Confused about what to offer and when to walk

I haven't posted much on this board but I've been lurking like crazy because DH and I are looking for our first home. After 40 houses, we keep coming back to one that we just have this feeling about. We went back for a second look last weekend, and liked it even more than the first time.

We'd like to make an offer. My RE Agent tells us that we need to determine how much the house is worth and be firm - if he won't accept it, to walk. DH and I differ $20K in what we think our final purchase price should be.

A $20,000 difference in sale price, with a 5.25% interest rate over 30 years and a 20% down payment, works out to only $88 a month. $88! I can't imagine losing my dream home for $88. I can quit my gym membership and that's $88 right there.

I need someone to bring me back to reality, I guess. I mean, I know I'd rather the money in my pocket than in the seller's. But $88 a month? How can I rationalize walking away from a house for that? I think, psychologically, the seller would be happier to get $350K than $330K, and for $88? Let him feel like he got a fair price, and let us have our final offer accepted... right? I know I can't be looking at this the right way, and I need people who actually own a house to help me out with this. Thanks so much.

Message edited 10/28/2009 11:41:06 PM.

Re: Confused about what to offer and when to walk

Quick question before I answer this...did the seller reject 330 and counter with 350?

If so, can ya meet in the middle? Thats what we had to do with ours...

Re: Confused about what to offer and when to walk

Sorry, I think I was babbling up there in that first post, I'm just so confused!

Asking price is $370K. It was $409K until a month ago. Recent comps in the area have sold for $320's and $330's. So DH wants to be firm about $330, and I'm just saying that, if $330 is insulting and $350 is acceptable, should we budge and offer above what the comps have been, seeing as it's only $87 a month more?

Re: Confused about what to offer and when to walk

Although like you said $88 a month is like your gym membership- it's also $31,680 more that you would be paying for the life of the loan. We actually broke our lock a relocked for less because it made more sense in the long run.

I think you should ask to negotiate!

Re: Confused about what to offer and when to walk

can you and your Dh agree first to what your max is on the house? could it be 340K?

if so, start at 330K, make your realtor bring comps to the selling realtor and start the bargaining. if you can get to 340K and they drop to 360K or 355K, you are really getting close.

if they won't even counter your 330K, then you may just have to walk...

Re: Confused about what to offer and when to walk

You need to think about what is the max that you are comfortable paying for the house. The means what you are comfortable with as a monthly payment but also what you really believe the house is worth. IF the house is not worth the 350K then you should not pay it and walk away.

If the price was dropped recently they may not take a considerably lower offer. But if the house has been on the market for a long time then you know it is probably overpriced. And that is why the recent price drop.

We looked at tons of houses many were overpriced and the ones that weren't were on the market for a week or two and then sold.

Re: Confused about what to offer and when to walk

Re: Confused about what to offer and when to walk

I would absolutely not pay more than recent comps have gone for regardless of how much the incremental cost is per month. As another poster said it adds up over the life of the loan. It's also another $4000 out of pocket if you're putting 20% down. And most importantly with prices still coming down, you don't want to have overpaid in case you needed to sell it.

Dh was more like you when we were looking but I insisted on hanging tight and wait for the homeowners to come down. And it took a month (of torture!) but they did eventually and so far all of the houses we walked away sold for even less than we were offering or are still on the market.

Re: Confused about what to offer and when to walk

see we always used recent sales to base our offer, or at least our starting point. Considering the recent sales are 320's-330's your real estate agent should be presenting it that way.

I would start with 330 if it were me. And why does your real estate agent want you to offer your "best" offer or walk? do they not want to do work, or are there other offers?

the only time we offered our best offer first, was when there were other offers or other people interested, and we couldn't risk losing it. Otherwise, IMO I wouldn't offer the MOST you are willing to spend.

I went through a lot of he!l with this whole home buying process, and I was let down by several houses that were my "dream" house. All I can tell you, is if its meant to be it will be! Its hard to feel that way when you get attached to a house, but you have to believe that, otherwise you will make yourself crazy, and super stressed out! I lost 5 houses. we are in the process of a 6th house. every tear I cried, every house I thought was the one, was so worth the wait for this one!

Good luck, let us know how it goes!

Re: Confused about what to offer and when to walk

You also have to think about the bank appraisal. If the comps are $330ish what is the bank going to give you?

Re: Confused about what to offer and when to walk

Like the PP's said, I would start at the 330 and see what happens. For all you know, they could be in a position where they need to sell/move/close quickly. I wouldn't sorry about insulting anyone.

Just to give you an idea, our intial offer was 65K less than the listing price and we closed at 30K below the listed price.

I wasn't worried about insulting them, I kinda knew that they weren't going to take our first offer because the house was that nice and it was a new listing. Your seller might be desperate, so why not roll the dice?

Re: Confused about what to offer and when to walk

Wow, thanks so much for all the responses. You guys are such a great source of information.

Recent comps have gone from the $270s to $330s. The ones on the low end were actually larger, but needed TLC. The ones in the $330s were 300 sq ft. smaller than this house but in mint condition and on bigger lots (making the overall value pretty comparable, I think).

So, if our FINAL offer should be, say, $335 because of the comps... what do we start our bidding at? He's asking $370 but the RE Agent says to not even look at that, and only base our offer on what we're willing to pay.

Thanks again!

Oh, in case this info helps: The house has been on the market for 4 months. The man living there (alone) has not bought a new place yet. And as far as I know, there have been no other offers - I assume if there were, his RE Agent would be trying to use that as a sales tactic to pressure us.

Message edited 10/29/2009 5:23:43 PM.

Re: Confused about what to offer and when to walk

Re: Confused about what to offer and when to walk

Re: Confused about what to offer and when to walk

Re: Confused about what to offer and when to walk

sellers need to be a bit more realistic in todays buyers market... the economy is still on the down swing.. if you chose to sell at this time, you're going to take a hit... they should all know this by now... at least see if they will counter at 300... i wish we had started off lower... we'd prob be paying less ... for us we initally offered 35k below asking but the comps werent too far off from asking so we prob couldnt have started too much lower... in your case, comps will support your offer... propertyshark.com is really a great resource for that... i didnt find that site until after we were already in contract

Re: Confused about what to offer and when to walk

The advice you guys are giving me is similar to what my friends are telling me - start low, it's a buyers' market, the comps support a price in the $330s... I've just never done anything like this before (even at garage sales and flea markets, I just pay what's on the sticker!) and I'm so nervous about making a wrong move. But my money is worth more to me than this stranger's feelings. So really, what do I have to lose by making a lowball offer, right?

Re: Confused about what to offer and when to walk