How to make an offer when there are no comps in the area? (contingent, appraisal)

[Carrscandles]

We're still waiting on approval (fingers crossed) from our lender, but then we need to make an offer on the house we want, but according to our realtor, there are no comps in the area. She's not even sure how the appraisal is going to work because of this problem. So how do we make a solid offer without insulting the seller or paying too much?

The home is listed for $108k, has been on the market off and on for about a year, started at $119k. Just built in 2012 and there is nothing wrong with the home, other than location. We actually like the location, and feel the home is perfect for us.

I was thinking offering $103k and ask for the seller to pay closing costs. Would that be considered insulting or fair?

[Heidi60]

Call an independent appraiser as they are highly educated and trained to provide acurate local information. Anything less is just a guess, but ultimately, the seller can make a counter offer, and probably will, if you start low. Use a real estate lawyer through out the process to be sure everything is done propertly.

[jameshardin]

Yes, I agree with the above poster. You need to hire an appraiser. Ask your Realtor to split the cost with you if need be (it should be about $400).

[skiffrace]

Is the house the first time on the market, or has it been sold in the past?
If the latter, can you find out how much they paid for it?
Perhaps you can get that info from Zillow.com, or from you local county records. If you have that number, then look up the appreciation of the real estate values for that neighborhood, or for the broader geographical area.
Again, Zillow has good data that is open to the public.

Once you have those 2 figures in hand, you can extrapolate the (approximate) number the house is (on average) worth today.

BTW- if you decide to hire that independent appraiser, and there indeed are no comps near by, how do you think he will get his figure? Perhaps in similar way, except he has access to better data (like Core Logic, available for paying subscribers)

However, how about some common sense approach here.
Do you really like the house and the neighborhood? You are not paying cash, are you. Then the extra $5K or $8K, amortized through the life of the mortgage, will amount to just a few extra bucks each month. Are you going to risk the sale for those diminutive savings?

[Someguy1978]

Hire a private appraiser, and if it comes back to what the listing price is, offer list price but have seller pay closing costs. That's what we did and we ended up getting money back at closing. Good luck!

[Carrscandles]

Thanks for all the replies. We are still waiting on approval from our lender. My husband just started a new job, same field, but paid differently, so our lender is sending it through his underwriters before we make an offer, just to be safe. We will definitely be getting an appraisal, and we are willing to pay list price IF the seller will pay closing. We are moving from PA to TX and plan to only take a little bit with us, and buy new once we get there, so the more money we can keep in pocket, the better.

The house has never been sold before, as it was just built and has been sitting empty on the market since.

[thelopez2]

You're going to hire an appraisal during the loan process, what would you hire one to make an offer on the place? Is $103k + closing is your budget, is that what you value the property at or do you think you are getting a deal because the property would then be 20% off from the original price list price. Let's say you did pay for an appraisal upfront and the value comes in at 105k and your even up your offer to 105, but the seller still wants 108, you just wasted your money on an appraisal when the seller wouldn't even take your offer.

Something seems very off about the path of your real estate agent, I don't use the term Realtor. I'm not giving advice on what to offer or how to negotiate. For simplicity sake, let's say you offer 103+closing and the seller agrees, you then get the appraisal and the number are fine. You get a loan,close, move in and be done. What if the value comes in at 102k, are you going to back out or pony up the extra 3k plus closing cost? Understanding the sellers tolerance to the appraised value is important. Will the seller sell for a lower price due to a low appraisal or just sit on it longer. The holding cost on a $100k asset is somewhere around $500 a month, every month that house sits empty, they are losing hundreds a month.

If your husband gets denied, just keep shopping for a different lender or post his scenario on the mortgage forum

[Carrscandles]

Our offer will be based on what we want to pay for it, and unless he accepts the $103k off the bat, we'll add a contingency on the appraisal's value. I would assume that he wants it to sell, so he may be happy with our offer. From what his realtor told ours, because of it's location (a very small town), it's not getting any attention. Their realtor was very excited when ours called to schedule a showing, lol.

I currently have a couple of other lenders who say they can get the loan to push through, just in case this one doesn't work out. Everything else is in place, just that he's paid differently.

[UNITYinternational]

So if you are only willing to pay $103,000 why bother with an appraisal. Make your offer contingent upon loan approval not appraisal.

[FalconheadWest]

In Texas, you don't need to add a contingency on appraisal. It's already part of the contract. Has your agent not shown you a contract yet so you know what to expect?