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I'm currently in negotiations with a potential buyer for my house. We're priced to take a loss and prepared to take a loss, but now I'm looking at probably writing a check at closing, which pains me. "Hey, let me write a nice fat $3,000 - $5,000 check so YOU can have the privilege of moving into my lovely, totally updated, adorable house with the granite/stainless/maple kitchen and new systems! Have a great freaking time!"
We want more space, we want to move on. But writing that check will cut substantially into our downpayment for the NEXT place, making it even more likely that we'll have to move ourselves, our toddler, and our pets to an apartment in the interim. I am understandably less than thrilled about that prospect.
One of the most frustrating things is that no one is presenting comps to back up these low(er) offers--it's basically not about the market, but about the financial situations of the buyers. That annoys me. Why are people looking at homes they can't really afford when homes in this town are going for within a few thousand dollars of asking within a fairly short time? Grrr.
I share your pain. One buyer came through our home 5 times now and has submitted multiple offers that we clearly communicated were too low. They recently came back with an even lower offer since their preapproval expired and they couldn't squeeze another dime our of their government-backed loan. They are looking for 97% financing and having us give 3% back at closing for 100%. I don't even want my broker to let these people book a showing because they have no ability to afford our home and it is extremely time consuming to ready the house for someone who cannot afford our home.
It is ludicrous that a buyer with limited funds feel they are in the driver's seat during a supposed credit crunch. Why is the government still letting people with no money get loans? If these buyers are only approved up to an amount $40,000 below our list price (which is priced below comparables and is newer, and in much better condition) why is their broker still bringing them here?
The problem is that the $300 to $400k market is not moving anywhere right now in my area because people who typically buy homes in that income bracket are being extremely cautious in this tenuous economy. I personally know several people in the middle-income bracket who want to move up but are not going to take the chance of buying a new house when they feel things could get worse causing them or their spouse to lose their job. Many feel much more secure staying in their current (smaller home) because most could swing the mortgage and taxes on one salary. If they move up they will depend more on a two-income salary to swing the larger mortgage.
I'm sure that this the case with a large number of fiscally-conservative would-be buyers would love to move up but right now are just waiting out the economy.
We don't "have" to sell. We want to sell because we really would like more space and are in a position of being able to move up. My husband is also concerned that if the market takes another downturn, we may be "stuck" in our home for longer than we'd prefer (we planned on being here 5 years, it's year 4 now, our ARM adjusts in year 7). Yes, selling will help accomplish the "moving up" aspect, but like I said...writing that check makes it difficult to move on, logistically.
When I look back, I'm sure a few months in an apartment, scrimping to re-save the $5k I had to write a check for will seem like no big deal. But it's difficult to face it all right now. I'm over the "principle" of writing the check (well, I'm not OVER it, but I can deal with it!), it's more about the hole it's going to leave in my pocket at this point. Especially once I factor in having to pay first/last/security on an apartment.
It is about the market and the economy. They do it because they can and you in turn will do the same when you purchase your next house.
But that's just the thing--I won't. I don't even look at houses that are priced higher than I can pay. I do look at houses and think to myself, that's overpriced, I'd offer xyz. But if the list price is more than I can swing financially, I know I can't afford the house. Sure, I'd LIKE to pay less than list price, but that's my guide for personal affordability. If you can't afford my house, you shouldn't be looking at it. If you'd like to pay less, that's different. Offer away! But stick with listings you can afford. (We've had a few ridiculous lowballs...I totally understand why agents require a pre-approval before showings...people can be quite delusional.)
...I don't even look at houses that are priced higher than I can pay. I do look at houses and think to myself, that's overpriced, I'd offer xyz. But if the list price is more than I can swing financially, I know I can't afford the house. Sure, I'd LIKE to pay less than list price, but that's my guide for personal affordability. ...
You seem to be assuming that the list prices of all homes are realistic in the first place. I agree it's not productive to look at homes that are well outside your range, but if within a reasonable amount, it may pay to review area comps to see if a lower offer price is justified. Even more so in a declining market, where a home outside your range now may drop into your range within a few months.
We're priced to take a loss and prepared to take a loss, but now I'm looking at probably writing a check at closing, which pains me. "Hey, let me write a nice fat $3,000 - $5,000 check so YOU can have the privilege of moving into my lovely, totally updated, adorable house with the granite/stainless/maple kitchen and new systems! Have a great freaking time!"
Selling right now was your choice. Taking this offer, right, now is your choice. Or you can do what millions have done in previous regional real estate busts did and stay put and ride it out.
No fair complaining about your choice to be a part of this market. You are moving because you see an opportunity to get more house for less than it would have cost, just a few years ago.
Best of luck to you. This too shall pass. Shall we drink to this?
The problem is that the $300 to $400k market is not moving anywhere right now in my area because people who typically buy homes in that income bracket are being extremely cautious in this tenuous economy.
The $400's in my market are hot stuff, right now. Multiple bids are common. Most stuff at $650 and above is sitting and a substantial percentage of them will overwinter.
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