How to you determne your offer?

when the seller doesn't know what they want??

The house is old & needs mucho work, but it's exactly where we want to live so we are willing to do all the work. The seller hasn't put it on the market and doesn't want to, but let us know they were selling. I asked for a ballpark number & she said she had no idea & to "make an offer"

I have no idea how to come up with a price. DO I get a bank appraisal and engineer to inspect?? I'm lost!

TIA

Message edited 5/24/2011 9:31:43 PM.

Re: How to you determne your offer?

I would look at the past 3 months of sales to see what people were asking vs. what they sold for. Discount a bit for the actual cost of the work and discount for the fact that no realtor is involved. Before making an offer I would have an inspector/engineer come in to really see what you are working with.

Re: How to you determne your offer?

I would look at what comparable homes in the area have sold for in the past 6 months (look at actual sales prices, not list). Keep it within the same school district and within the same area of town (e.g., don't go north of a major road if the hosue is south of a major road). And, if possible, look at the same style of houses. If it's a 1930s colonial, don't look at new construction or ranches for comps. If the house is in much worse condition than the comp houses, then of course you need to account for that.

Always make your offer contingent on having a home inspection done. I would see if you can agree on price before paying for a home inspection (which will cost $400-500 on average). You can always withdraw your offer if the home inspection yields unpleasant surprises.

If you are getting a mortgage, then the bank will order an appraisal once you are in contract and apply for your mortgage. If the house doesn't appraise for what you are paying, you can re-negotiate the price with the seller. Although the bank's goal is to protect its investment, the appraisal is definitely a "check" that protects you, the buyer, too (from overpaying).

Good luck!