Lowball Offer on House

[w_gibbs]

I wasn't sure where to post this but you guys seem to be good at investing so hopefully you may have some insight. I am relocating and looking at a few houses. I already saw some places when I was at the new location for an on-site interview. Now I am going back down over the next few days to look some more and possibly make an offer.

I've taken the Danko and Stanley approach of looking for older homes in established neighborhoods. In the area of Texas I am going that means 1980s-built range. There is a 20-year old place with 4 bed, 3 bath. It is priced at $269,500. It was priced at $279,900 until about 2 weeks ago. The house has been on the market for over a year. My buyer's agent said he has seen the seller's disclosure and it did not reveal any problems, but the roof is the original (1987 built) and will need to be replaced. The house is exactly what I'd like and it is priced fairly compared to other places.

Regardless of how fairly it is priced, I would like to make a low offer because the seller may be inclined to come down on price since it has been on the market so long. Given the above facts, what would you offer?

I know there are plenty of other factors but I was trying to keep this as short as possible. I can elaborate if it would help you guys make a suggestion.

[joda mas]

$245,000.

[maxtower]

I'd go lower by about 10%. You really need to talk to the seller and the agent to see if you can gauge how motivated they are. This will help when making the purchase. Just because it has been on the market 1 year doesn't mean the seller is motivated. If he bought it originally 20 years ago, he may very well have paid it off.

[ilikeaces86_]

245k sounds about right.

[BradleyT]

OT a bit -

I've seen Texas houses on the various house flipping shows on TV and the houses seem to be unbelievably cheap. On one I watched a lady got a 4BR 3BA place in Austin for $130. That seems like a great price unless it was in a crack neighborhood. Another show I saw this couple bought a ginormous log house with tons of land out in the country and I think the price was something like $230.

Anyway just wondering if Texas homes in general are relative bargains or if these two people just got extremely lucky.

[w_gibbs]

[ QUOTE ]
OT a bit -

I've seen Texas houses on the various house flipping shows on TV and the houses seem to be unbelievably cheap. On one I watched a lady got a 4BR 3BA place in Austin for $130. That seems like a great price unless it was in a crack neighborhood. Another show I saw this couple bought a ginormous log house with tons of land out in the country and I think the price was something like $230.

Anyway just wondering if Texas homes in general are relative bargains or if these two people just got extremely lucky.

[/ QUOTE ]

I think prices in Texas are lower than most places in the US. Alot depends on the city. For example, prices in Houston are almost crazy low. You can get a ton of house in the $200K range. I am going to Lake Jackson which is an hour south of Houston on the Gulf. Prices are slightly higher there, but still pretty good. Especially considering the other place I was possibly relocating was Jersey and I would have gotten a cardboard box and set of sheets in the $200K range there.

The thing that hurts you in Texas are the high property taxes. They don't have a state income tax, but they definitely make up for it in property taxes. I honestly think you may be getting the best of it to rent there, but I am tired of renting so I didn't do any calculations to see if that is in fact true. Case in point, annual taxes on the $269,500 home mentioned previously are ~$5000.

I believe Austin is one of the more expensive cities in Texas, so those two cases you cited seem like the buyers may have gotten somewhat lucky.

[turnipmonster]

why has it been on the market that long?

[mattnxtc]

I know housing in houston is "cheaper" but remember with Cost of living adjustments its all relative

[Snafu'd]

[ QUOTE ]
OT a bit -

I've seen Texas houses on the various house flipping shows on TV and the houses seem to be unbelievably cheap. On one I watched a lady got a 4BR 3BA place in Austin for $130. That seems like a great price unless it was in a crack neighborhood. Another show I saw this couple bought a ginormous log house with tons of land out in the country and I think the price was something like $230.

Anyway just wondering if Texas homes in general are relative bargains or if these two people just got extremely lucky.

[/ QUOTE ]

The home in Austin sounds ridiculously cheap and I'd imagine that it was either in horrible shape or in a bad part of town. Austin is most likely the highest priced real estate in the state if I had to guess. The other place sounds reasonable considering it was out in the country. FWIW, the town I live in in TX is roughly 60,000 population and upper end homes go anywhere from $100 to $130/ft.

Edit to add: I agree with others on the 245K offer.

[w_gibbs]

[ QUOTE ]
why has it been on the market that long?

[/ QUOTE ]

Thanks for the responses guys. Just to followup. I was down in Texas the past few days looking at places again. I saw the house in question again. The wife liked it but I hit a snag. We saw another house with a huge yard that she likes better. That place is overpriced and has huge operating costs. So I am in a holding pattern on the original house as I try to convince the wife it is a smarter decision.

Anyway, I found out why the original house has been on the market for so long. The owner has no real impetus to sell. His kids have grown up so he probably doesn't need a house that big now. But I found out he paid $218,000 for the house in 1997. He originally listed it a year ago at $284,500. His most recent price drop was to $269,500. I think the house is priced right now. But I will still offer $240ish if I can convince the wife to get onboard.