1st time home buyer. What should our offer be? Need Knowledgeable advice?

Question

My bf and I are looking at buying we got preapproved for a loan of 184,900 which is the asking price for the loft we are intrested in.
Some History:
www.thefremont.com
The loft has been sitting since April with no buyers , the investor that bought 6 of the 92 units has 3 still avaible since April1/06.
There is still 20 something units in this building for sale.
We prefer to buy thru the investor because the realtors seem much easier to reach and get answers from.
They included the blinds ( 2 windows @ 300 dollars a peice, they are huge old mill windows) and washer and dryer ( estimated value of $1,000)
They are offering $4,000 paid towards closing cost.
The Fremont Lofts realtors that still have about 20 units open are offer Condo Fees paid for a year ( value of 1,986)
So here I ask what is the lowest we can offer without insulting them but for us to get a good deal?
The investor paid 144k for the units he bought, and he has been sitting on them since April.

We are putting down only 5% as first time home buyers it is pretty tough to put down more..

Answer 1

I think this a terrific property. I agree with the person who said 175 but go up to 180.

At 7% your payment would be $1,197.54 for $180k and $1,164.28 for $175k - that is $33 per month - not enough to lose sleep.

How much will you have to put as a down payment?

Answer 2

First of all, don't worry about insulting them. Offer a little less than you're willing to pay and see if your offer is accepted or countered.

You could also try working with a buyer's agent, they can advise you on what a fair price for the local market is. But then they get a commission ... although they usual split with the selling agent.

Answer 3

How to value a property during market downturn?

Housing market continues to slump. Now we can calculate true value of a property easily. As price decline, we don't need to guess and factor in the potential price appreciation while calculating home value. Without the guesswork, figures are more accurate.

Let's use following example:

Today, a typical 15 years old, two bedrooms condo/townhouse is priced around $500,000 and $550,000 in Sunnyvale, California. Rent for similar condo/townhouse is $2000/month.

If you are a home owner, $2,000/month in rent means $20,000 a year in profit ($24,000 per year in rent, minus $4,000 maintenance costs). A $20,000 income is equilevant of owning $400,000 bonds or CDs, because current yield of 30 Years U.S. treasuries are 5% (5% of $400,000 is $20,000). Bank CDs have similiar yields.

In our example, the two bedrooms condo/townhouse is 20% to 25% overpriced. They should be priced at $400,000.

It is interesting to note that if we redo the calculation from buyer's perspective instead of seller's perspective, the figures are even more shocking.

Mortgage payment consists of two parts: mortgage interests and mortgage principal. The interests portion is similar to rent. If you pay interest, it disappears and doesn't add equity to the property. To fully simulate characteristics of renting, we assume buyer will apply for a zero down, interest-only loan.

It turns out that rent of $2000/month is equivelant to mortgage payment of a $340,000 loan at 7.0% APR. And comparing $340,000 loan to $500,000 or $550,000 price tag, from buyer's view, the two bedrooms condo/townhouse is 30% to 35% overpriced.

One may ask, why is there a discrepancy between two perspectives of the buyer and owner?

The discrepancy is a result of 2% differences in interest rate that buyer borrow comparing to yields of bonds and CDs that owners would get. We understand that buyer would always pay more. That is the premium of buying to own. However, looking from home owner's perspective, current housing market is probably 20% to 25% overpriced. We recommand investors to wait for a better entry point.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

Answer 4

My husband and I bought our house 4 years ago we paid 180,000.00 asking price was 184,950.000 so in another words we knocked 4,950.00 off the asking Price and they the previous owners paid the closing fees ..I am no expert here but try asking for around 180,000.00 or lower if they don't budge then obviously not worth the effort...Good Luck

Answer 5

I would offer $175,000, that will give room for him to counter.