so you offer $77400 and the seller accepts because it was really worth 69k. You could always offer a dollar and go from there. ;)

Also, seeing how your agent is really working for the seller, protect yourself by making the purchase contract contingent on the appraisal meeting your agreedable price and that there is no damage in excess of X amount of dollars from a home inspection. Read some books or online information about pitfalls in buying a home and the different ways where you can get your deposit money back if a certain event happens, for example, your financing falls through or you lost your job during escrow.

Good luck and I wish you the best.

Regards

Answer 5

I had to offer my opinion after reading the ridiculous answer by sallygirl. Yes fire your current agent as it does seem them are representing both sides and therefore can't do their fiduciary duty to both clients. You need a Realtor who has your best interests. Contrary to what sallygirl is saying Realtor commissions range depending on the market and price negotiated. I've seen some commissions here in Arizona be as low as 2.5% and as much as 7% and that total commissions for both Realtors. I hope this helps you :)

Answer 6

You should find out about other sales in your area. Your realtor should be able to tell you what price was asked and what price was accepted. Depends whether the housing market in your area is hot or not. If it is hot, you should offer 95%-98% of the asking price and be prepared to go to 100%. If the market is cold, you may be able to offer 90%-95% of asking price. I won't go any lower, that's just insulting the seller.

Answer 7

If you want to avoid paying PMI, Private Mortgage Insurance, which if I recall right is something like $100 a month and is a total ripoff; you never see any of it back...you need to have at least 20% down.

BTW, $86k is nothing for a house.

Answer 8

If you really want it, 40%.