Should I quiblle over $5,000 dollars when making a home offer?

[CALL 911]

Only tangentially related.

I had a house for sale for almost 5 weeks. A few showings. Lots of "interest". You know the drill. We were starting to talk about dropping the price, and by how much. Then, we got 3 offers in 45 minutes. I can't explain it. Nothing changed. At all. Suddenly, everyone wanted the house. Go figure.

[mozar]

Could be the other offer is offering a lot more and they get it. Could be that the other offer is higher but you still get it. That happened with my mom where her offer was the lower one but she had more cash in the bank. The seller assumed (correctly) that my mom had a better chance of following through with getting a mortgage.

[mattr249]

Maybe the question I should be asking as a first time home buyer is, how do I better appraise the house? How do I decide how much it is worth to me? Comps give a range of 87 to 119 with a median of 102.

Pros: Great location, has finished basement apartment that we intend to move in to and rent the main floor. Ready to move in, we could probably move in without fixing anything right away. Many of the similar places we have seen would at least require the addition of a kitchenette in the basement to finish it in to an apartment.

Cons: It will likely need a new roof soon (shingles are beginning to peel), the windows are old and thus will need to be replaced otherwise our heating bill will be astronomical, the water heater has some rust spots on it, indicating to me that it is leaking and will thus soon need to be replaced. According to the owner the central air unit "may need to be serviced or repaired" (the place is in the humid south east, if we are going to have tenants, that needs to be addressed). There's an old dying tree in the backyard that will need to be removed by someone insured, its in position to fall on either the house or the neighbors house.

As I mentioned before my friend who has been in the land lording business for more then 20 years thinks we should go no higher then 105. He of course, isn't a mustacian, and doesn't own any properties in my city. So he doesn't know the market and he doesn't understand the value of location to me, but I still value his experienced opinion.

[farmstache]

I don't know much about house evaluations, so I can't help there.

If you have been looking for a while, you have probably gotten an idea of how much the market value of these houses go. If you have just started looking and this fell on your lap, well, it can be a great deal, but it can also be a bad deal - you haven't gathered enough experience to evaluate that. As far as commute and renting goes, it sounds great. As far as home condition goes, it may not be so great.

One of the friends of MMM (collins maybe?) has a good blog post about real estate that I really couldn't find, but basically he says that rushing to purchase the first good deal you see in front of you is usually a bad idea. You need to make a few offers, get a little punched and learn a little before you know what to really value.

That said, if you get the house, great! You'll also get some experience in homeownership and repairs and will be much more ready to look into what's an expensive repair or acceptable for your next future purchase :)

[dragoncar]

Are the comps for homes in good condition or those that need new roofs?  If the former, I'd definitely factor in the cost of the roof.  Think about what total cost you are willing to pay here... Are you willing to pay, say $130k (or whatever it is) for this house with a new roof and new windows? 

[johnhenry]

Are the comps for homes in good condition or those that need new roofs?  If the former, I'd definitely factor in the cost of the roof.  Think about what total cost you are willing to pay here... Are you willing to pay, say $130k (or whatever it is) for this house with a new roof and new windows?

Agreed.  It's hard to value those things (quickly) if you haven't had the opportunity get quotes for roofing, HVAC replacement, tree removal, window replacement. I'd get free estimates on as many of those items as you can.  And ballpark the rest.  As dragoncar said, you can add those to your potential price and that's your price for that home with new roof, new windows, new HVAC, tree gone.  If that price doesn't scare you, for the home in that updated condition, keep pursuing.  Keep in mind, that price probably won't look as good, but it will be for a completely different house... all updated.

To me, and this is based on what I'm picking up from the info you've provided, the BIG things that this house has going for it are the location and the two full living spaces, allowing subletting with no work.  I don't know the RE market where you are looking, but it sounds like both of those things, in conjunction, may be nearly impossible to find again.  If we are talking about a location so good that you can walk to most destinations.... not just bike or have a short commute, is potentially HUGE if you plan to take full advantage..... maybe you don't.  That requirement should really narrow down the options.  Even if you expand your geographic area to include places that allow a short bike instead of a walk, surely there aren't many places for sale that offer 2 living spaces for a single family price, are there?  Again, your local RE market may tell a different story.  Maybe those things aren't nearly as rare as I'm imagining them to be.... or maybe you aren't even dead set on your house meeting those criteria.

Are the "comps" you are using to determine price also in that limited geographic area (allow walking)?  And do they have 2 living spaces, ready to go?  If not, then I'd be careful to hold your house to rigidly to those comp prices.  I'll admit, it sounds like this place may take some money to get where you want it.  But the ability to rent the place without having to drop any money right away, is huge in my opinion.

[Melody]

Here is another way of looking at it. How long have you been looking for a house? What is the benefit of owning the house over renting. E.g rent $1000. Payment you pay on new house after tenants move in snd pay a share $500. If it took you ten months to find this place, buy it. If you think you csn find another one in less than ten months,  negotiate hard and walk away if need be.