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Posted: 8/12/2007 10:17:05 PM EDT
Well, after getting approved on my first house for up to $160k, I keep looking at houses that are closer to $200.  I know that it's supposedly a "buyers market" right now but I'm just not satisfied with what's being offered in the neighborhood of $160.  What I'm wanting to do is to sent out several offers on several houses that might almost be considered insulting.  What do I care?  I figure someone will eventually respond that's in a bind and I can begin stealing their house.

Am I going about this wrong?  I know that location determines everything but dammit, I want to steal some schmuck's house and walk into some equity on something nice that I can shake in a couple years to some other schmuck who'll pay my mortgage with his rent check.

And another thing, either I can get a nice fucking awesome house somewhere I don't want to be, or get a so-so house somewhere I do.  What's more important, a nice house or a nice location?  I'm getting to think I might not be able to afford both.

*apologies in advance for what's probably an incoherent post...been looking at houses too long today*
Link Posted: 8/12/2007 10:22:51 PM EDT
[#1]
Location is more important to me.  I'll live in a shack on the right piece of land, but that's just me.  Depends on what's more important to you.  I also hate subdivisions.
Link Posted: 8/12/2007 10:23:26 PM EDT
[#2]
Wait six months 200k houses will be 160.

Yes its going to get that bad, then its going to get worse.
Link Posted: 8/12/2007 10:27:01 PM EDT
[#3]

I also hate subdivisions.


Amen, brotha!
Link Posted: 8/12/2007 11:32:43 PM EDT
[#4]
Location over building.  You can always upgrade your house, you can't upgrade your nieghbors.

I'd also see how long those properties you're looking at ahve been on teh market.  Offering 70% of asking on a home thats been on teh market for 4 days will get you no reply, a rude one if you do.
Link Posted: 8/12/2007 11:54:58 PM EDT
[#5]
There is nothing wrong with a low ball offer.  It works better when you can back it up with stuff like market data or flaws.  Get your self a really good realtor that understands how to do a proper market analysis and comparable report.  Also get your self a really good inspector that will find everything wrong with the house.  Look for people who need to sell quick.  I picked up a great bargain on a 750 square foot house that had 5 adults living in it.  They had bought a new larger house and in now way could afford two mortgage payments.  We got it for a great price.  Look for houses that have been on the market a long time.  
Link Posted: 8/13/2007 1:10:06 AM EDT
[#6]
Good things come to those that wait and the housing market is going down in AZ.  If you play this hand right you will get more house than you would be normally able to afford. Now that brings up another issue. If you want to live where the well to do people live you need to act like them too. Most well to do people in polite society do not cuss. This is advice I give my own children so do not take it wrong. Moving up in the world requires changes because after all, you want to feel that you are part of the neighborhood.
Link Posted: 8/13/2007 1:12:56 AM EDT
[#7]
Location, ", ", is the real estate mantra.

If you are looking in the 200K range you should wait to buy. Check out the foreclosure article in yesterday's LA Times for one.
Link Posted: 8/13/2007 1:13:04 AM EDT
[#8]
I hope you're ready to wait and wait and wait.

When I bought my house, I chose location over the dwelling.  Don't regret it one bit.  

As far as buying a house so you can flip it, I don't think this is a flip friendly time.  If you want to live risky go for it.  I wouldn't.

Link Posted: 8/13/2007 1:45:45 AM EDT
[#9]
Yes. Buying a house these days is unreasonable.
Link Posted: 8/13/2007 2:36:37 AM EDT
[#10]
Dont know how the market is in AZ where you are, but from the sound of it its like it is here. Location is your number one concern. Then all else. Dont send out multi offers at once. If you get more than one to agree, you just set yourself up to buy two houses.
(or more). The advice of hiring a Realtor that guides you thru the process of comps, and trends in your area is sound. It doesnt cost you anything, and the info availible to them is superior to what you have avalible. Forget the web sites on Real Estate values
that are out there for the public. They are so far off for this it isnt funny. I bet your area is the same way.

Most forclosures are not good deals. For one, the compitition on the good ones is fierce. They mostly sell for more than other propeties because of this, then need rehab.
Link Posted: 8/13/2007 2:41:27 AM EDT
[#11]
I believe SA stated that you should buy the cheapest house in the nicest neighborhood you can afford.  Seems like pretty sound advice.


I don't know what your market is like, but round these parts, it looks like it's a long way form hitting bottom.  I'm waiting to buy.  Maybe 6 months.

People aren't desperate yet!
Link Posted: 8/13/2007 3:06:08 AM EDT
[#12]
Wait and find the house that you like.  My wife and I shopped for 2 years before finding one in our price range.  Get a good realtor who will e-mail you MLS listings everytime a house comes on the market in your price range.  Be prepaired to pounce on something in a hurry.
Link Posted: 8/13/2007 3:08:47 AM EDT
[#13]
Link Posted: 8/13/2007 3:14:21 AM EDT
[#14]
Buy the shittiest house in the nicest neighborhood.  

90% of houses sell for within 10% of the asking price.

Patience is a virtue.  

Shop the obituaries AND the forclosures.

Looking to over extend yourself and make a quick buck short term is how this market got fuxxored in the first place.  
Link Posted: 8/13/2007 3:17:51 AM EDT
[#15]
I've been laying low for 3 years. I'd like to purchase another home, but I can't find one at a price I like, AND in a location that suits me. I'm a patient man.
Link Posted: 8/13/2007 3:25:48 AM EDT
[#16]

Quoted:
Location over building.  You can always upgrade your house, you can't upgrade your nieghbors...



That can't be stressed enough. And take the time to ring their doorbells and meet them.
Link Posted: 8/13/2007 3:31:41 AM EDT
[#17]

Well, after getting approved on my first house for up to $160k, I keep looking at houses that are closer to $200.


I am glad you are not wasting my time....


Good luck.

Link Posted: 8/13/2007 3:58:47 AM EDT
[#18]

Quoted:
Well, after getting approved on my first house for up to $160k


Just remember that lenders will approve you for a much bigger loan than you can really afford, unless you like sleeping on the floor and eating Ramen for the next ten years.
Link Posted: 8/13/2007 3:59:49 AM EDT
[#19]
AZ is one of the worst housing markets right now.  I'd hold off at least 12 more months unless you come across something you really like at a price you can afford.
Link Posted: 8/13/2007 4:08:04 AM EDT
[#20]
Now is not the time to buy a house, wait a few years...
Link Posted: 8/13/2007 4:11:23 AM EDT
[#21]

Quoted:
Now is not the time to buy a house, wait a few years...


Why?
Link Posted: 8/13/2007 4:12:36 AM EDT
[#22]

Quoted:

Quoted:
Well, after getting approved on my first house for up to $160k


Just remember that lenders will approve you for a much bigger loan than you can really afford, unless you like sleeping on the floor and eating Ramen for the next ten years.


Yep.

Also, if someone owes $200K on their house, they have to come up with $40K cash at closing if they want to sell it to you for $160.
Link Posted: 8/13/2007 4:15:04 AM EDT
[#23]


Quoted:

Quoted:
Well, after getting approved on my first house for up to $160k


Just remember that lenders will approve you for a much bigger loan than you can really afford, unless you like sleeping on the floor and eating Ramen for the next ten years.

I was approved for $230,000 or around that, no way in hell I was going to do that.
Link Posted: 8/13/2007 4:24:42 AM EDT
[#24]

Quoted:
...Most forclosures are not good deals. For one, the compitition on the good ones is fierce. They mostly sell for more than other propeties because of this, then need rehab.


HUD homes are houses that have been through foreclosure and you can actually inspect. Owner occupants get priority over investors. Cops / teachers / firefighters / EMTs get priority + a significant discount. The problem is these homes need rehab and look very scary to the typical 1st time buyer.
Link Posted: 8/13/2007 5:50:43 AM EDT
[#25]
If you are qualified for $160, the odds are you will be fairly uncomfortable making that payment.  You are looking at $200 because you have drank the cool aid that the bubble will never burst and you have to buy something you can not afford.  Somebody has most likely convinced you that you can afford it with special financing (probably an interest only ARM).  

You will be happier renting than trying to keep up with a mortgage you can not afford.  Don't use an ARM to get into the door.  Even if the bubble does not burst, rates are on the way up and your payment with an ARM will be getting worse.  Don't buy more than what you can afford at a fixed rate, 30 year note.
---
I was approved at $200, and my broker was trying to convince me to stretch it to $250.  I am paying on $150 and it murder as it is.
Link Posted: 8/13/2007 7:08:50 AM EDT
[#26]
Maybe I should clarify, while I was approved for $160, I could have probably secured much more, I just didn't want to bite off more than I could chew.  It's also at 6.875% over 40 years through BoA.
Link Posted: 8/13/2007 7:15:49 AM EDT
[#27]
40 years! Yikes.

...

To your original question, lowball to your heart's content. However, expect a counteroffer.

If you want a place valued at $200k now but for less, talk to a good friendly realtor about foreclosures. Explain what you're looking for and have him email you whenever he finds a place that goes up on the market. JMHO.
Link Posted: 8/13/2007 7:18:37 AM EDT
[#28]
Didnt even know they had 40 year loans, damn.... thats a hell of alot of interest payments.
Link Posted: 8/13/2007 7:24:52 AM EDT
[#29]

Quoted:
If you are qualified for $160, the odds are you will be fairly uncomfortable making that payment.  


I wouldn't be so sure.

I was qualified for $270k.  
But got a $100k house that is hard enough to pay for.
I can't imagine trying to survive while paying off a $270k loan
with my income.

Getting qualified is the easy part.  Actually affording it is a different story.
Link Posted: 8/13/2007 7:30:29 AM EDT
[#30]
Location is everything to me.
Link Posted: 8/13/2007 7:39:59 AM EDT
[#31]

Quoted:
Didnt even know they had 40 year loans, damn.... thats a hell of alot of interest payments.


My boss has me on the line of thinking..."What do you care?  Do you actually plan on being in there in 40 years?  (no...)  It's not like you're going to retire in this thing.  It's less outgoing and you can refi in a year or three when you're a citizen (credit-wise) and you're FICA's higher from having a better payment history."
Link Posted: 8/13/2007 7:53:21 AM EDT
[#32]
$160K on a 40 year loan is going to be about $980 a month.  So you can say your reallly buying a $470,400 house.  Now property taxes and insurance really makes that payment much more than that.  Tax base is well worth looking into when buying a house.   That may be adding several hundred dollars a month to the expenses.  


BTW it is only about $70 a month to go from a 40 year to a 30 year and saves you $92K and 10 years of payments.
Link Posted: 8/13/2007 7:56:53 AM EDT
[#33]
Wow...  that's some very bad advice.  

Figure this... you take the full 160K at 6.875 for 40 years.

Your payment will be roughly $980 + Tax & Insurance. I'm not familiar with the area, we'll call that 220 and round your monthly payment to 1200. Over a single year, you'll have paid $14,400, and the payoff on you loan will be roughly $159,220. Yes that's right, after paying almost 15 grand in payments, you'll have made $780 in progress on your loan. Also consider that you are buying into a market that many say is projected to be one of the worst markets in America over the next year. Only Florida and Detroit will top it, if my realtor friends haven't missed their bet.

I don't like to give out advice very often, but I do warn you to be cautious. With a little patience, you could really get a nice house for a good price. Lack of patience, and you may "fook" yourself for some time to come.

I wish you luck, but being smart and patient may go a lot further.

Disclaimer for the finance geeks: I used Excel, and only compounded monthly. Therefor, number are only ball park.
Link Posted: 8/13/2007 8:48:12 AM EDT
[#34]
Also consider that if you take the loan on a 30 year mortgage, you will only increase your payment by $70 a month roughly. But that extra amount will take down your payoff another $882. So, for the additional $840 that year, you'll knock down 882 in the payoff. Starting to see a trend here?

So, for the first $14,400 in paymetns you paid off 780, the next $840 paid off 882. Getting ahead of this interest curve is something most people never consider. They are busy trying to get their payment as low as possible, when they should really focus on not buying more house than they can afford, and get the payment to the point where the bank doesn't maximize their profit out of your savings account.

Another thing is if you finance for 30 years, you may get your interest rate down further as the bank's exposure is less, the risk is less, so the rate is less.
Link Posted: 8/13/2007 8:58:11 AM EDT
[#35]

Quoted:
Another thing is if you finance for 30 years, you may get your interest rate down further as the bank's exposure is less, the risk is less, so the rate is less.


Average 30-year rate right now is 6.25%, which means a PI payment of $986/mo (per Excel).  That's only a $10/month difference.

To the OP: you need to investigate your financing options more.  BoA is ripping you off.
Link Posted: 8/13/2007 9:37:48 AM EDT
[#36]

Quoted:

Quoted:
Now is not the time to buy a house, wait a few years...


Why?


He can see teh futures !!1
Link Posted: 8/13/2007 10:08:03 AM EDT
[#37]

Quoted:
Well, after getting approved on my first house for up to $160k, I keep looking at houses that are closer to $200.  I know that it's supposedly a "buyers market" right now but I'm just not satisfied with what's being offered in the neighborhood of $160.  What I'm wanting to do is to sent out several offers on several houses that might almost be considered insulting.  What do I care?  I figure someone will eventually respond that's in a bind and I can begin stealing their house.

Am I going about this wrong?  I know that location determines everything but dammit, I want to steal some schmuck's house and walk into some equity on something nice that I can shake in a couple years to some other schmuck who'll pay my mortgage with his rent check.

And another thing, either I can get a nice fucking awesome house somewhere I don't want to be, or get a so-so house somewhere I do.  What's more important, a nice house or a nice location?  I'm getting to think I might not be able to afford both.

*apologies in advance for what's probably an incoherent post...been looking at houses too long today*


In a dream world where media headlinesare real life, your plan might work. In reality there are two fatal flaws in your plan:

1) Representation: Any home you find will be represented by an agent unless its an FSBO. Agents have a fiduciary duty (by law) to protect the financial interests of their client.
The sellers will have already seen a market analysis of their neighborhood and know what homes are selling for. What this means is that when you write an offer 20% below asking price(on an appropriately priced home), their agent will rightly tell them its an illegitimate offer.
You could go FSBO because they don't have representation but FSBOs are typically penny pinchers. If they are unwilling to pay an agent $6000 for commission they probably won't accept an offer $40,000 below asking price.

2) Payoff: Banks won't let a home sell below payoff amount unless the seller makes up the difference. Mortgage payments on a $200k loan are $2k a month. If the sellers are desperate to sell, you're offering them the opportunity to get rid of their home and only bring $40k to closing . They would have to have their home on the market 20 months in order for your deal to make sense.
If they've owned the home ten years and only owe $160k, you're offering them no return for their investment. Another buyer will and that is who they'll sell to.

A more solid plan would be to get prequalified for a loan at $160k - $200k and wait for a good deal to come to market from someone who is ready to sell quickly. Be prepared to view a home within 36 hours of it hitting the MLS and make an acceptable offer on a home that already has a discounted price.

You sound like the type that should be looking at the foreclosure market but be prepared to budget $10,000 if it only needs carpet and paint. Usually foreclosures need a minimum of $20,000 to end up in comparable condition with their neighbors.
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