Low balling on overpriced house (appraisal, foreclosures, agent, commission)

[bankheadbaby]

House was built in 1942 in a relatively small Alabama town and was put on the market after the original owner passed away a couple of years ago. All brick with lovely unique architectural features, two car garage and a big back yard with flower gardens, with the new addition of the adjoining lot, expanding the back yard. It has been updated by exposing the hardwoods, totally redone kitchen, expanded small rooms by removing walls, new wiring, piping and probably a new roof. It's a great house. The problem is, they want $245,000 for the house, and I know for a fact they only paid $100,000 or less for the house. The neighborhood is declining, and it's on a noisy and busy street. I am not begruding them trying to make a profit. Sitting somewhere else, like Birmingham or Mountain Brook, it would be worth it. Not in this town. A similar house down the street is listed for $150,000--Probably not as updated, but that sounds more reasonable, and I am thinking that's what the comps will turn up.
I also know they need to sell quickly for personal reasons. They offered that the price is negotiable--what does that mean? $5000...$40,000??? I have read so many things about sellers getting insulted and refusing to respond to low-ballers. With the new lot and updating, I am thinking I would reasonably pay about $180,000-200,000 for it, but I don't know where to start. My family said go lower, but a real estate agent offering to help said go down $10,000 or more. I just don't think they are being realistic in this town and market. I feel bad because they put so much money and time in the house, but it is in a not so good neighborhood. I could LIVE there if we got a good deal, but if for some reason we had to sell it, I don't see it going for a quarter mil...
Any advice from anyone familiar with the state of AL real estate?
I mean, how low is too low?

[renriq02]

offer as you wish, and remember that most states require for all offers to be presented to the seller.

Maybe you should offer 185k , but it depends on the comps.

Have your realtor do a CMA to determine the best price for the house.

If your realtor is saying offer 10k less.....then he might thinkin about his commission than your pocket.

[bankheadbaby]

[both of these are repsosted from another thread]
No, the real estate is not booming around here like Florida, and for good reason--it's not Florida!
A great house was up for 380,000 but that was over priced for the area. They finally sold it for a little over 200,000. So I think the comps will be between 140,000-200,000. People are just nuts in that town. And not surprisingly, their properties are not getting sold.
They did get a good deal and did everything that needed to be done to update it. It's beautiful. I think Southlander touched on a delicate point, that maybe, in this neighborhood and market, they shouldn't have put so much money into it to turn around and sell. I think they deserve to be paid for their work, but I think they are shooting a little too high for this town.
Buyers market people say "negotiate hard, this is your time to shine, all you buyers that can actually get a mortgage these days!" People on the sellers' side say they get insulted from low offers, so don't even try.
I just want to find the happy medium between not shooting myself in the foot and not looking like a jerk.

[bankheadbaby]

I have already thought about the commission. They are not formally hired. She's a friend of a friend that offered to show it. But I am not sure they have our best interest in mind. Business stuff sucks--plus I have never bought a house before.

[renriq02]

well first make sure to recieve a mortgage approval then go shopping.

if you have found a home that you like....keep in mind that the lender will appraise that house. If it comes in low...then you just wasted 300-400 for an appraisal.

Originally Posted by bankheadbaby

I have already thought about the commission. They are not formally hired. She's a friend of a friend that offered to show it. But I am not sure they have our best interest in mind. Business stuff sucks--plus I have never bought a house before.

[bankheadbaby]

No need to stress until then. I am coming to understand why this is one of the most stressful things people do in life!

[ReefAreCoolToo]

Originally Posted by banker0679

well first make sure to recieve a mortgage approval then go shopping.

if you have found a home that you like....keep in mind that the lender will appraise that house. If it comes in low...then you just wasted 300-400 for an appraisal.

Appraisal dont mean jack if the market is crap ..the could appraised at $250k dont mean they can sell it at $250k....

[renriq02]

not every area has been affected.

appraisals mean everything. most sellers/buyers agree on the appraisal...and the LENDER will definitely only lend on that appraised value.

also it's the job of the appraiser to determine if it's in a declining area which he needs document on the appraisal.

Originally Posted by myselfdotcom

Appraisal dont mean jack if the market is crap ..the could appraised at $250k dont mean they can sell it at $250k....

[GregTraub]

An appraiser will never mark a home is in a "declining area" unless there is a major, very public reason for it, like a major employer leaving the area or toxic waste dump moving next door. If a lender notices an appraiser mark neighborhood in decline, your deal just died, the only lenders that will lend in a "declining" neighborhood would be a small local bank with an interest in the local economy.

Anyway as far as lowballing, if you think a house is worth what you say it's worth then show the seller why you are offering what your offering! That's a surefire way not to look like a jerk (as long as you present it right and have facts to back it up). I think it's great that you want the sellers to get their money out of their sweat equity, but unfortunatly if everything you say is true, and they overimproved the home, why would you pay more than market value?

Since this is your first time buying a home, find yourself a good buyers agent. Figure out what your expectations are and what you'd like the agent to do for you and interview around. Since it's your first time it may take a few tries to even know what you're really looking for.

[renriq02]

I have recently done a purchase in South FL, and the appraiser marked declining value due to foreclosures.

I'm not sure where you received your information, but most lenders are doing BPO's with the appraisal.

This is a down market, and it is safe to say that the appraiser CAN mark it as a declining area. NEVER will be an incorrect statement.

Originally Posted by GregTraub

An appraiser will never mark a home is in a "declining area" unless there is a major, very public reason for it, like a major employer leaving the area or toxic waste dump moving next door. If a lender notices an appraiser mark neighborhood in decline, your deal just died, the only lenders that will lend in a "declining" neighborhood would be a small local bank with an interest in the local economy.

Anyway as far as lowballing, if you think a house is worth what you say it's worth then show the seller why you are offering what your offering! That's a surefire way not to look like a jerk (as long as you present it right and have facts to back it up). I think it's great that you want the sellers to get their money out of their sweat equity, but unfortunatly if everything you say is true, and they overimproved the home, why would you pay more than market value?

Since this is your first time buying a home, find yourself a good buyers agent. Figure out what your expectations are and what you'd like the agent to do for you and interview around. Since it's your first time it may take a few tries to even know what you're really looking for.