Author Topic: **FIRST TIME HOME BUYER** Am I being unreasonable?  (Read 5843 times)

jane Z

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**FIRST TIME HOME BUYER** Am I being unreasonable?
« on: February 01, 2014, 08:53:52 PM »
I'm currently in the negotiating process on a contract for a house I want to buy.  The house I want listed at $126,000, which is higher than the "comps" listing prices.  The home has been on the market for over 90 days now.  It's not a short sale.  I put in an opening offer of $98,000 which is the average selling price of the "comps" my agent sent me.  The seller counter-offered at $117,000 and their reasoning is that they paid $17,000 for vinyl impact resistant thermal windows.  I asked for the seller to provide receipts and warranties, and all she provided was one receipt with the final price she paid and it wasn't itemized.  I increased my offer to $106,000.  My agent said she doesn't think the seller will accept.  My agent also keeps telling me I can go up on my offer then cancel after the inspection if I find anything wrong with the house.  I told her I am aware of that.

I would have to put a $1,000 escrow deposit down if the seller accepts my offer.  My agent hasn't made it clear to me whether or not I can get my deposit back if I find out during the inspection the windows are overpriced. 

I have already been through one agent and dropped him because I felt like he wasn't patient when I asked questions (I am a first time home buyer and both agents are aware of this).  I am starting to get second thoughts about this new agent because I don't feel like she is backing me up with this offer and helping me with getting the seller to accept my offer.  Since I am a first time home buyer I think agents should understand I will have a lot of questions.  Before signing the contract, I asked for a document explaining what the HOA covers and if the house had a termite bond (so I could decide if a termite inspection would be needed).  I am getting the feeling my agent didn't feel it was necessary for me to ask for that.  I am thinking about getting another agent if my offer doesn't get accepted.  But when I met with the agent at a cafe the day I signed my contract, two people they sold homes to happened to be at the cafe.  I thought it was a coincidence and said "wow you guys are pretty popular in this area!"  But now I am wondering if that was a coincidence or if the agent was sneaky enough to plant them there to give me that impression.

Please give me your opinion on all of this.  Would it be reasonable for me to ask for an itemization of costs of the $17,000 window renovation the seller is stuck on?  Am I asking for too much information at this stage of the process?  Was it too much of a coincidence that two of my agent's former buyers just happened to be at the ice cream shop the same day and time I met my agent there to sign a contract?

Insanity

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #1 on: February 01, 2014, 09:26:06 PM »
Popularity of the agent doesn't matter, and I wouldn't care if it was a coincidence or a plant.  All that matter s is you are happy with your buying price.  If the agent isn't willing to go to bat for you without a valid reason (have they suggested an exact price point?).

Here's the thing - comps are just that.  comps. They are not exact (most of the time).  I know when we bought our current house, the comps wound up being something like with one less bedroom, 1/4 less of an acre, and a newer roof/pool/whatever else.  I don't know the area so referring to comps isn't an exact.  Can you be more specific?

Also, is the agent telling you the 117K is still high or are they telling you that is a fair price?  That's a big factor in reading the deal.  What did the agent say about the original offer you put in?  Since you are a first time home buyer, I'm assuming there are no conditions for the sale (you don't need another house to sell -- like one you might have been left in an estate or something).  Have you been pre-qualified for a mortgage? Are you putting 20% down?

Also, has the house dropped in price during those 90 days?  Does your agent have any indication as to how the house has been showing or the traffic in it?  Has the agent shown the house to any other potential buyers she is working with or has worked with (don't laugh, I did have my agent tell me that for a couple of houses because people are willing to deal with different difficulties/issues that may arise based on the cost basis).




Another Reader

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #2 on: February 01, 2014, 09:33:06 PM »
What the seller paid for the windows is irrelevant.  Cost does not equal value.  Look at the comparable sales in the neighborhood to see which ones have new windows and if they sold for more money.  My guess is you may find no difference or you may find a couple of thousand dollars difference.  If the house is old and the windows made a big difference in energy bills and improved the curb appeal of the house, the seller may get some money back,  $17,000 on a $100,000 house?  No way.  The seller is either uneducated or unreasonable.

If the agent sent you recent sales of similar houses in the neighborhood at $98,000, you may have already offered more than the home is worth.  Ask the agent to determine which of the sold houses had new windows and which did not if windows are not mentioned in the details of the sold comparables.  If the house is worth $98,000 with old windows, add the premium for new windows that is determined by the analysis of the sales.  That's what this house is worth.

If you have an active market where houses sell quickly, being on the market 90 days is a strong indication the property is overpriced.  In your shoes, I would move on to a property with a reasonable seller.

ShortInSeattle

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #3 on: February 01, 2014, 09:54:38 PM »
I think it doesn't really matter what they paid for the windows. You made an offer, they accept or not, and
 the deal happens or it doesn't.

Value is guided by comps but it's also subjective. If you made the max offer you are comfortable with, see what happens and be prepared to walk if they don't bend.

I don't see a lot of utility in using their receipts to modify your offer, or validate it.


stevesteve

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #4 on: February 01, 2014, 10:33:05 PM »
I'm currently in the negotiating process on a contract for a house I want to buy.  The house I want listed at $126,000, which is higher than the "comps" listing prices.  The home has been on the market for over 90 days now.  It's not a short sale.  I put in an opening offer of $98,000 which is the average selling price of the "comps" my agent sent me.  The seller counter-offered at $117,000 and their reasoning is that they paid $17,000 for vinyl impact resistant thermal windows.  I asked for the seller to provide receipts and warranties, and all she provided was one receipt with the final price she paid and it wasn't itemized.  I increased my offer to $106,000.  My agent said she doesn't think the seller will accept.  My agent also keeps telling me I can go up on my offer then cancel after the inspection if I find anything wrong with the house.  I told her I am aware of that.

I would have to put a $1,000 escrow deposit down if the seller accepts my offer.  My agent hasn't made it clear to me whether or not I can get my deposit back if I find out during the inspection the windows are overpriced. 

I have already been through one agent and dropped him because I felt like he wasn't patient when I asked questions (I am a first time home buyer and both agents are aware of this).  I am starting to get second thoughts about this new agent because I don't feel like she is backing me up with this offer and helping me with getting the seller to accept my offer.  Since I am a first time home buyer I think agents should understand I will have a lot of questions.  Before signing the contract, I asked for a document explaining what the HOA covers and if the house had a termite bond (so I could decide if a termite inspection would be needed).  I am getting the feeling my agent didn't feel it was necessary for me to ask for that.  I am thinking about getting another agent if my offer doesn't get accepted.  But when I met with the agent at a cafe the day I signed my contract, two people they sold homes to happened to be at the cafe.  I thought it was a coincidence and said "wow you guys are pretty popular in this area!"  But now I am wondering if that was a coincidence or if the agent was sneaky enough to plant them there to give me that impression.

Please give me your opinion on all of this.  Would it be reasonable for me to ask for an itemization of costs of the $17,000 window renovation the seller is stuck on?  Am I asking for too much information at this stage of the process? Was it too much of a coincidence that two of my agent's former buyers just happened to be at the ice cream shop the same day and time I met my agent there to sign a contract?

I think you're being a bit high maintenance.  In the end realtors are there to tell you what they think about the property in the current market and how they think the seller will react, not to agree with your strategy.  It seems your realtor doubts the sellers will accept the lower amount so ultimately it's up to you to decide if the house is worth $117,000.  If you don't think it is then by all means tell your realtor to put in another lower offer.  That's their job and they will do it.  But I do recommend taking their disagreement with you seriously.  You have the best sense of what you value and what you're willing to pay but they almost undoubtedly have a better sense of the market and the seller.  Finally, ask for receipts if you want to prove the work was actually done.  Don't ask for it just to "prove" the value of the repairs.  It really doesn't matter if they're lying or not about the $17,000.  If you think those repairs are worth $6,000 then that's what they are worth to you.  You're just making everyone's life more difficult trying to have them prove it.  Similarly, who cares if they were plants or not.  It's your relationship with the realtor that matters.

So, decide how you value you things, listen to your realtor's advice but make decisions based on how much you value things, only ask for documentation to prove things were done, not how much they cost.

MrsHybrid

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #5 on: February 02, 2014, 04:49:59 AM »
I would not raise my offer and would start looking for another house. You may find one you like even better at a price you are comfortable with. As someone mentioned the owners are unrealistic if they think they are going to recover the cost of the windows.

Do not rely on a home inspection as a way to renegotiate a contract. You can only do so or cancel if some problem is actually found. I would change agents based on that comment alone.

Mori

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #6 on: February 02, 2014, 08:30:18 AM »
It's a bit high maintenance, but I only say that because regardless of what they paid for the windows, the house is only worth a
certain amount (no need for receipts). Windows are one of those "invisible improvements", like wiring. You don't tend to recoup full cost on sale.

I would say offer based on comps--you can offer slightly more for windows if no other house has done them, but I wouldn't go for 17% of the cost of the house. I would really only offer what you thought you could sell it for later. That's what it's worth to you. You're the one that has to pay the note long after the realtor and seller have moved on to the next house.

The bigger issue is that you don't feel you can trust your realtor to have your best interests in mind. If you don't think they will go to bat for you or argue well on your behalf, time to find a different realtor.

Last thing--home inspector--don't use the one the realtor recommends unless you know them before and their reputation (you can also look for reviews for the company). Use some sources to find one (Angie's List comes to mind). The good ones will take a few hours to go through the house and give you a LONG list of issues, even on a well-maintained house. Most of them aren't deal breakers, just maintenance items that should be addressed at some point. I remember the first time I had a home inspection report I was a bit nervous at all the stuff that was on it. If you are worried about it at all make sure to talk about it with a friend that knows a bit (or the MMM forum) before you decide the list is crazy.

Good luck in your search!

BPA

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #7 on: February 02, 2014, 09:05:51 AM »
I seriously doubt those former clients were planted.  What does the realtor stand to gain if you feel reassured?  Frankly, the commission the realtor would make from any sale to you would not be worth it, IMO. 

As for the other things, $98k is a real lowball of an offer and that's okay, but as you said, you are new at this.  Is it possible that the realtor just wants you to be realistic? 

marty998

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #8 on: February 02, 2014, 01:37:51 PM »
If you were the seller would you accept $98k? If no, then why are you expecting the seller to do that?

Workinghard

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #9 on: February 02, 2014, 03:36:55 PM »
Sometimes lowball offers are taken. Our house was initially 268k. It had been on the market a year and was empty (and trashed). They had come down to 248k when we looked at it.  We offered 200k cash and they took it. I felt a little bad as they had turned down 220k a few months before we bought it. It definitely needed cleaning and cosmetic work but was well worth it.

Another Reader

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #10 on: February 02, 2014, 04:05:48 PM »
If the OP is correct that the comps indicated $98k was the market value, then the seller has listed the property at a price that is well above market.  Offering market value is not lowballing. 

The various multiple listing services across the country are chock full of overpriced properties.  Some agents take listings like this to get their advertising signs out there, knowing the property will never sell.  Others hope the unrealistic seller will become realistic over time.

As a buyer, you should recognize an overpriced property and just walk away.  Negotiating with someone that is convinced that his $17k windows are worth $17k is a waste of your time.  If you end up offering more than the property is worth, then you will get less when it's your turn to sell.

Strawberrykiwi75

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #11 on: February 03, 2014, 03:16:59 AM »
I don't think you're being unreasonable. This is your first house and the biggest asset you are likely to have for a long time. Now, I don't know much about how this is all done in the US, as it's a little different here- but the concepts are the same.

Your agent should be working for you. You hired them, you're paying them. Make sure you are happy with the service they are providing.

If you want to get any sort of inspections done, do them. Don't let anyone put you off doing them, telling you it's not necessary. I just bought my first home myself, and got a building report done- and thank god I did, as the firewall needed replacing. This knowledge left me in a good position to go back and negotiate, even after the contract was signed.

As for the value, go with your gut feelings. Negotiate as you feel appropriate, do your research on the market, and don't be afraid to walk away if they won't negotiate with you. As someone else said, just because the vendor spent X amount of dollars improving the property, doesn't mean they increased the property value by X amount. To me that sounds very out of proportion to the actual value of the house

Bill76

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Re: **FIRST TIME HOME BUYER** Am I being unreasonable?
« Reply #12 on: February 03, 2014, 06:47:21 AM »
I may be cynical, but you also need to remember that the realtor's goal is to make a sale in the least amount of time spent.  They don't get paid unless you buy a house, and the higher the price, the bigger the commission.  The good agents won't deliberately steer you into a terrible deal, but most won't really help you get a bargain either.

In the end, it's your decision.  Make the offer you're comfortable with, and if the seller declines, there are plenty of other houses in the world.