Lowball Offer on House

[Sully]

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UPDATE:

I countered at $255,000 with 3% purchase price credited towards my closing costs (effective price of $247,350).

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3% of your closing costs = $7,650.

$7,650 is a LOT to pay in closing costs for a loan of $255,000.

There is no "standard" amount for closing costs, but from my experience, 3% would be very high on that loan size.

Make sure that $7,650 isn't higher than the loan costs that you would normally have to pay. Because if your loan costs are $5,500, there is $2,150 that the seller gets to keep....you don't get the leftover amount - it's just not allowed by the lender.

And if you are spending that much on closing costs for a loan of that size, you might want to shop your mortgage.

The more of this thread I read, the more I wonder about the "deal" you are getting. Very little talk about comparable properties, and a mention of your property being cheaper due to location.

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Most of the other comparables in the neighborhood don't compare well because the house I am looking at is on a street that is lower (across the board) than the rest of the neighborhood.

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You are talking about numbers and negotiations, when THIS is your main concern. Why are they lower? What is the difference? Busy street? Flood danger? Small lots? No view? Different zoning?

Forget the pennies and negotiation, and solve this question. The house has been on the market for a YEAR.

No BS. Location is the only thing you can't change. It's everything.

[w_gibbs]

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3% of your closing costs = $7,650.

$7,650 is a LOT to pay in closing costs for a loan of $255,000.

There is no "standard" amount for closing costs, but from my experience, 3% would be very high on that loan size.

Make sure that $7,650 isn't higher than the loan costs that you would normally have to pay. Because if your loan costs are $5,500, there is $2,150 that the seller gets to keep....you don't get the leftover amount - it's just not allowed by the lender.

And if you are spending that much on closing costs for a loan of that size, you might want to shop your mortgage.

The more of this thread I read, the more I wonder about the "deal" you are getting. Very little talk about comparable properties, and a mention of your property being cheaper due to location.

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I have a good faith estimate of $7250 on 30yr fixed @ $250,000. That's not including the inspection costs.

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You are talking about numbers and negotiations, when THIS is your main concern. Why are they lower? What is the difference? Busy street? Flood danger? Small lots? No view? Different zoning?

Forget the pennies and negotiation, and solve this question. The house has been on the market for a YEAR.

No BS. Location is the only thing you can't change. It's everything.


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Location is great. Lot size is normal (non-corner) approx. 15000 sq.ft. Not a busy street. Well established neighborhood. The houses on the street I am buying on are 2000-3000 sq. ft. Houses everywhere else in the neighborhood are above 3000 sq.ft. and price per sq. ft. seems a bit higher on those so I didn't use them as comparables. If I did, it would seem like I was getting this house at a great price. I gave three comparables of houses on the street earlier. Here they are:


Format will be (Soldprice, Sqft, Soldprice_per_sqft, Solddate)

$283,000, 2719, $104/ft^2, 02/04/2005
$240,000, 2628, $91/ft^2, 11/28/2005
$304,000, 3248, $94/ft^2, 01/13/2006

Right now at his most recent counter of $259,500 on his 2772 sq.ft. home he is at $93.61/ft^2. My agent said the statistical norm for the area is that houses sell at about 96-97% of asking price. In the case of the most recent two comparables, the asking price was $250,000 and $309,000, respectively.

On an unrelated note, what the heck is your avatar Sully?

[Big TR]

That seems like really high closing costs on a $250k home.

Are you paying points to buy down the rate, and what is the rate? If not, you are being taken to the cleaners.

[w_gibbs]

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That seems like really high closing costs on a $250k home.

Are you paying points to buy down the rate, and what is the rate? If not, you are being taken to the cleaners.

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The good faith estimate is about $3500 closing costs (loan origination, processing, title fees) and $3500 escrow (taxes and insurance). My agent said the 3% of purchase price can be put toward all of the above. Is he giving me bad info?

[Big TR]

Okay, this isn't terrible then. One question though, of the $3,500 for taxes and insurance....is part of this for prior year real estate taxes or is that just your portion of a couple month's real estate taxes?

In Illinois, we are one year in arrears on real estate taxes, i.e. in 2007 I will be paying the state for my 2006 taxes. If I were to sell my home in November of 2007, I would have to give the buyer 11 month's worth of taxes at closing. This is the standard around here, and is not typically part of the negotiations.

I don't know about the legality, so I can't answer your question.

[w_gibbs]

Here is the breakdown on taxes and insurance from the good faith estimate:

12 mo hazard insurance @ 150/mo = $1800
3 mo hazard insurance reserves @ 150/mo = $450
3 mo tax reserves @471.58/mo = $1414

Total ~ $3700

Property taxes are high in Texas. And it is the same as Illinois, you pay 2006 taxes the following year.

[Big TR]

Based on this it appears you are not getting hosed.

Those RE taxes aren't too bad considering there is no income tax in Texas. The RE taxes on your potential future home are barely higher than those on my $200k townhome, and I don't own the land that my townhome sits on. Good times.