How much should we offer on the home of our dreams?
The house is listed for a quick sale at right below 200,000-too much for us. Home will go to auction in August. Home is in Putnam County IN, has 10 acres, 3 bedrooms, 3.5 bathrooms, 3 car attached garage, bonus room. There is no central air, all flooring needs to be replaced, kitchen is outdated, roof appears to need some work, needs painted on inside and out, some holes in siding, missing light fixtures on garage and the ones that are there do not match, outside and inside trim missing, no railing on staircase, no dishwasher, appliances included are very outdated, behind house is old boat, lots of trash, old motors and a very rundown shed, and the kitchen floor has a mysterious bump in it(possible foundation issue). All these things were noticed during an informal 5 minute tour of the property. Any help anyone can give us in coming up with a reasonable offer will be greatly appreciated. Our realtor is the listing agent on the property so we aren’t expecting much help from him.
Hard to answer, but here is how I would approach it.
Try to figure out what a comparable house in the Indianapolis area would go for on a standard lot. Pick a house in decent condition. I might used Greencastle or Danville area. Then try to add to that what you feel the extra 9 or more acres is worth. Then discount from that total what the repair and upgrades for things like A/C are going to cost ($30k-$40k ???).
Also, consider that the housing market is not real great right now. And not a lot of people want to live that far out in the country. It’s just too far to drive to work!
It doesn’t really hurt that much to low-ball in this market. The worst they can do is say no and it will likely result in a counteroffer that will give you a better idea of their rock bottom price.
Everyone says to get another realtor. I don’t know that I necessarily agree with that. Realtors can represent both sides in Indiana, it is legal. Yes, he will not give you much help on an offer price, but if you can figure that out yourself, then no big deal. Your offer may be more indicative of what you can afford rather than what the house is worth anyway! And trust me, any realtor is going to have a hard time appraising that property.
A realtor can charge the seller anything he wants. If he knows that he will not be having to split a commission with your realtor, he can charge the seller less overall for the services, even if he is representing you also (because he keeps both sides). This means the owner keeps more of the sale proceeds and therefore might be willing to take a lower price for the home.
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Get another agent to represent you in the purchase.
Offer what you think is reasonable. It is hard to say what the home is actually worth in that condition and area.
If it is up for auction, they may be willing to negotiate and would probably be willing to cover their costs.
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The first thing I would do is get another realtor. The conflict of interest will not allow you to make the best possible deal.
Second, I would let them know that I am preparing an offer. i would proceed in this manner:
find the fair market value of the house in good condition. (ex $250K)
Subtract the estimate for repairs. (ex $200K)
establish in you mind the max you are willing to pay. (ex $185K).
Make an offer in the neighborhood of the lowest figure.
In this scenario, I would offer 185K, with the hope they will take 190K.
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my opinoin
Hard to answer, but here is how I would approach it.
Try to figure out what a comparable house in the Indianapolis area would go for on a standard lot. Pick a house in decent condition. I might used Greencastle or Danville area. Then try to add to that what you feel the extra 9 or more acres is worth. Then discount from that total what the repair and upgrades for things like A/C are going to cost ($30k-$40k ???).
Also, consider that the housing market is not real great right now. And not a lot of people want to live that far out in the country. It’s just too far to drive to work!
It doesn’t really hurt that much to low-ball in this market. The worst they can do is say no and it will likely result in a counteroffer that will give you a better idea of their rock bottom price.
Everyone says to get another realtor. I don’t know that I necessarily agree with that. Realtors can represent both sides in Indiana, it is legal. Yes, he will not give you much help on an offer price, but if you can figure that out yourself, then no big deal. Your offer may be more indicative of what you can afford rather than what the house is worth anyway! And trust me, any realtor is going to have a hard time appraising that property.
A realtor can charge the seller anything he wants. If he knows that he will not be having to split a commission with your realtor, he can charge the seller less overall for the services, even if he is representing you also (because he keeps both sides). This means the owner keeps more of the sale proceeds and therefore might be willing to take a lower price for the home.
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Atomic Dog is absolutely right. You need a realtor quick fast and in a hurry. In most states it’s completely legal to represent both sides of a deal but it’s not good business and borders on being unethical. Besides, as a buyer, your realtor works for you for free. The buyer’s rep gets paid by the listing agent who must split his commission 50/50. This is why he’s so generously offered to represent you in the purchase of this property- smell the sarcasm.
By the way, I’m a realtor- one of the many good ones. I never work both ends of a deal- just not that greedy.
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if its the home of your dream, well im pretty sure people will overpay for it. if you can find it at a price you can afford then go for it. if you cant afford it and its your dreams, well then make more money or find something else thats like your dream.
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