early 30's/single net worth of 200k, found a house I like for 58,000. Price has steadily dropped since appearing on MLS since February (starting at 79k, then to 69, 63, and now 58.)
House facts: Built in 1957, 1220 sq feet with a 180 ft Florida porch added on, over half acre, ranch on a slab, no real attic, 2 bed/1ba, needs major overhaul with outdated carpet/etc (which doesn't bother me), in a nice town and neighborhood, no garage but would like to erect one for under 5k, and has outbuilding in backyard. Older couple owned it, wife died, the executor of the will is a probate lawyer. It is listed on MLS thru a major realtor company in my area. Being sold AS IS.
The house seems structurally sound, its all brick, not much room for expansion with varying roof lines, but I'm fine with that. No plans for kids anyways. Girlfriend loves it (she would move in in another year.) Nice asphalt driveway. Nice trees and foliage.
Looked at the house yesterday, realtor told me another person was in the midst of writing their offer but hadn't submitted it yet (sounds like a typical sales pitch.) I'm to get a home inspection tomorrow, which won't do much since its being sold AS IS, but at least the realtor being there could potentially tell the executor of the will what the inspector says. I want to use the inspection as part of my leverage, though it may not help. It has been at 58k for 4 weeks now, due for another price drop. I'm looking to offer 44k cash. Everything is still in the house too, which I don't care if it stays or leaves.
The way I see it, if your goal is to throw lowball cash offers, its a numbers game. Some will stick. But I wish to win this house with the lowest bid possible. Seeing the quick price drops makes me think they want the money and done. I also am curious how much lower they would take my offer in cash with no contingencies versus a loan. 5% lower statistically?
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posted: May. 9, 2012 @ 10:35p
I bought 1 house last year through probate, that was listed on the MLS. This was in California.
House was listed for $299,999. I was a bit slow to send in my offer and I missed it. I think someone offered $300k and it was 'accepted', as it was the ONLY offer. A few weeks later came the court date. The public trustee was there and everyone could bid on it. I personally did not have time to addend the court date, so I sent a partner. However, the bid increment was determined by the law. I forgot the exact formula. But it was something like a percentage of the current high bid minus $8k? The minimum bid to beat the 300k was $327,050 My partner was willing to bid this price.
The next highest bid would have been over $350k. Nobody was willing to pay that much.
Now you see the dilemma. The original bidder who bid $300k should have bid $320k. Had they bid $320k they would have gotten the property because nobody would've been willing to beat that number (court would've asked for $350k).
This is the property that I got for $327,050. I painted and did some other stuff and sold it a few weeks later for $420k.
Now, there was another probate sale in November 2011. Asking price was $699k on MLS in a neighborhood of $900k houses. I expected multiple offers. I wrote one for $750k cash, no contingencies, close in 7 days. All buyer agents who had an offer came together in a room. Each offer in a sealed envelope. 20 envelopes! Trustee opens each envelope, reads the name and price, writes both down. Winner was some id*ot who bid $940k. (The house needed $80k of repairs to be worth $900k IMHO.)
A few weeks later everyone received a letter with the court date, in case they want to top that $940k offer.
I don't think anyone went to attend the court date.
So, the initial bidder bid high, and got the property.
I don't know if your probate sale is in California. With a price of $58k, maybe not. 'Florida porch' ? Sounds like there is no demand. You might just write any offer, you should automatically be the only and the highest, and it is unlikely that some sniper like myself in the first example will come in and steal it from you.
Just write an offer of $55k. Good luck!
Senior Member - 1K
posted: May. 9, 2012 @ 10:44p
OP - I think you are thinking too low an offer, and going to lose by doing house inspection. You should offer 55K, cash subject to satisfactory (no major) issues from the inspection (and clear title). That way your offer goes in, if accepted, then you spend the $$ on inspection and if they find really bad things (termites, black mold) you can pull out or tell them to knock off 10K to cover fixing the problem.
posted: May. 9, 2012 @ 10:46p
ptiemann, I wish I had your or SIS's real estate savvy.
posted: May. 9, 2012 @ 10:55p
So I'm doing a disservice by getting the inspection FIRST? I was clueless that you could write an offer and then get an inspection and THEN if sh*t hits the fan, you have a clause allowing you to haggle down (or get out.) I thought by finding the problems FIRST, i would be helping myself "build a case."
Should I call and cancel the appointment? Its 12 hours away. Make the offer and THEN get the inspection?
Nice work ptie, you sound like you have a knack for this
posted: May. 9, 2012 @ 11:16p
YES. By getting the inspection now, you are effectively removing the contingencies that would allow you to rescind your offer later. The seller would be ecstatic.
posted: May. 9, 2012 @ 11:19p
BlueSeaLake said: OP - I think you are thinking too low an offer, and going to lose by doing house inspection. You should offer 55K, cash subject to satisfactory (no major) issues from the inspection (and clear title). That way your offer goes in, if accepted, then you spend the $$ on inspection and if they find really bad things (termites, black mold) you can pull out or tell them to knock off 10K to cover fixing the problem.
The following applies to California, the only place where I have experience with probate sales.
IIRC, this would not work. In a probate sale situation, there is no negotiation after the offer because of a problematic inspection. You buy it 'as-is'. There is definitely a bit higher risk involved, esp if you write your offer cash without financing contingency. That's why that Sunnyvale house with a FMV of $380k sold through probate for $327k. (Remember, I applied only minor cosmetic stuff and re-sold it for $420k.)
Think about it, if there was a time for negotiation based on inspection, how would that be fair (assuming there had been other parties interested).
The only thing the buyer can do: if inspection shows serious problems, back out. Then write another offer for a lower price. Not sure if that would be accepted. The seller may HAVE to accept it if it's the only offer. Of course, they may advertise it then for the lower price and there's always the risk of another buyer coming in.
Overall, it's definitely good to do the inspection prior to writing the offer.
You really should work with a RE agent instead of asking these questions here. In both probate sales that I described above, the seller had provided an inspection report for all interested parties.
posted: May. 9, 2012 @ 11:25p
By the way, I remember now that the court date to confirm the sale (and allow others to out-bid you) happens after you remove all contingencies.
So, if you think that you are wasting your money on an inspection by doing the inspection prior to acceptance, then understand, that you could do the inspection after acceptance, but still be out-bid.
It may be a purely theoretical comment in your case, seems that nobody wants to buy it.
posted: May. 9, 2012 @ 11:28p
I cant make sense of your response qcumber; maybe I'm just tired at the moment. (Ok, so you are saying it gives all the power to the seller?)
So it seems we have differing opinions on what steps should be taken in what order.
So if I make an offer, do probate courts either say yes or no? There's no counteroffers? And if no, I lose the ability as a buyer to ever purchase this house?
Senior Member - 2K
posted: May. 10, 2012 @ 12:01a
Where do I find these auction sales? Btw I'm located in SoCal.
Senior Member - 1K
posted: May. 10, 2012 @ 11:03a
In general, you always make the offer first and then do the inspection afterwards. The as-is just means that the seller won't make any repairs, but that doesn't mean you can't renegotiate the price. If the inspection turns up any major problems by law the seller has to disclose it to other buyers assuming that other buyers know to ask. In your case, you're spending money doing the inspection, but your offer may be too low that it won't get accepted and you're just wasting your inspection money. It's somewhat normal for the broker to say that they're expecting an offer. It's not really a pressure tactic, it's just to give you the current status, sometimes people say they're going to put in an offer and then back out, it's out of the broker's hand, they're just relaying information they were given. Sometimes a cigar is just a cigar.
There's no point in debating how much lower you should go or what the motivations of the seller are, even if you figured it all out, there are also other buyers out there and you don't know who they are or what they may offer. You just make what you feel is a good offer and see what happens. If you hope to get it for less, you can typically start low and then move up, but if you start too low and another offer comes in, they may just accept the other offer thinking that you won't come up much.
posted: May. 10, 2012 @ 11:15a
I'd offer $40k, see what happens, and learn. Then you know more for next time.
Or you get it for $18k less than asking, which should cover basically anything south of an actual superfund site.
posted: May. 10, 2012 @ 11:29a
I am waiting to do the inspection now. Thanks for the feedback.
I have an appointment in 3 hours to submit my offer. I need to know if I submit a lowball offer to the probate if they reject me, I have the right to resubmit since its either "Yes" or "No" from their end. But their lies the problem; in between my offers where I slowly inch up,someone else could snag it. If I were to hypothetically offer, say 48,000$ cash, and they take it, I'll always beat myself up wondering how low I REALLY could have got it for since it appears the demand is super low for this home.
Duct Tape Rules
posted: May. 10, 2012 @ 11:37a
IMO, if you like the house give a fair offer, regardless of how low you COULD have gotten it for. Coulda Woulda Shoulda can get you in trouble and you end up losing out in the end by trying to play games.
Duct Tape Rules
posted: May. 10, 2012 @ 11:44a
For those that don't know what a Florida porch/room is. It's usually an enclosed porch/room with lots of windows and no insulation. It is really only used during the warm months. You typically find these in parts of the country with COLD winters.
Senior Member - 1K
posted: May. 10, 2012 @ 12:11p
suezyque said: IMO, if you like the house give a fair offer, regardless of how low you COULD have gotten it for. Coulda Woulda Shoulda can get you in trouble and you end up losing out in the end by trying to play games.
There is some truth in this. Often folks reading FWF take advice on face value as an absolute. This works if you have an unlimited supply of funding. For instance, it doesn't matter when the next CVPI auction is if your car was wrecked yesterday, you still need to get to work today. Sure, you may find a slightly better deal by waiting to find the perfect apartment, but your lease runs out at the end of the month and you need a place to live and hotels are expensive.
Most stuff is learned by trial and error, regardless of how much reading and planning you do. You just don't want to get completely screwed in the process.
posted: May. 10, 2012 @ 4:19p
I kind of get the feeling from your posts that you really like and want this house. (Worried someone could snatch it up while you work through things). I'll echo others comments and say if you really like this house then put in a fair offer and don't try to low ball and negotiate. If you wouldn't mind losing it then throw in a low offer and if it sells to someone else you can move to the next prospect.
I searched months for a house and never found one I really liked. However, there was one house on MLS that I absolutely loved from the pictures but it was under contract. It was an amazing house that went into foreclosure and was in a neighborhood full of 400-500k houses in a great part of town.
I continued checking out places with my realtor and none of them were any good. Finally the place I'd loved came back onto the market at 270k and I was ecstatic. I saw it return to Active on MLS in the morning and I was checking the house out with my realtor later that night. My wife and I fell in love with the place when we saw it. Being true FWF I put in a bid for $250k the next morning to see what they countered. The selling agent got later and they had 4 other offers and needed our best and highest. I decided I really loved this house, but still being cheap, I gave $265k as my highest and best.
Well, my wife got really ahead of herself and had already started planning the interior and talking so much about it. I let myself sort of get caught up in the excitement. A week later we found out we lost it and later found out it sold for $274k. We were extremely dissapointed and I was so upset I didn't come up higher on my last offer - what's $10k when you amortize it over 30 yrs? Since then we've decided to stay renting and continue to look but we still haven't come across anything we like or at a similar price point.
Long story short if you really like this house, offer a fair price and realize 5-10k in the scheme of things isn't worth it.
posted: May. 10, 2012 @ 7:05p
rvdmp3: You don't know at the time whether your bid was adequate. You're working blind. If at that time, if 265 was the highest you could go, it was the highest you could go. There was another example somewhere where people where bidding for a large house. One guy says that house was worth around 650k. Another person bid 920k.
You don't know until after the fact. Let me put it this way: would you buy @ 290k or 300k?
Senior Member - 6K
posted: May. 10, 2012 @ 7:13p
Count26 said: Where do I find these auction sales? Btw I'm located in SoCalFor these probate sales, looks like you start by searching the MLS
suezyque said: For those that don't know what a Florida porch/room is. It's usually an enclosed porch/room with lots of windows and no insulation. It is really only used during the warm months. You typically find these in parts of the country with COLD winters. ; Or Florida.
$526 sq/ft for THAT! Thank god I don't live in CA.
Senior Member - 6K
posted: May. 11, 2012 @ 2:07p
wilesmt said: $526 sq/ft for THAT! Thank god I don't live in CAYou forgot to value the other 4202SF of land
posted: May. 11, 2012 @ 3:02p
no garage but would like to erect one for under 5k,
Ain't gonna happen, maybe 20 years ago. Double/triple that just for the building, don't forget a bag of $$ for permits, inspections and other municipal red tape.
posted: May. 11, 2012 @ 3:47p
It sounds just like regular bankruptcy auction. You are going to put stalking horse bid and if no one bids, you win. Court will take determined % (10%) higher bid at the time of auction. From experience, either I will bid low (40k) and go to the court with being prepared to bid high to certain amount. or Do not bid and go to the court with specific bid figure in the mind.
In any scenario, look at what is your target price. If you are ready to walk away, you will win.
rvdmp3 said: I continued checking out places with my realtor and none of them were any good. Finally the place I'd loved came back onto the market at 270k and I was ecstatic. I saw it return to Active on MLS in the morning and I was checking the house out with my realtor later that night. My wife and I fell in love with the place when we saw it. Being true FWF I put in a bid for $250k the next morning to see what they countered. The selling agent got later and they had 4 other offers and needed our best and highest. I decided I really loved this house, but still being cheap, I gave $265k as my highest and best.
Really ?? the selling agent asked for your best and highest offer ? I never thought they would expect you to pay more ... oh my !!
posted: May. 11, 2012 @ 9:48p
Well I bid 42k, 16k off listing price of 58k, which has been at that price for almost a month. I told my buyers agent I have a very small window to work with and have a budget. I also told him I'm not in any rush to move in when he asked. I shall find out if my bid has been accepted in a week or 2.
PS my offer contained no contingencies and also comes with everything in the house (lots of tools, furniture, antiques) as well as a huge outbuilding full of stuff. It feels like I bid on a storage unit! (my bet is the kids are in a different state and the executor of the will who is a lawyer finds the fact I dont mind "dealing" with all the crap a GOOD thing.) It will be like Christmas going thru it all!
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