About B&B

It’s a buyer’s market. We all know that. And only in a buyer’s market are lowball offers even considered.

Because the market is on our side and we are in no hurry to rush into just any house, we’re planning to make a lowball offer on whatever house we do decide to make an offer on (be it House #1 or another house we find).

I’ve been researching how to make a lowball offer so I go into it prepared instead of over-emotional like I was when we first started our home search.

Here are some big things I’ve been seeing:

• Keep it clean. Make a clean offer, meaning not a whole list of contingencies and other “ifs, ands, or buts”. Go in strong and firm.
• Keep yourself out of it. Don’t base it on your situation (your income, amount you can borrow, etc.). No one cares that you want to buy a $400,000 house, but were only approved for a $250,000 house.
• Don’t walk away after the first counter. Don’t walk away when they counter. This is basically known in the real-estate world as just an invitation for the buyer to make another counter offer.
• But know when to walk away after that. Go into the situation knowing what your max price is and be prepared to walk away from the deal even if your heart is broken.
• Explain your offer. Sellers will probably feel shocked, and maybe angry, when you offer $275,000 on their home that’s priced at $350,000. But, explain you’re reasoning. Don’t just say “it’s a buyer’s market”. Say “this house doesn’t have a finished basement or granite countertops and the house across the street that sold for $40k less does.”
• Be financially ready. Make sure you’re pre-approved for the right amount and have the amount you plan to put down for earnest money, closing costs, and down payment ready to go.
• Don’t delay closing. Set a quick closing date (especially helpful for those motivated sellers).
• Don’t stray below 85% of the asking price. This varies among different articles, but I think this is a good percentage. I think anything lower than that could just result in a rejection.

Here’s more reading on the topic:

How To Make a Lowball Offer [WSJ]

The Art of the Aggressive Offer [MarketWatch]

How Low Can You Possibly Go On A Real Estate Bid? [MSN Real Estate]

Have you ever made or received a lowball offer on a house? What other tips would you add?

3: The number of years we’ve rented together.

6: The number of years I’ve rented since graduating from college.

0: The amount of debt we have.

$60,000: The amount of debt we paid off (mostly student loans and car loans).

2: The number of years we’ve been saving for our house.

25%: The amount of down payment required to secure a lower mortgage interest rate at our local Credit Union.

3.875%: The Credit Union’s 30-year rate.

4.1%: Our bank’s rate.

$32: The amount per month we’ll save with the lower interest rate (approximately).

$11,000: The amount we’ll save over 30 years with the lower interest rate (approximately).

810: My husband’s credit score.

785: My credit score. Whomp, whomp. He wins.

~500: Homes I’ve looked at online since last August.

1: Homes we’ve seen in person that we’ve loved.

1: Homes we’ve seen in person that had a disco ball hanging from the ceiling.

1: FSBO open houses that we’ve attended where the homeowner followed us around the entire house.

5,000: Times I’ve ran the online mortgage calculator.

0: Number of roommates we’ll need to be able to pay our mortgage.  I know a couple people in this situation and I always wonder why they think they were ready to even buy a house? I’m basing this on Kansas City prices – I know it’s pretty normal in other major cities.

Priceless: Knowing we’ve gotten all our freaking ducks in a row and we’re going to be able to buy an awesome house within our means and that we’ll never struggle to make payments or be house poor.

1: Number of pieces of advice I have to people planning to buy their first house – SAVE, SAVE, SAVE.  And be patient.  So, I guess that’s 4 pieces of advice.  Just keep saving, guys.  Keep renting.  Get your finances in order.  Be patient and live below your means – the final reward AND the peace of mind are totally worth it.

The house hunt continues, but we’re constantly going over the numbers, as you can see.  It’s so liberating knowing that we’re FINALLY going to be able to purchase a house and still live well below our means.

Any other numbers you’re interested in?  I can’t give away everything, but I may have missed something here.

We are not homeowners … yet. 

Reading back on my posts last week, you can tell I was a LITTLE over-eager.  Just a touch excited.  Let’s recap some of my quotes from last week:

“But I totes love the house.  (Don’t tell my realtor I said that.)”

“When we got home after stalking the house/neighborhood for a good half hour tonight…”

“I also just happened to find the house that we’re going to buy today.”

“I found our house.”

“I mean, we haven’t even been in it yet…”

“We drove by it tonight and we’re even more obsessed with it now.”

“It has everything we want.”

WOW!  I need to slow it down a bit.  Good thing I’m married; I would NOT be good at all those dating games people play where they have to wait 3 days to call or wait 2 days to return a call or whatever.

So, here’s what happened this weekend:

Friday: We looked at 6 houses, including our dream house that I drooled all over last week.

Four of the houses were beyond depressing (like, take down your disco ball and remove your TWO 100 gallon, dirty fish tanks that contain “creatures” and have sticky labels attached warning visitors not to “tap on the glass” – WTF people?).

One of those homes was brand-new and beautiful, but had an odd layout and ZERO backyard.

The last house was the one I’d been obsessed with all week.

We definitely liked the house (we’ll call it House #1).  It wasn’t as amazing in person as it seemed in the pictures, but when is that ever the case?

It meets most of our requirements (aside from a finished basement) and the backyard/deck/fenced yard/neighborhood ARE amazing.  We know we can’t change these things, but we can change everything inside.

Saturday: We talked about House #1 all weekend.  Our realtor sent us some comps in the same neighborhood.  (Comps are comparable houses that have sold in the last year or are on the market.)  In our opinion, the comps helped our situation in that many of them sold for way less than their listing price and a couple similar houses sold for less than House #1 is listed at.

Sunday: House #1 just happened to be hosting an open house on Sunday.  I invited my parents to come along with us to the open house since they know way more about this house-buying business than Adam or I do.

We spent a solid hour at the house looking it over with my parents.  I was happy because only 3 other lookers came during the 3-hour open house.  Most of them only stayed for 5-10 minutes, which is also a good sign that no one else is truly interested in it.

(The agents are trying to tell us that there is another interested buyer.  I would think that if there was another interested buyer, they would have been at the open house staking their claim just like we were.  Nope, it was just us.)

While we were in the unfinished basement, we started investigating some cracks in the basement floor.  Cracking in a concrete floor is natural over time, but this house is only 7 years old.  Plus, the cracks are wider than just the normal hairline cracks.

I pulled up the seller’s disclosure while we were there and they did say there were cracks and that they tried to fix these cracks by making perpendicular cuts into the basement floor (which we saw).  The floor also looks like it’s buckling slightly upward which hints to some pressure below the foundation – water possibly.

New homes are built on something called a vapor barrier, so there isn’t much of a chance of leaking (yet), but if there is water pressure under the house now, there is a chance in the future.

Obviously, this concerns us.

Today: We still really like the house, but this IS a buyer’s market.

Many more homes will start to pop up on the market as the weather gets warmer and I don’t want to feel forced into the first home we love just yet.

The seller’s are motivated and have already moved away for a new job (to Denver actually).  There’s a chance they could keep dropping their price.

If the house is still on the market and they drop their price, we might make our move.  But I want to see what homes come up over the next few weeks/months.

I’m still stalking the house online to see if an offer is made (our realtor will let us know that, too), but I’m not betting on it.  Homes in the price range that this house is in are just not selling right now.

Pictures: I am SO sorry I didn’t get any pictures for you guys!  I would post the ones from the listing on the Internet, but I don’t want to do that in case some creeper can trace the pictures back to their original location.  If we visit the house again, I will definitely get pictures for you.  AND, if we lose out on this house and continue our hunt, I’ll take more pictures of those houses, too.  (Trust me,  you didn’t want to see pictures of the other houses we saw last Friday – they were depressing.)

The house hunt continues!

What do you think about our decision to wait?  Any basement experts out there?

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Check out some of my writing on these fabulous blogs:

Seven Rules for Intentional Love (on Makeunder My Life)

The Tax-Document Checklist; A No-Stress Guide To Filing Your Taxes, Part 1 (on Money Under 30 – the first in a 6-part series on tax prep)

• Wait, so that monthly payment DOESN’T already included property taxes and insurance?
• Property taxes and insurance are going to add FIVE-HUNDRED DOLLARS to my monthly payment?!
• I love this house.
• I can’t afford this house.
• But I looooooove it.
• I have to pay $10,000 in bank fees?!
• No one ever told me about bank fees!
• So, bank fees are the same as closing costs?
• Okay, I totally knew about closing costs.
• Buutttt, I don’t really want to pay them.
• How do I get the seller to pay my closing costs?
• How do I get the lender to waive my closing costs?
• I can’t negotiate.
• I can’t concentrate on anything else.
• Do you want to drive by the house?
• Do you want to drive by?
• Let’s do a drive by.
• Their furniture is awful.
• Wallpaper?!
• I could TOTALLY see myself in this houseeeeeee!!!
• I can’t do it.  It’s too much money.
• Let’s do a mock budget.
• Okay, I feel better about our finances now.
• Wait, no, I don’t.
• But Dave Ramsey says…
• It’s our dream house.
• It’s just a little bit out of our price range.
• Do you really think there is another interested buyer?
• Is my real estate agent lying to me?
• Is the lender lying to me?
• Is the seller’s agent lying?!
• WHO ISN’T LYING TO ME?!
• I can’t do this.
• Let’s rent forever.