Ok, I have contributed to many people's questions so now I hope that I get some real help. I am in the middle of attempting to purchase a home. Exactly where my wife and I want to live has a very small inventory of houses so there are only a dozen or so that fit our needs and in our price range and most of those are a bit beat up. Houses go very quickly in this area as it is in high demand. Here is the story:

3 or so months ago we came across a house listed for $305k (approved short sale from one month earlier) and possible 3% sellers concession. It was a short sale originally bought for $485k in early 2005. We liked the house and bid exactly that to ensure we got the house we offered exactly $305k and asked for 3% back. This is the very top of our price range and we do not wish to get above this at all. We aren't preapproved for more than a $310k house anyway. The bank countered back at $310k and no closing costs. The said they would only allow us to get closing costs if we did a FHA or VA loan and we wanted to do a conventional loan with 20% down. We countered back at $306k plus closing costs. They didn't budge so we killed the deal even though we really like the house.

2 months later the house is still on the market so we try again because there is virtually nothing else desirable on the market at this point. At this point we have another realtor who is more experienced because we feel that the first realtor did a crappy job communicating with us. We try again and offer $297,500 plus closing costs. They come back again at $310k with no closing costs, but now the owner says that he will try to convince his ex wife (the other owner) to contribute $5k towards closing costs. The counter made it seem like the bank was coming back to us at $310k plus $5k towards closing, but we later found out it was the seller. We countered back at $304k plus 3% back for closing costs (thinking that the bank was the one who offered the $5k) We don't want to pay $310k plus our own closing costs or half of them if the seller concedes it. While we have the cash it would make us feel strapped as we would have less than 8 months of living expenses in savings and we don't want to go that route.

There are some other dynamics at play here. The seller is a former realtor and his buddy is handling his listing. That realtor is contributing a large portion, if not all, of his commission to the seller because the seller doesn't have a ton of money.

We are waiting for the bank to respond and want to know if you guys have any negotiation tactics that might work here. We were originally going to try to push the seller or the listing agent to contribute, but now we found out their back story. I know that it sounds like we are negotiating over peanuts, but this is the difference between bringing $61k (not including insurance and taxes) and $70k (not including taxes and insurance) to closing.

Is it worth it to go FHA? I don't really like the idea of paying PMI for 5 years plus 1% ($3k) at the table, but I wonder if I do go FHA if I can get the seller to contribute $5k at the table in addition to the bank's 3%.

Thoughts?

If you are in west palm beach $305k on a house that sold for $485k in 2005 at the height of the real estate bubble in florida at the time, I'd be willing to bet that house is really only worth about $225k. The bank that owns the paper on the house must have balls bigger than chaz. $310k is WAY too much for the home in the current market.

offer $350K...not a dollar more!

if they say no, leave a note on their winshield asking them to reconsider

if they say "we'll let you know", tell them "cool story bro" and then if they say no after that, mail them a box of shit crickets

if they say yes, give em some noods of your wife

GL

cliffs that shit
..nm i still wont read.

IMO, move on. It seems like you are already streching to meet 305 and if i've learned anything about buying homes, it is do not over extend your self. Something else will come up. Rates are going to stay low for the next year, so just be paitient.

On negotiating. The seller is probably flat broke and can't contribute any $ to closing. Try 302 and you pay closing costs.

Tell them they are losing money it's not selling obviously and that the 6k difference would have been paid for already in the 2 additional months it's been sitting there. Time is money imo Don't budge at all.

Don Corleone did this by putting a pistol to the forehead of the band leader and assuring him with the utmost seriousness that either his signature or his brains would rest on that document in exactly one minute. Les Halley signed.

 

Originally Posted by officerpizza

The house is not in West Palm Beach, trust me there are very few houses in actual West Palm worth that much of money. I don't want to say exactly where the house is, but suffice to say that many of the Miami Heat and Florida Panthers players live in the neighboring developments to the one that this house is in so it is very desirable. Our price range is the very bottom of the market in this city and the house is actually worth close to what it is listed for. The city is perfect for us because it has one of the best school districts, very low crime, and good business opportunities. We have rented here for the last 8 months and love it.

By the way, I don't see the house as an appreciating investment for at least 10 years, but we do plan to live in this house for at least 10-15 years so we are looking at its utility.

Help?

Actually yes it does help but I have to say ray just gave you some very sage advice above. And while I know it sounds cool that Heat players live in the surrounding neighborhoods, trying to be cool is not what buying real estate is about. It's about finding value. I like your plan of being in the house for 10-15 years and if things go as planned you end up walking away with some profit. But as my now deceased Father used to say, "if if's and but's were candy and nuts we'd all have a merry christmas".

Very funny about Suze. I think that the 8 months is more about me being self-employed than listening to her, though I catch her show every now and again. Business is great now, but you never know what might happen.

 

Originally Posted by XquiziVex

The problem is that your first offer didn't make them laugh at your chutzpah.

lol at them having a house on the market for 305K and countering your offer with 310K....like its 2005 or something.

You should have originally offered $275 and let them counter at $300.

Since when do sellers GAF about what kind of mortgage you are using anyway? A conventionally qualified buyer with 20% down is real estate fucking gold.

These people are jerking your chain. F that house. It's not possible that there are no other houses on the market in S Florida that dont interest you, much less motivated sellers.

They know you want it really bad and are giving you the shakedown.

I agree with you with LOL @ what happened the first time. Remember, this is a short sale not a regular offer so we aren't negotiating with the seller (other than getting them to chip in for closing costs). We actually offered less the second time and they just signed it to the bank with no issue. The banks don't seem to be motivated to get rid of the houses, especially Bank of America which this one we are dealing with. I know we are real estate gold to them, but in this market there are a lot of people buying properties for cash.

I'll give you an example of how our market works. We are currently bidding on a 4 bedroom house, but before this we bid on a 3 bedroom house in the exact same development with the exact same layout. The only real difference is this house had granite countertops. That house was a regular sale listed at $295k and it sold for $325k in 3 days (listed on Friday afternoon and selling Monday afternoon). There was a bidding war with 2 other people after we bowed out.

Yes, if we expanded our search to all of South Florida obviously there would be a ton of inventory, but we want to live in this particular city. I'm thinking that this thread is getting derailed by people saying don't get the house. Let's assume we want the house, tell us what we can do to negotiate a better price or any tactics we can use.

That would be a great idea, but this isn't like a foreclosure. The bank only looks at one buyer at a time and we have in the contract that no other offers can be considered while we are negotiating.

 

Originally Posted by MrMojo728

Actually yes it does help but I have to say ray just gave you some very sage advice above. And while I know it sounds cool that Heat players live in the surrounding neighborhoods, trying to be cool is not what buying real estate is about. It's about finding value. I like your plan of being in the house for 10-15 years and if things go as planned you end up walking away with some profit. But as my now deceased Father used to say, "if if's and but's were candy and nuts we'd all have a merry christmas".

Thank you for the response. Living in this city isn't about being cool to us. It's about being in a nice and secure area with great schools. What I am trying to express is that the area is desirable. My wife actually grew up here and thoroughly enjoyed it.

 

Originally Posted by MackTheGirls

just get a bunch of people you know to offer $225-$250k .. .10 or so of those offers... and the bank starts to second guess themselves, and then u offer 275, and get the house for 285k, ezgame

not quite sure if this is correct??

 

Originally Posted by MackTheGirls

just get a bunch of people you know to offer $225-$250k .. .10 or so of those offers... and the bank starts to second guess themselves, and then u offer 275, and get the house for 285k, ezgame

I hope that was a joke of somesort. If a friend was to make an offer like that, and it for some act of god got accepted, I would hope there would be terms and conditions in the contract for the friend to be able to get out of the offer without being sued.

 

Originally Posted by vitobiggs

I've dealt with a lot of short sales the past few years. The problem with those is that some guy sitting at a desk in a different city is just looking at the numbers and their bottom line. Most of the time when they say what that number is they don't budge. I had a short sale listing 1.5yrs ago and we had an offer at 120k (it sold for 146k 3yrs prior), they told me after 3 weeks they had to net 122k which wasn't possible in the current market. I basically told the bank rep he was an idiot for not dumping the house......this home just went on the market bank owned 2 months ago and is sitting listed at 119k and not going anywhere, they've now had 1.5yrs holding costs plus it will sell for less.

The banks are making terrible decisions left and right in short sales. I have a buyer right now waiting on a response from bofa on a short sale and its been 6 weeks.

If you really don't want to go with what they said, save your time and effort and move on. If you really like the house and plan on living there for 10+ yrs it might be worth the extra now.

I don't understand why they want fha or va though? Conventional is usually preferred by banks because fha and va appraisers also do inspections and have certain requirements that can kill the deal.

They don't want FHA or VA over conventional per say. When they called my mortgage broker they told her that if I can afford 20% down I should be able to afford closing costs too. What I was told by other people in the industry is that they actually get a kickback from FHA or VA for closing the loan so this is where the funds for closing costs would come in.

We would need to weight whether or not it is worth it to do FHA and eat the mortgage insurance for 5 years, but get our closing costs paid for plus I think we can also get a $5k credit from the seller which would cover the 1% fee and some of the mortgage insurance. We would also get a slightly lower rate, but have some more hoops to jump through.