Posted by GC on October 19, 1998 at 08:48:50:
I have offered 125k as my final offer, with the seller paying about 4k in closing costs, and the agent giving me 2,500.
Same models sold in the past year were in the range of 145k to 129k with the average at 134k.
I think I’m doing ok on this TH - Newbie,(long) - Posted by GC
Posted by GC on October 16, 1998 at 12:21:50:
My wife and I are looking at a townhome to buy. We need more space and are going to rent our condo.
The condo will rent for 1,000 (break even).
The TH was listed at 134000. 13 other models have gone for an average of 133600 in the past year and a half. The high was 145000 and the low was 129,000(with seller 600 closing contribution).
We offered 123000 with seller giving 4000 for closing. The agent is donating 2500 of her commision. The house has been on the market for 9 months with no offers. We will have to come up with about 2k at close.
The seller countered with 128750 which is 750 over what my wife and I agreed we would be willing to go. At this price we would be paying about 1070 a month total. We would eventually think about renting this place after we live there a few years. I think rents go for 1000 now in that neighborhood.
The place needs some work (about 6-7k). With improvements I think it will be worth the 134 asking price.
Does anyone think this is a bad deal. I think we will counter at 126000 with imediate possesion.
I think in few years this property will appreciate. It’s a good neighborhood with many companies building in the area.
Any comments suggestions will be appreciated.
Thanks in advance.
Re: I think I’m doing ok on this TH - Newbie - Posted by Rob FL
Posted by Rob FL on October 17, 1998 at 17:54:44:
Since it sounds like you are buying this as your primary residence, then your asking price is probably ok in my book.
However, if you plan on trying to do anything besides just break even on this property, then you are paying way to high. If you can’t get a condo/TH for less than 75% of fair market value, then it probably isn’t a good deal in my book. Because they normally don’t appreciate much in value, and you have to remember the costs of repairs, holding costs, transaction/closing costs, real estate commissions. If you are paying 123,000 and it needs 6,000 worth of repairs, that is 129,000 plus costs to purchase it, get a loan, etc. If its only worth 133,600, its not much of a deal. 129,000/133,600 = 96.5% of FMV. You may lose $$ in the long run.
think I’m doing ok on this TH - Newbie,(long) - Posted by Bud Branstetter
Posted by Bud Branstetter on October 16, 1998 at 16:43:58:
After your responses below you have convinced me that the decision is not investment based but a need/desire for it to be your place. I don’t know the DC market so I can’t say you could find a better deal. Because this is your home it becomes a liability rather than an asset. The only thing to concern yourself with is what will be the circumstances when you want to move and rent it out. Dallas is famous for the I30 condo’s that went down to a third the value of what they once sold for.
Re: I think I’m doing ok on this TH - - Posted by Bud Branstetter
Posted by Bud Branstetter on October 16, 1998 at 13:26:58:
The seller is saying I will split the difference with you. Instead of negotiating price make several counter offers. One with a little owner financing(it would help to know what he owes). The other for his price of 128750 but he do the repairs you want. Will he do either. Not if he is not motivated. Will you pay his price? Possibly, if emotionally, you want the TH.
There have been several posts about buying because of appreciation. Is it the same fever of the early 80’s? Most economists are looking for deflation more than inflation and appreciating prices. There will be regional pockets of good times but the one lesson of the 80’s is that you make your profit going in when investing in real estate.
Appreciation vs. depreciation - Posted by GC
Posted by GC on October 16, 1998 at 14:51:29:
Basically, housing prices in my area have been flat over the last ten+ years. Are you saying that prices will drop in the next few years? twenty years?
Don’t you think we’ve seen a long period of flatness/depreciation. I’m am looking at this property in the long term. Say atleast ten years.
The guy owes only 17k… - Posted by GC
Posted by GC on October 16, 1998 at 13:45:18:
but if I can get a 97% first mort. at 6.75 or better, why go through with a second or first from him. He said he would want 8 or 9%. I am going to have a no money down deal regardless.(I can get my 2k from a credit card or whatever)
I think he will say yes to 127k. I really think it is worth that. I know this isn’t a home run deal but I think it’s a good start.
Bottom line is we will be renting our condo at break even (not counting depr. or equity build up) and our monthly payments will be the same.
P.S. this is the Wash. D.C. area (NOVA)
Thanks for the help.
Re: The guy owes only 17k… - Posted by JohnBoy
Posted by JohnBoy on October 16, 1998 at 15:28:53:
If your getting a 97% first you will have to pay for private mortgage insurance. If you can get the first down to 80%LTV by getting the owner to carry the difference you won’t have to pay the private mortgage insurance.
Have you checked to see how long the TH’s there have been on the market before eventually selling? This would give you an idea of how hard these things are to move if you ever decided to get rid of it.
I’ve seen several condos here in my area that have been on the market for a year. They started out at $120k and finally sold for $86k. Every area is different but I would check to see how long the average is before they sell.
I would counter back by raising the first offer up by $500. This thing isn’t going anywhere if it’s been on the market 9 months with no other offers. Tell the agent you found another deal and if the seller doesn’t take this offer your going to buy the other place. This will tell you how motivated this seller is. If you want it that bad it will still be there if you wish to pay more for it. From the sound of this I don’t think you would have to. Counter with the $500 AND tell them you want the minor repairs done. You can use the repairs by dropping that issue if he takes your offer.
If he hasn’t recieved any offers in 9 months, he would be a fool not to jump on this IMHO!
Re: The guy owes only 17k… - Posted by phil fernandez
Posted by phil fernandez on October 16, 1998 at 13:56:19:
GC,
I don’t like the deal. You’re paying retail and only breaking even. No cash flow and no instant equity.
As Bud says you make your profit going into the deal. And these aren’t the 80’s. I’ve seen condos and townhouses go down in value and if we have future deflation, watch out below.
It appears you’re rationalizing this into a good deal. Where’s the deal.
Thanks - Posted by GC
Posted by GC on October 16, 1998 at 15:45:04:
Thanks,
I think his is the exception as far as length on the market. He hasn’t even had the place professionally cleaned. There really isn’t a whole lot of work to be done. It just looks bad because of all the junk. ei. he has an old waterbed in one of the bedrooms.
I think 3 to 4 months is the norm.
Re: The guy owes only 17k… - Posted by GC
Posted by GC on October 16, 1998 at 14:57:29:
There is no cash flow now, but in a few years there will be. I think at 127-128 there is equity here(a couple grand), granted not much but do you buy only when you make a killing. This is a nice place that needs a little cosmetic. It has new roof, new appliances.
my .02 - Posted by Mark (SDCA)
Posted by Mark (SDCA) on October 16, 1998 at 15:51:03:
I don’t like townhomes or condos. They don’t appreciate as well as SFR. They don’t rent or sell as easily. And HOA seem to go up like mad (plus you get to deal with the Jr Hitlers on the board).
If you are paying 128K for something worth 130K, you ar epaying 98% of FMV. Not a great deal.
Re: my .02 - Posted by GC
Posted by GC on October 16, 1998 at 16:07:24:
We looked at many single families and the ones we could afford were dumps in bad neighborhoods. I think in the DC area a nice TH in a good neighborhood is a better property than a single fam. in a bad area.
I’m originally from Richmond, VA, and you are right, I wouldn’t even cosider buying a TH there.
I think it depends where you are. As far as the HOA, 50 month. It’s only 50 after twenty years. I confident it won’t go up much.
This place is around the corner from a future Oracle Corp. building. There is also Sprint, MCI and many other huge buildings going up.
I’m thinking I won’t pay 128 maybe 126 but it I feel it’s worth more than 130, more like 135.
Re: my .02 - Posted by MichaelR (NoVA)
Posted by MichaelR (NoVA) on October 17, 1998 at 17:07:03:
Next to the new Oracle building. That would place it in
Reston, correct?
Anyway…Just wanted to throw my support behind the TH in NoVA argument. We have a unique situation with townhouses here that make them behave in the market more like SFH’s…
Anyway…the numbers are still a bit funky.
Michael
Re: my 25 cents worth - Posted by Mr Donald (NORVA)
Posted by Mr Donald (NORVA) on October 17, 1998 at 21:17:20:
GC,
Your numbers don’t show much room for future growth. What exactly are your comps on this one? If you’re not getting some sort of discount going in, are you certain you can carry it until the NEXT boom in NORVA?
With a few exceptions, real estate in NORVA has been overvalued for a number of years since the 87-88-89 boom. Those who bought high, hoping to sell higher, are stuck, and looking to salvage some cash on their homes - especially when they’re upside down now.
So they try to sell at a high price that is supported by the current FMV - or they hang on waiting for the return of the good times. Eventually, a few might just break down and sell it for the current mortgage balance - which may be a good deal for all.
You may find some of these great values - but buying at market value (as you apparently are), isn’t going to make you money in the short term or long run here - if that’s your goal.
Keep looking - you may find a better deal just waiting for you if you keep your eyes open - and your options clear. Think creatively.
Mr Donald.
dlm@bellatlantic.net