First time home buyer, first bid advice

[#1pistonfan]

Any and all advice is appreciated. Here is the situation:

There are quite a new construction houses located in Hazel Park, MI which borders Detroit (just north of). It is a very small city and there are alot of houses for sale and the list seems to keep growing.

There is this builder which owns 3 new construction houses that I'm very interested in and I believe they have all been on the market for 5-10 months (at least). All are listed between $144,900 - $154,900. The houses are all 1200-1300 sqft w/ basements and attached garages. All seem far superior for the housing (which mostly sell for 60-90k) that surrounds them and it's quite hard to find comparables.

What should my first bid be? Is it possible to put in a bid that is too low and insult the realtor or seller?

Please help!

[Alpharetta]

Am am assuming that there are only 3. If there are more you need to find out what they have sold for.

If you are not working with a Realtor, you need to get one. Do not use the listing agent in a new construction transaction. You need to have a cma from a Realtor. Sometimes there are other homes around that are close enough to use for comps.

[#1pistonfan]

Am am assuming that there are only 3. If there are more you need to find out what they have sold for.

To clarify, there are probably 20 or so new construction within the city of Hazel Park, but these 3 are the ones that I am interested in. There are superior new homes (around 1600-1800 sqft, colonial homes) that have sold for 150k-170k over the past few years, before the market took a dive. The ones I am looking at are smaller ranches. The new contruction ranches are rare in HP and I'm not even sure there have been any that have sold recently.

I have been looking w/ a realtor, who has discouraged me from putting in lower offers.

Thank you very much for you help. :)

[ColoradoHomeHelper]

To clarify, there are probably 20 or so new construction within the city of Hazel Park, but these 3 are the ones that I am interested in. There are superior new homes (around 1600-1800 sqft, colonial homes) that have sold for 150k-170k over the past few years, before the market took a dive. The ones I am looking at are smaller ranches. The new contruction ranches are rare in HP and I'm not even sure there have been any that have sold recently.

I have been looking w/ a realtor, who has discouraged me from putting in lower offers.

Thank you very much for you help. :)

Ask your REALTOR to pull comparables for you. Ask him/her what their opinion is.

I wouldn't say there is such thing as an offer that is to low, but if you go in lowballing you can piss people off and have them think your not a serios buyer. They might throw your offer aside and look for some better. Offer just around were you think they will counter you without getting pissed off.

[TJ2007]

Sounds like you definitely need to find out what the real comparables are before you get locked into this deal - you don't want to find out you can't get financing due to the appraisal and have the builder try to keep your deposit money!!!!!!!

Talk to an appraiser or a mortgage broker who can get his appraiser to give you a better idea on the value.

THERE is definitley a point when you offer to little that the seller will not want to even look at it or any other offers from you in the future, and your realtor will get really bored of you making low ball offers & probably will lose interest in working with you after a while.

That said DO NOT OVER PAY for the property, lots of builders are hurting right now, and you can always try to push them & also see what extras they will throw in to sweeten the deal for you...

[#1pistonfan]

Sounds like you definitely need to find out what the real comparables are before you get locked into this deal - you don't want to find out you can't get financing due to the appraisal and have the builder try to keep your deposit money!!!!!!!

Talk to an appraiser or a mortgage broker who can get his appraiser to give you a better idea on the value.

THERE is definitley a point when you offer to little that the seller will not want to even look at it or any other offers from you in the future, and your realtor will get really bored of you making low ball offers & probably will lose interest in working with you after a while.

That said DO NOT OVER PAY for the property, lots of builders are hurting right now, and you can always try to push them & also see what extras they will throw in to sweeten the deal for you...

Do you think 80% of the listing price, in this situation, is too low?

[Deana]

Bottom line - you have to understand the comparables. I've lived in the Detroit area all my life and know Hazel Park very well. If there are not enough ranches, then similar square footage and amenities will have to do. In Hazel Park, the older homes do not have attached garages and often times they are only 1 car. What is it worth to you to have an attached garage? Adjustments must be made for age, upgrades, etc. on a case by case basis. Thus- a good appraisal or a thorough analysis by a Realtor is neede in this situation.

Comparables that sold in this area:

Home on E. George; built in 2005, 1400 sq. ft. 3 beds, 1 1/2 baths, 2 car attached garage, air, ceramic tile in kitchen and baths, appliances and deck - sold for $145,900 ($104 per sq. ft).

Home on Evelyn, built in 1953, 3 BR ranch, 1 1/2 baths, 2 car detached garage, 1152 sq. ft sold for $133,700 ($116 per sq. ft.).

3 BR Colonial on W. Hayes, built in 2002, 1344 sq. ft. 2 baths, 2 car attached garage, has air but landscaping needs to be done. Sold for $144,000 ($107 per sq. ft).

Roughly $110 per sq. ft. on average x 1300 sq. ft. = $143,000. You can use that for your baseline then compare and adjust for inclusions.

Deana Vitale
Servicing Macomb and Oakland County

[Thesa]

and where are the comps when you look at list price to sales price? That could also help with where to start your offer - and does that number stay the same on new construction?

[YourOrlando.com]

You may want to factor in how you would feel if you lost the house because of a low bid. If you would be devastated, I would say offer 90% of market value. No one in our current market should be angered by that type of offer. On the other hand, if you wouldn’t be devastated by loosing out on the house, go with your 80% of market. Every good investor knows that buying at great price is key. But, keep in mind the investor does not have the emotional connection to the property.

So gauge your motivation and how you would feel if you alienated this builder and were unable to get the house at all. Once you have done that, just have your Realtor submit your offer and put it behind you. You will learn from the experience.

One more thing. Listing price has nothing to do with value. Only past sales and current inventories should be considered. Anyone can put any price on a house. Recently sold homes are indicative of what the market is willing to pay, therefore creating the market price. I hope this helps. GREAT question by the way.

Best of luck,
Phil

[gjtrafl]

I have a whole other thought for you. Be careful about being the "highest priced home in the neighborhood" syndrome. You could get into this home and not like it or decide you need more space. Your appreciation could end up being less desirable than others around you.

You never want to be the Big kid on the block. It's best to be the smallest/cheapest... that way every window you look out you see something that looks better than your's.

My opinion...

[badie321]

I agree with that last post. I to have lived the metro detroit area my whole life and a house that expensive in Hazel Park? You have to hope the neighborhood gets better.(EXTERNAL OBSOLESCENCE). A bid of 85% would be fine, or 130ish