Question:
I am a realtor in the Temecula Valley and would like to respond to your question. I have sold many Va properties and one of the biggest problems we have is when we ask the seller to pay closing costs. The va has its own set of appraisers and they are usually a tough group. If you offer a higher price and also ask the seller to pay closing costs then the property must appraise for that much more. I recently did a VA on a property. We went in and offered $5000 lower than asking price and asked for them to cover closing costs of $5000 which put the price right back up to full asking price. The appraiser was tough but we pulled it off. Ask your realtor for a net sheet to show how much you really will be paying for the house. Also all the closing costs are added to your loan amount. You should probably deal with a realtor you trust and also a good lender – Hide quoted text — Show quoted text -> We are in the process of buying our first home. A home was recommended to > us by our agent who also happens to manage the house for the owner. The > owner is out of state and the house is currently rented. The owner just > wants to unload the property at this point, and is glad we are interested. > The property isn’t even officially on the market yet, but we have been told > the house would sell "as is". (I guess some clarification of what "as is" > means would be helpful.) > We like the house, want to fix it up, and it should be in our price range, > however, the selling price hasn’t been determined yet. We have already > decided on what will be our opening offer which is about $10,000 less then > our agent thinks the asking price will be. (Appraisal is also pending.) > Our agent is trying to get the seller to pay the closing costs and also get > us a VA loan with no money down. Our offer to buy will be contingent on a > professional home inspection. Our agent has also agreed to throw in a home > warranty. I should add this house is very old, possibly built in the 20’s. > We were looking for a fixer upper, but know an inspection will help us make > a decision on whether to go through with the purchase or not. Nothing has > been signed yet. We are going to take an extensive "second look" next week, > probably make an offer, then set up the inspection. Regarding our first > offer for the home, our agent thinks we should offer a fair (higher) price > to give the owner an incentive to help us out with the closing costs, we > think we should offer less and do some negotiating based on what is found > after the inspection. What do you, with more experience, think of our > situation so far?? > Please post your replies….
Before you buy.
Response:
Also schrieb Mike Nickerson: >My initial comments:
[snip great post] Are you sure those are your INITIAL comments? Wonderful reply. — A philosopher sees the earth as a large planet, traveling through the heavens, covered with fools. — Bernard le Bovier de Fontenelle (1657-1757)
Response:
We are in the process of buying our first home. A home was recommended to us by our agent who also happens to manage the house for the owner. The owner is out of state and the house is currently rented. The owner just wants to unload the property at this point, and is glad we are interested. The property isn’t even officially on the market yet, but we have been told the house would sell "as is". (I guess some clarification of what "as is" means would be helpful.) We like the house, want to fix it up, and it should be in our price range, however, the selling price hasn’t been determined yet. We have already decided on what will be our opening offer which is about $10,000 less then our agent thinks the asking price will be. (Appraisal is also pending.) Our agent is trying to get the seller to pay the closing costs and also get us a VA loan with no money down. Our offer to buy will be contingent on a professional home inspection. Our agent has also agreed to throw in a home warranty. I should add this house is very old, possibly built in the 20’s. We were looking for a fixer upper, but know an inspection will help us make a decision on whether to go through with the purchase or not. Nothing has been signed yet. We are going to take an extensive "second look" next week, probably make an offer, then set up the inspection. Regarding our first offer for the home, our agent thinks we should offer a fair (higher) price to give the owner an incentive to help us out with the closing costs, we think we should offer less and do some negotiating based on what is found after the inspection. What do you, with more experience, think of our situation so far?? Please post your replies….
Response:
- Hide quoted text — Show quoted text – > We are in the process of buying our first home. A home was recommended to > us by our agent who also happens to manage the house for the owner. The > owner is out of state and the house is currently rented. The owner just > wants to unload the property at this point, and is glad we are interested. > The property isn’t even officially on the market yet, but we have been told > the house would sell "as is". (I guess some clarification of what "as is" > means would be helpful.) > We like the house, want to fix it up, and it should be in our price range, > however, the selling price hasn’t been determined yet. We have already > decided on what will be our opening offer which is about $10,000 less then > our agent thinks the asking price will be. (Appraisal is also pending.) > Our agent is trying to get the seller to pay the closing costs and also get > us a VA loan with no money down. Our offer to buy will be contingent on a > professional home inspection. Our agent has also agreed to throw in a home > warranty. I should add this house is very old, possibly built in the 20’s. > We were looking for a fixer upper, but know an inspection will help us make > a decision on whether to go through with the purchase or not. Nothing has > been signed yet. We are going to take an extensive "second look" next week, > probably make an offer, then set up the inspection. Regarding our first > offer for the home, our agent thinks we should offer a fair (higher) price > to give the owner an incentive to help us out with the closing costs, we > think we should offer less and do some negotiating based on what is found > after the inspection. What do you, with more experience, think of our > situation so far?? > Please post your replies….
First, you talk about your agent. Do you mean that you have a buyer’s agent or do you mean a real estate agent you have been talking to? The difference is significant. A buyer’s agent is paid by you and represents you. A traditional real estate agent is employed by the seller and, no matter what they say or don’t say, represents the seller — not you. Just keep in mind that a traditional agent is legally obligated to the seller. For example, it is the agent’s duty to get as high a price as practical for the property. It is also the agent’s duty to submit every offer to the seller. (This may account for the agent thinking you should offer "a fair price".) hth — Jerry Gitomer Once I learned how to spell DBA, I became one.
Response:
The scenerio you presented in your post suggests to me that you may not be represented by the best agent and may, in fact, be led in a direction that may not be in your best interest by the owner and agent, who have an existing fiduciary relationship, which you probably do not have (depends on the laws of agency where you are). Representation by an agent independent of the owner may be desirable. Rehabing an old house can be a rewarding experience, but is also exhausting and stressful. I would suggest you obtain a thorough understanding of everything that needs to be done and possible costs involved. A typical home inspection will not yeild that information. IIRC, the primary advantage of a VA loan is the fact that you can get in for no money down. VA loans put stringent conditions on who can pay what and how much can be paid. They also put stringent conditions on the condition of the property. They are normally not popular when property is selling quickly (sellers can easily find buyers who will finance some other way). If you need to get in with no money down, perhaps a fixer is not the right choice. A home warranty is only a carrot, not something to even consider as a basis of a decision. Hopefully, you will get more opinions here. Good luck with your decision. Craig – Hide quoted text — Show quoted text – > We are in the process of buying our first home. A home was recommended to > us by our agent who also happens to manage the house for the owner. The > owner is out of state and the house is currently rented. The owner just > wants to unload the property at this point, and is glad we are interested. > The property isn’t even officially on the market yet, but we have been told > the house would sell "as is". (I guess some clarification of what "as is" > means would be helpful.) > We like the house, want to fix it up, and it should be in our price range, > however, the selling price hasn’t been determined yet. We have already > decided on what will be our opening offer which is about $10,000 less then > our agent thinks the asking price will be. (Appraisal is also pending.) > Our agent is trying to get the seller to pay the closing costs and also get > us a VA loan with no money down. Our offer to buy will be contingent on a > professional home inspection. Our agent has also agreed to throw in a home > warranty. I should add this house is very old, possibly built in the 20’s. > We were looking for a fixer upper, but know an inspection will help us make > a decision on whether to go through with the purchase or not. Nothing has > been signed yet. We are going to take an extensive "second look" next week, > probably make an offer, then set up the inspection. Regarding our first > offer for the home, our agent thinks we should offer a fair (higher) price > to give the owner an incentive to help us out with the closing costs, we > think we should offer less and do some negotiating based on what is found > after the inspection. What do you, with more experience, think of our > situation so far?? > Please post your replies….
Response:
My initial comments: 1. "As is" means that you get the house exactly as it currently is (problems or not). This may be a reasonable thing for an out-of-state landlord with tenants to ask for. However, it is also a relatively polite way to say: "I don’t want to hear about it if you find any problems after you buy this house." This openly puts the burden on you to make sure that you (or your helpers such as home inspectors) understand as closely as possible the condition of the house. I would ensure I checked EVERYTHING I could think of. Try all the faucets and drains. Crawl around on the floor checking the condition of everything. Check every outlet for power. (There are nifty little testers that tell you the outlet is working and wired correctly.) Pay attention to big things which could cost big money: Roof, basic electrical up to snuff, foundations and supports OK, sewer or septic in good shape, etc. 2. The home warranty may be a reasonable deal. It may also be worthless. The only way to tell would be to read all the detailed fine print on exclusions and deductibles. For example, if it will replace appliances which break but only after a $500 deduction per occurrence, it would be mostly worthless. Most new appliances don’t cost $500. Also, watch out for exclusions on pre-existing conditions, etc. I certainly wouldn’t let the warranty lull me into a sense of security. I would still mostly depend on my inspections. (BTW, doesn’t the idea of "home warranty" and "fixer-upper" seem a little strange?) 3. It sounds to me like you have a traditional agent. Remember that THE AGENT IS PROBABLY WORKING FOR THE SELLER. Based on some of their comments, I would be willing to bet money on it. Don’t say anything to the agent that you wouldn’t say directly to the buyer. While they are working closely with you and you may like them, they are still trying to get the best (highest) price from you for the seller. I would recommend taking their "your first offer should be higher" comments in this light. Now, if you have a real buyer’s broker, this wouldn’t be true. But it doesn’t sound like that to me. 4. When you make the offer, you are also setting into stone all the major details about how the deal will work. Even if you are using a "standard form" the terms can be made drastically different by which boxes are checked and how the blank lines are filled in. It is possible to make all risk in the closing fall to you (the buyer). The agent will probably default to filling in the form this way unless you stop them. Don’t sign the offer until you are sure what all the boxes mean and exactly what risks you are assuming. Remember that who pays for certain items in closing is probably also specified in the offer. The agent will probably say things like: "The buyer traditionally pays for that." This may be true. However, it is still negotiable if you want it to be. 5. If there are things which would prevent you from closing the deal (or cause you to lose interest in the house), make sure they are explicitly listed as contingencies to the offer. The obvious ones: subject to sale of a current house or other property, have to qualify for a loan, subject to inspection of property by inspector, subject to approval of offer by an attorney, subject to verification of zoning policies, etc. Each of these contingencies should have a date by which you will either remove the contingency or withdraw the offer. The dates could be different for each one. 6. Part of the negotiation during this process is on price. However, some of it is on these terms and who is assuming the risk of the deal falling through. Often the buyer is pushing for lots of contingencies so they can back out easily if something goes wrong. Obviously, the seller would prefer a "I will pay tons of cash on Friday" type of offer without contingencies. The fewer the contingencies, the more attractive your offer but the less you are protected. 7. It is a good idea to get a lawyer involved. In some parts of the country it is common practice. In other parts, not. However, a good lawyer can at least explain the various amounts of flexibility you have in the offer. Also, remember you don’t have anyone on your side at this point. Your attorney and inspectors that you pay are the only people on your side. (I would also tend to stay away from the selling-agent recommended building inspector unless I had independent recommendations for the person.) 8. I would recommend gathering documentation about as much stuff as possible. I did most of the legwork on these types of questions myself. It was more work, but cheaper than paying someone to chase the information. Also, it allowed me to follow up when an answer led to another question. When I finally got an answer to a question (say on zoning ordinances for the property), I asked for paper documentation confirming the answer. Even if the real-estate agent did the work, I still demanded the documentation. Sometimes the agents don’t know as much as they think they do. Sometimes they may be stretching the truth. If an agent (or anyone else) makes a statement that you are depending upon to make your decision, get documentation. If the agent states: "Very efficient home. The power bills have never been over $100 per month," ask to see copies of the last 12 months . They are available from the utility. Keep copies for your records. You will probably get a reputation as a pain-in-the-ass, but you will know that you have an accurate picture of the situation. I hope this helps. Good Luck. Mike Nickerson – Hide quoted text — Show quoted text – >We are in the process of buying our first home. A home was recommended to >us by our agent who also happens to manage the house for the owner. The >owner is out of state and the house is currently rented. The owner just >wants to unload the property at this point, and is glad we are interested. >The property isn’t even officially on the market yet, but we have been told >the house would sell "as is". (I guess some clarification of what "as is" >means would be helpful.) >We like the house, want to fix it up, and it should be in our price range, >however, the selling price hasn’t been determined yet. We have already >decided on what will be our opening offer which is about $10,000 less then >our agent thinks the asking price will be. (Appraisal is also pending.) >Our agent is trying to get the seller to pay the closing costs and also get >us a VA loan with no money down. Our offer to buy will be contingent on a >professional home inspection. Our agent has also agreed to throw in a home >warranty. I should add this house is very old, possibly built in the 20’s. >We were looking for a fixer upper, but know an inspection will help us make >a decision on whether to go through with the purchase or not. Nothing has >been signed yet. We are going to take an extensive "second look" next week, >probably make an offer, then set up the inspection. Regarding our first >offer for the home, our agent thinks we should offer a fair (higher) price >to give the owner an incentive to help us out with the closing costs, we >think we should offer less and do some negotiating based on what is found >after the inspection. What do you, with more experience, think of our >situation so far?? >Please post your replies….
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