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Old 03-01-2010, 11:56 AM
 
152 posts, read 449,843 times
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Just curious - what is the perception of a bid that asks the sellers to kick in 3% or so towards closing costs? Does it make the buyer look like they don't have a lot of cash?

The reason I ask is because we are looking a house that we want to put an offer in at about 12% below list price. It just went on the market a week ago. We are wondering if the combination of our low bid with asking for closing costs will make it seem like we can't afford the house/don't have enough cash upfront avail. etc.
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Old 03-01-2010, 12:03 PM
 
Location: Wake Forest, NC
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It shouldn't make a difference to the seller how you want to structure your financing and fees. If your offer meets what their net expectations are to walk away from the table with they would be crazy to reject your offer. It's the same to them as offering 3% less with no closing costs so either it meets their expectation or not.
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Old 03-01-2010, 12:31 PM
 
Location: Tempe, Arizona
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Suggest you 1st read through the other thread on closing costs:

//www.city-data.com/forum/real-...s-just-me.html

Last edited by rjrcm; 03-01-2010 at 12:55 PM..
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Old 03-01-2010, 12:41 PM
 
152 posts, read 449,843 times
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Quote:
Originally Posted by dad2jules View Post
It shouldn't make a difference to the seller how you want to structure your financing and fees. If your offer meets what their net expectations are to walk away from the table with they would be crazy to reject your offer. It's the same to them as offering 3% less with no closing costs so either it meets their expectation or not.

I agree that ultimately if the net offer meets what they want to get that is what should matter, but I'm wondering if they would perceive an initial offer of say $415k with them paying closing costs better than an initial offer of $405k (assuming $10k in closing costs).
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Old 03-01-2010, 12:54 PM
 
Location: Tempe, Arizona
4,511 posts, read 12,805,361 times
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Quote:
Originally Posted by jeanne0626 View Post
I agree that ultimately if the net offer meets what they want to get that is what should matter, but I'm wondering if they would perceive an initial offer of say $415k with them paying closing costs better than an initial offer of $405k (assuming $10k in closing costs).
If they were smart, it makes no difference. They net the same either way. The real question is will they be satisfied with the net you offer? However, if you read the other thread I indicated, you will see that not everyone is rational about it.

Also keep in mind that the home will have to appraise for whatever price is agreed on.
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Old 03-01-2010, 01:19 PM
 
Location: NJ
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I recently sold my house. It made no difference what so ever how we the buyers got to the net number. I didn't even think about what it meant to their financial situation.
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Old 03-01-2010, 01:51 PM
 
152 posts, read 449,843 times
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Thanks for the responses everyone.

Regarding the appraisal, don't you mean that it has to appraise for at least what the purchase price is? As in, we won't be able to get a mortgage for a property that appraises for grossly less than what we intend to buy it for, so as long as it appraises higher we are good to go?
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Old 03-01-2010, 02:26 PM
 
Location: Tempe, Arizona
4,511 posts, read 12,805,361 times
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Quote:
Originally Posted by jeanne0626 View Post
...Regarding the appraisal, don't you mean that it has to appraise for at least what the purchase price is? As in, we won't be able to get a mortgage for a property that appraises for grossly less than what we intend to buy it for, so as long as it appraises higher we are good to go?
Yes, I meant for at least the purchase price. Higher is OK, lower is not. My point was that the price you offer including closing costs must be at least the appraised price. In your example, it would have to appraise for at least $415K.
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Old 03-01-2010, 04:21 PM
 
Location: Boise, ID
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On a lower price range house, I wouldn't think anything of it, since so many first time buyers don't have the cash, it is sort of the norm. On a higher end home, which I would consider what you are talking about to be, at least in my area, I would consider it to be abnormal, and would look for sufficient Earnest Money.

If they are looking to buy a $400k house, I would expect that they should be able to pay the closing costs. What it comes down to is that every seller is different. How I look at the situation has nothing to do with how your seller is going to view it.

I think the biggest hurdle is that you are offering 12% off the list price, along with asking for closing costs, on a house that has only been listed for a week. Is that where the comps put the value, or is that what you could afford? Either way, the seller may not mentally be ready to drop the price that much yet.
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Old 03-01-2010, 06:47 PM
 
152 posts, read 449,843 times
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Quote:
Originally Posted by Lacerta View Post
On a lower price range house, I wouldn't think anything of it, since so many first time buyers don't have the cash, it is sort of the norm. On a higher end home, which I would consider what you are talking about to be, at least in my area, I would consider it to be abnormal, and would look for sufficient Earnest Money.

If they are looking to buy a $400k house, I would expect that they should be able to pay the closing costs. What it comes down to is that every seller is different. How I look at the situation has nothing to do with how your seller is going to view it.

I think the biggest hurdle is that you are offering 12% off the list price, along with asking for closing costs, on a house that has only been listed for a week. Is that where the comps put the value, or is that what you could afford? Either way, the seller may not mentally be ready to drop the price that much yet.
The comps put the value at probably about 7-8% lower than asking, and we want to end up there, so that is why we were thinking of offering 12% lower. We actually ended up offering about 9% lower, per our agent's recommendation. Agree that the seller will likely not perceive our offer as being strong since they just listed. Oh, and we didn't ask for closing costs.

We'll see what happens. Thanks for all the feedback all.
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