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I'm considering making an offer on a foreclosed property. The bank has had possession for 6+ months and in that time they have dropped the price from $335K down to $315K (most recent drop was ~1 month ago). Here are my concerns and thoughts:

1. We're getting ready to head into winter; my sense is that homes sell far more slowly in the winter, but I may be wrong. If I'm right, the bank would be interested in moving this off of its books rather than waiting until spring to sell.
2. The neighborhood is still growing and similar, brand-new houses are selling for only a bit more. They aren't making this exact floorplan any longer, but similar (albeit a bit smaller) floorplans are in the $330K range. This house does have a few unique attributes that make it desirable over the new versions (larger lot, more garage space), so it's not an exact comparison.
3. I would like to get a good deal on it, but I don't want to make my offer so low that I'm not taken seriously, etc. It also needs a bit of cleaning/work; the landscaping has gone downhill from an entire year of disrepair, but I think I could bring it back to life with a bit of work and money come spring.

I think I'd like to pay $300K; what should I offer to get that price and is it realistic in the situation I've outlined? Should I be more aggressive? I'm trying to learn more about how banks approach these negotiations. And if it helps, the house is owned by a large, national bank (e.g. BOA, WF, Chase).

Member Summary
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Regional exception - in Massachusetts blueboard and a skim coat plaster is the norm vs drywall and mud. The trades are ... (more)

Sesq (Dec. 08, 2012 @ 9:30a) |

Your mindset is still wrong. learn from this mistake. seems like you are going to overpay for your house no matter what ... (more)

bevo2k1 (Dec. 08, 2012 @ 11:10a) |

You're certainly entitled to your opinion, but I think enough anecdotal evidence has been posted in this thread to suppo... (more)

ltcm (Dec. 08, 2012 @ 11:40a) |

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I'd make a lowball offer, say $260-270k. Worst case scenario bank is just going to say no, then you can come in a bit higher. Beauty of dealing with a bank vs private seller is that a bank is not going to get offended at lowballs

I think you'd have no problem getting it for $300k. I'd start at $280 - its not too low, and you'll never know if you could have got it for 285 or 290 if you start too strong .

Use a high rebating realtor and you'll get another $3-5k off

Thanks for the advice. My realtor is actually my landlord -- in exchange for this arrangement, he's rebating 25% of the commission and letting me out of my lease at the end of whatever month I close, so I've got a lot of flexibility as far as timing (and he's a decent guy to work with as well).

Sounds like a good arrangement..

The REO offer will go to the listing agent, who will turn it over to 1 of 10,000 people at random responsible for viewing and accepting/rejecting offers. Some underwriter has already written down the minimum the bank will take. As long as your agent doesn't mind all the paperwork start really low, like $235k, and make an offer every couple days going up 10k a pop till the bank bites. Its highly unlikely the same agent for the bank will review all your offers. Without listing the area its really hard to say the likelihood of it going through. In CA the banks didn't budge at all, in CO they are much more motivated to move on price.

For 5-10% more I would just buy new and not have to hassle with the REO, just depends how your budget is.

Make your broker do their job. In their MLS, they may be able to look up all the listings sold by a particular broker or there's a search feature to find only bank properties. Then you look at the listing history before the properties are sold. Typically national banks follow a specific program like yours seems to be, they're lowering the price every 30 days until the property sells. Typically the best way to get in is to stay in contact with the listing broker and see if there are any offers, if there aren't any, you can start off with a low offer so that they know you're out there. If you look at the sale prices they typically accept offers within 10-20k of the asking price, but only your broker will be able to tell you that. If it's listed with a firm that doesn't do that many foreclosures, you might not have that much history but he may be able to find a few other firms that specialize in foreclosures and figure out what their history is. If you figure out the time that they lower their price, you can typically stick in an offer that's within 10-20k of the new price. For instance, if they're dropping 10k a month, the next drop will be 305k which means they might accept an offer that's above 295k, or you can just play the waiting game and wait for it to go down further. But in the meantime someone else could decide it's worth 305k and beat you out. The real unknown is what other buyers are willing to offer.

They don't care about winter or how long it's on the market, they just keep lowering the price until it sells. Because it's winter, probably less people are looking at it and it's possible that you may get a better price. They may have other pressures like trying to make the numbers for the quarter or moving so many properties or not wanting to depress the local market, but as the buyer, you'd never know that and it's really up to the program manager what he will accept. The program manager is typically responsible for several properties could be 50-200 properties so they're busy and they don't really pay attention to what you're doing specifically so I've run into the situation where you end up submitting a 305k bid, it gets rejected, then a month later the price gets lowered to 305k and then you come back and submit another bid at 300k and it gets accepted. They only seem to look at the offer in front of them, not at offers that have expired and are no longer valid. Buyers can have many other reasons for offering a lower price.

Thanks for both of the great responses -- I'll definitely have my agent look at the listing agent's history to try to get a sense of what the bank (assuming repeat REO business) is doing around here.

I'm curious though -- why do you say banks in CA were not willing to deal, whereas ones in CO were? I would think the opposite would be true because there was no big run-up on prices in Colorado, presumably less REO stock, etc.

I'm going to walk through this morning, and then do a bit more research if I confirm that I'd like to put in an offer.

Alright, back from looking at the house -- my wife loves it, so we're going to make an offer on it. I found out that it was a VA foreclosure (as opposed to FHA, etc.) -- does that make any difference in the bidding strategy? I don't think they're going to let this house go for less than $300K or so, but I also think there's some flexibility below the asking price of $315K. Also, talked to my agent and he said he did not think he could search MLS sales by agent/firm, but he was going to check.

Bumping my own thread so one of the foreclosure experts will hopefully chime in --

The house is in good shape, but I have two concerns (and will obviously getting an inspection) and I'm sure someone has come across this before

1. The doors seem to stick a bit. Some googling turned up the idea that the house has been closed up for several months and has been more subject to temperature swings (the furnace has been running, but has been set at a minimal setting, and I have no idea whether the a/c was running this summer), which may explain a bit of swelling in the doorframes. Is this a reasonable conclusion?

2. A related question -- there were a few horizontal cracks in the drywall (looked to be where two sheets had come together). My agent said vertical cracks are purely cosmetic, but that horizontal cracks can sometimes be indicative to an engineering problem, but he said it wouldn't stop him from buying the house. I googled about this and pretty much came to the same conclusion -- the only drywall cracks to really be concerned about are jagged or diagonal (none of these are); all of these are horizontal or vertical and appear to be right at the seams of two pieces of drywall. I read online that the temperature swings can also cause these types of cracks -- reasonable explanation and/or typical with foreclosures that have been sitting for a while?

Sounds like a settling foundation to me. Get a good inspection, I've had inspectors recommend $15-40k of structural work needed and got a bank to drop their price , even though the "work" isn't likely necessary and someone can live with it .

Just seeing what this agents listings sell for isn't really relevant unless they get all their REO from the same bank . I'd be more concerned with what this particular bank accepts . If they dont accept your first offer get your agent to ask theirs when the next scheduled price adjustment will occur. You can search this bank seller by public record search of sold homes with the same bank seller name , since the bank is on title now as owner

SUCKISSTAPLES said:   Sounds like a settling foundation to me. Get a good inspection, I've had inspectors recommend $15-40k of structural work needed and got a bank to drop their price , even though the "work" isn't likely necessary and someone can live with it .

Just seeing what this agents listings sell for isn't really relevant unless they get all their REO from the same bank . I'd be more concerned with what this particular bank accepts . If they dont accept your first offer get your agent to ask theirs when the next scheduled price adjustment will occur. You can search this bank seller by public record search of sold homes with the same bank seller name , since the bank is on title now as owner


Yeah, I've obviously wondered about the foundation -- I'm planning on a solid inspection and my agent knows someone who is a retired structural engineer who also does inspections. My agent talked to the listing agent yesterday and he said they're planning to "do another market analysis" at the end of this upcoming week (i.e. drop the price), so I think submitting an offer right before another price drop is a good idea. He also said the bank would likely take $310 and I'm offering a good bit less than that, but still w/in what I would consider a reasonable range.

I don't know the details of the local market, but I would think these numbers be a reasonable good approximation.

1. New homes sell for 10-15% more than similar used, but not distressed, homes,

2. Distressed homes sell 10-15% below the prices of similar used, but not distressed, homes.

Numbers might be a little bit lower in both cases. E.g., short sales might be only 5-10% cheaper, certain REOs might be a lot cheaper due to extensive damage, etc.

Lot size, configuration, etc, can all be accounted for. That's the job of your buyer's agent. Two homes can be comparable properties, even though they are not of the same size or configuration.

From the numbers you are quoting (similar new homes selling for $330K), I think $300K for REO is way too much. You need to recognize that a foreclosed home which has been on the market as REO for 6+ months is going to have A LOT of issues, most of them hidden. Not to mention that it will come without seller's disclosures, and as-is; so in case a big issue is discovered down the road, there is nobody to sue.

Without seeing the house, and based only on the numbers, I would bid no more than $255K on it.

It is not your job to determine what the bank is going to offer the home for. It is your job to determine what the place is worth to you, and what you can afford and are willing to pay for this property.

Short sales and REOs have huge variation by market. For extreme examples- in Detroit you can get a REO for literally pennies on the dollar, whereas in Portland most REOs have multiple offers and close higher than list price. Unless you give more information on the area where you are looking its hard to be of much help.

Your drywall issues are probably related to poor craftsmanship that can't withstand the neglect the house is experiencing due to temperature fluctuations. Its a good indication the quality of the house build is crap pretty much throughout (no insulation, probably drywall in the bathrooms, cheap carpet etc). Who was the home builder? Also if there seem to be moisture issues you better make sure it wasn't a grow house or meth house.

And finally- $315k in most of America buys you a pretty nice house. If there are this many obvious issues with the property you definitely are not going to end up saving money or building equity by going after a REO in an area where new construction is only marginally more expensive. Drywall and paint in a medium size house could easily run $3k doing it yourself, more if you have to buy tools, and triple that if you pay a contractor to do a decent job. If you can't get a ridiculous price by the sqft relative to neighboring properties you need to walk, and you need to know those numbers and stick to them.

Thanks for the advice.

I'd rather not say the market, but $300K around here buys a decent home way out in the country; I don't live in NYC, but it's definitely near a larger city that has done well throughout the recession (no big highs or lows). The builder is D.R. Horton and the house was built in 2008 and I would be the second owner. I looked back through the comps that my agent sent me and the only house of 9 (w/in the subdivision) sold in the last 12 months that is really similar to mine went for $345K (and was new construction, but on a lot that was 2000 square feet smaller), so using that figure, I guess I'm discounting about 15% off of the new price to bid $300K. My agent has said that used homes typically sell for the same as new homes around here, because the standard is not to include much landscaping or other similar finishes with new construction, so by the time you do that stuff, the used houses sell for similar prices to the new.

I definitely am looking for a competent inspector to come in and give the place a thorough inspection; I don't think the issues I've outlined are really as bad as I'm making them out to be (and other than the stuff I've mentioned, the house is in very good shape), but I do get the point re general level of craftsmanship.

Time for a new agent. Your agent shouldn't be telling you why you should be paying more, she/he should be telling you how to get the best deal for the market you're looking at.

No shortage of DR Horton horror stories. Unless you were inspecting the construction as it was being complete I wouldn't touch the home. Is the bathroom tub/shower enclosure tiled?

Are you making a bid on a house at auction or an offer on a REO? If you're making an offer there's no reason to start with a guess, start absurdly low and work your way up through repeated offers. If you're at auction, well, good luck.

The bathroom tub/shower area is tiled -- why do you ask?

DR Horton is a really popular builder around here; I'm sure there are people who have bad experiences with them, but I know lots of people who have purchased their homes and been very happy.

Making an offer. I realize I could start really low and work my way up, but in the meantime, I might miss out on the house if someone comes in with a more reasonable offer. The area I'm looking does not have a lot of houses with the space/price quotient that I'm looking for, so there's not lots of inventory/sales to compare against.

ltcm said:   Bumping my own thread so one of the foreclosure experts will hopefully chime in --

The house is in good shape, but I have two concerns (and will obviously getting an inspection) and I'm sure someone has come across this before

1. The doors seem to stick a bit. Some googling turned up the idea that the house has been closed up for several months and has been more subject to temperature swings (the furnace has been running, but has been set at a minimal setting, and I have no idea whether the a/c was running this summer), which may explain a bit of swelling in the doorframes. Is this a reasonable conclusion?

2. A related question -- there were a few horizontal cracks in the drywall (looked to be where two sheets had come together). My agent said vertical cracks are purely cosmetic, but that horizontal cracks can sometimes be indicative to an engineering problem, but he said it wouldn't stop him from buying the house. I googled about this and pretty much came to the same conclusion -- the only drywall cracks to really be concerned about are jagged or diagonal (none of these are); all of these are horizontal or vertical and appear to be right at the seams of two pieces of drywall. I read online that the temperature swings can also cause these types of cracks -- reasonable explanation and/or typical with foreclosures that have been sitting for a while?

horizontal cracks between sheets of drywall? a 4-year old house should not do that. how wide are the cracks, and how many are there?

check the baseboards. bring a laser level and see if they slope.

how bad are the doors sticking? generally the only things that make for bad sticking are a) moisture, or b) settling foundation. cold vs hot wont make much difference, typically.

solarUS said:   ltcm said:   Bumping my own thread so one of the foreclosure experts will hopefully chime in --

The house is in good shape, but I have two concerns (and will obviously getting an inspection) and I'm sure someone has come across this before

1. The doors seem to stick a bit. Some googling turned up the idea that the house has been closed up for several months and has been more subject to temperature swings (the furnace has been running, but has been set at a minimal setting, and I have no idea whether the a/c was running this summer), which may explain a bit of swelling in the doorframes. Is this a reasonable conclusion?

2. A related question -- there were a few horizontal cracks in the drywall (looked to be where two sheets had come together). My agent said vertical cracks are purely cosmetic, but that horizontal cracks can sometimes be indicative to an engineering problem, but he said it wouldn't stop him from buying the house. I googled about this and pretty much came to the same conclusion -- the only drywall cracks to really be concerned about are jagged or diagonal (none of these are); all of these are horizontal or vertical and appear to be right at the seams of two pieces of drywall. I read online that the temperature swings can also cause these types of cracks -- reasonable explanation and/or typical with foreclosures that have been sitting for a while?

horizontal cracks between sheets of drywall? a 4-year old house should not do that. how wide are the cracks, and how many are there?

check the baseboards. bring a laser level and see if they slope.

how bad are the doors sticking? generally the only things that make for bad sticking are a) moisture, or b) settling foundation. cold vs hot wont make much difference, typically.


There are probably four or five cracks throughout the house of varying length. All of them are very thin, but long (the longest one is probably about two feet; the shortest is only a few inches).

solarUS said:   
horizontal cracks between sheets of drywall? a 4-year old house should not do that. how wide are the cracks, and how many are there?

check the baseboards. bring a laser level and see if they slope.

how bad are the doors sticking? generally the only things that make for bad sticking are a) moisture, or b) settling foundation. cold vs hot wont make much difference, typically.


Check with your home inspector, but I don't normally worry too much about drywall cracks, what's the status of the foundation? If there's going to be some settlement, it's probably going to be in the first 10 years or so. Cracks in drywall can be a lots of things, the joints weren't well taped, unheated home etc. Usually you worry about the types of cracks that you can see in the foundation. For drywall, those cracks could be fixed with a bucket of mud and some paint.

Thanks. I'm still a bit leery, but I think a good home inspection will resolve any lingering doubt one way or the other. I think the foundation is in good shape, but I'm certainly not a home inspector. My agent has built some houses over the years and seems knowledgeable, and he said that he felt like the seams were not well taped or too little "mud" was used, making them susceptible to cracks. I guess I'll wait and see.

EDIT: I will say that this thread has caused me to become more firm on my price. I'm happy with the offer I submitted, but I'm not happy with it if I add another $5K -- so I'm holding firm right here. If the bank accepts it -- great. If not, I'll keep looking.

How much did you offer ?

$300K. I realize that I could have low-balled and came up, but I decided to make one solid offer and then see what happens -- looking at previous sales around here, they won't let it go for less than $300K and they shouldn't, it's worth that much.

ltcm said:   Thanks. I'm still a bit leery, but I think a good home inspection will resolve any lingering doubt one way or the other. I think the foundation is in good shape, but I'm certainly not a home inspector. My agent has built some houses over the years and seems knowledgeable, and he said that he felt like the seams were not well taped or too little "mud" was used, making them susceptible to cracks. I guess I'll wait and see.

EDIT: I will say that this thread has caused me to become more firm on my price. I'm happy with the offer I submitted, but I'm not happy with it if I add another $5K -- so I'm holding firm right here. If the bank accepts it -- great. If not, I'll keep looking.


Just because they may say no isn't the end of it, you just have to keep waiting, banks aren't like regular sellers, if they don't get what they want, they will lower the price, just wait til the next price drop. You can also try and negotiate the price after the home inspection. Sometimes they'll do it and sometimes they won't. But because any defects have to be disclosed to the next buyer, if they say no, you can always resubmit a bid assuming no one else does. When you resubmit the bid, you have no home inspection contingency which makes it stronger than other bids which might have an inspection contingency.

I think that's one of the drawbacks of using mud, it's more likely to crack, plaster is better but harder to work with.

Definitely. I'll just wait and see what the bank says when they get back to me. I'm expecting that they'll take a couple of days based on conversations my agent has had with theirs (big bank = big process, I guess).

You can always BINSR after your inspection period to seek concessions. We've bought nearly 200 REOs in the last year and we regularly BINSR the bank to get 10+% more of a concession - well, we actually usually find expensive problems during the inspection period that require a concession for our numbers to work.

ltcm said:   $300K. I realize that I could have low-balled and came up, but I decided to make one solid offer and then see what happens -- looking at previous sales around here, they won't let it go for less than $300K and they shouldn't, it's worth that much.

I'm confused as to why you came in asking how to get the best deal, then acted directly contrary to that? You're just guaranteed to overpay for the property. You will never know how low they will go on the sale price with 'one solid offer' mentality. On our recent purchase I put in just enough of an offer to get under contract, which they countered and we compromised on. Then I used emcdemc's method to get another $7.5k off the price. Total we will be almost $15k down from the list price and astonishingly low for the neighborhood. This is a private sale and I can't believe the sellers didn't walk from us, several negotiation points were very difficult to resolve and with a lot of stubbornness on both sides.

Winter time is slow for real estate and you're about to be in rough water with this purchase, assuming you're in an area where winter is sub-freezing temps. If the house hasn't been winterized yet, at considerable cost to the bank, its unlikely they will winterize it under contract. They also won't let you as a potential buyer go in and winterize it. Best case with financing and some significant inspection issues you will be looking at 35 days to close, so maybe 3rd of Jan to take possession. That's a lot of time for damage to happen to a house if its not being maintained at proper temp and something you need to have squared away ASAP.

As far as settling- contrary to another post settling in homes typically happens slowly and over extended time for the life of the house. You need to leave one crack untreated and put a crack monitor on it to make sure you know what is going on for the long term. The other poster is correct, patch your cracks with plaster or caulk, not mud. Mud makes me fing crazy, anything over 1/4" and its almost guaranteed to break loose. I strongly recommend using mesh tape and caulk to patch your cracks.

I asked about the tile because DR Horton is NOTORIOUS for putting tile up on drywall (instead of concrete board), especially on ceilings, having issues and refusing to cover it. They also like to skimp on the moisture barrier so best case 1 of your 3 walls of your tub/shower enclosure has a moisture barrier, and only on the load bearing wall. It means you will have tiles pop off, walls sag, and shit ton of mold and mildew growth inside your walls.

http://www.hgtv.com/hgtv-holmes-on-homes/videos/index.html

Watch 'Toxic Bathroom Troubles' episode starting at about 9 minutes in for a great example of a bathroom not properly done, and this is less than a year after the home builder 'fixed' the initial problem.

CptSavAHo said:   ltcm said:   $300K. I realize that I could have low-balled and came up, but I decided to make one solid offer and then see what happens -- looking at previous sales around here, they won't let it go for less than $300K and they shouldn't, it's worth that much.

I'm confused as to why you came in asking how to get the best deal, then acted directly contrary to that? You're just guaranteed to overpay for the property. You will never know how low they will go on the sale price with 'one solid offer' mentality. On our recent purchase I put in just enough of an offer to get under contract, which they countered and we compromised on. Then I used emcdemc's method to get another $7.5k off the price. Total we will be almost $15k down from the list price and astonishingly low for the neighborhood. This is a private sale and I can't believe the sellers didn't walk from us, several negotiation points were very difficult to resolve and with a lot of stubbornness on both sides.

Winter time is slow for real estate and you're about to be in rough water with this purchase, assuming you're in an area where winter is sub-freezing temps. If the house hasn't been winterized yet, at considerable cost to the bank, its unlikely they will winterize it under contract. They also won't let you as a potential buyer go in and winterize it. Best case with financing and some significant inspection issues you will be looking at 35 days to close, so maybe 3rd of Jan to take possession. That's a lot of time for damage to happen to a house if its not being maintained at proper temp and something you need to have squared away ASAP.

As far as settling- contrary to another post settling in homes typically happens slowly and over extended time for the life of the house. You need to leave one crack untreated and put a crack monitor on it to make sure you know what is going on for the long term. The other poster is correct, patch your cracks with plaster or caulk, not mud. Mud makes me fing crazy, anything over 1/4" and its almost guaranteed to break loose. I strongly recommend using mesh tape and caulk to patch your cracks.

I asked about the tile because DR Horton is NOTORIOUS for putting tile up on drywall (instead of concrete board), especially on ceilings, having issues and refusing to cover it. They also like to skimp on the moisture barrier so best case 1 of your 3 walls of your tub/shower enclosure has a moisture barrier, and only on the load bearing wall. It means you will have tiles pop off, walls sag, and shit ton of mold and mildew growth inside your walls.

http://www.hgtv.com/hgtv-holmes-on-homes/videos/index.html

Watch 'Toxic Bathroom Troubles' episode starting at about 9 minutes in for a great example of a bathroom not properly done, and this is less than a year after the home builder 'fixed' the initial problem.


The house has already been winterized, so I'm not too worried about that, but I'll definitely watch your video. I guess you're right that I could have really lowballed them, but I don't really have the time to make continual offers on a property over the course of several weeks. If the offer's not accepted, I'll move on and circle back if they drop the price again in a few weeks. I will definitely take note of the BINSR if anything is found of note (if we make it that far).

ltcm said:   CptSavAHo said:   ltcm said:   $300K. I realize that I could have low-balled and came up, but I decided to make one solid offer and then see what happens -- looking at previous sales around here, they won't let it go for less than $300K and they shouldn't, it's worth that much.

I'm confused as to why you came in asking how to get the best deal, then acted directly contrary to that? You're just guaranteed to overpay for the property. You will never know how low they will go on the sale price with 'one solid offer' mentality. On our recent purchase I put in just enough of an offer to get under contract, which they countered and we compromised on. Then I used emcdemc's method to get another $7.5k off the price. Total we will be almost $15k down from the list price and astonishingly low for the neighborhood. This is a private sale and I can't believe the sellers didn't walk from us, several negotiation points were very difficult to resolve and with a lot of stubbornness on both sides.

Winter time is slow for real estate and you're about to be in rough water with this purchase, assuming you're in an area where winter is sub-freezing temps. If the house hasn't been winterized yet, at considerable cost to the bank, its unlikely they will winterize it under contract. They also won't let you as a potential buyer go in and winterize it. Best case with financing and some significant inspection issues you will be looking at 35 days to close, so maybe 3rd of Jan to take possession. That's a lot of time for damage to happen to a house if its not being maintained at proper temp and something you need to have squared away ASAP.

As far as settling- contrary to another post settling in homes typically happens slowly and over extended time for the life of the house. You need to leave one crack untreated and put a crack monitor on it to make sure you know what is going on for the long term. The other poster is correct, patch your cracks with plaster or caulk, not mud. Mud makes me fing crazy, anything over 1/4" and its almost guaranteed to break loose. I strongly recommend using mesh tape and caulk to patch your cracks.

I asked about the tile because DR Horton is NOTORIOUS for putting tile up on drywall (instead of concrete board), especially on ceilings, having issues and refusing to cover it. They also like to skimp on the moisture barrier so best case 1 of your 3 walls of your tub/shower enclosure has a moisture barrier, and only on the load bearing wall. It means you will have tiles pop off, walls sag, and shit ton of mold and mildew growth inside your walls.

http://www.hgtv.com/hgtv-holmes-on-homes/videos/index.html

Watch 'Toxic Bathroom Troubles' episode starting at about 9 minutes in for a great example of a bathroom not properly done, and this is less than a year after the home builder 'fixed' the initial problem.


The house has already been winterized, so I'm not too worried about that, but I'll definitely watch your video. I guess you're right that I could have really lowballed them, but I don't really have the time to make continual offers on a property over the course of several weeks. If the offer's not accepted, I'll move on and circle back if they drop the price again in a few weeks. I will definitely take note of the BINSR if anything is found of note (if we make it that far).


Saveaho is totally right. Horton, Lennar, Beazer, etc. They all shove tile right onto drywall. My home was built by a major builder who shall rename nameless who built my whole community on the fly. They shoved tile right onto drywall, we have had over 20 water explosions because of cracking pipes sometimes the owners are unaware for months resulting in bad cases of mold. We have had half a dozen diagonally cracked foundations, it's not good at all.

ltcm said:   CptSavAHo said:   ltcm said:   $300K. I realize that I could have low-balled and came up, but I decided to make one solid offer and then see what happens -- looking at previous sales around here, they won't let it go for less than $300K and they shouldn't, it's worth that much.

I'm confused as to why you came in asking how to get the best deal, then acted directly contrary to that? You're just guaranteed to overpay for the property. You will never know how low they will go on the sale price with 'one solid offer' mentality. On our recent purchase I put in just enough of an offer to get under contract, which they countered and we compromised on. Then I used emcdemc's method to get another $7.5k off the price. Total we will be almost $15k down from the list price and astonishingly low for the neighborhood. This is a private sale and I can't believe the sellers didn't walk from us, several negotiation points were very difficult to resolve and with a lot of stubbornness on both sides.

Winter time is slow for real estate and you're about to be in rough water with this purchase, assuming you're in an area where winter is sub-freezing temps. If the house hasn't been winterized yet, at considerable cost to the bank, its unlikely they will winterize it under contract. They also won't let you as a potential buyer go in and winterize it. Best case with financing and some significant inspection issues you will be looking at 35 days to close, so maybe 3rd of Jan to take possession. That's a lot of time for damage to happen to a house if its not being maintained at proper temp and something you need to have squared away ASAP.

As far as settling- contrary to another post settling in homes typically happens slowly and over extended time for the life of the house. You need to leave one crack untreated and put a crack monitor on it to make sure you know what is going on for the long term. The other poster is correct, patch your cracks with plaster or caulk, not mud. Mud makes me fing crazy, anything over 1/4" and its almost guaranteed to break loose. I strongly recommend using mesh tape and caulk to patch your cracks.

I asked about the tile because DR Horton is NOTORIOUS for putting tile up on drywall (instead of concrete board), especially on ceilings, having issues and refusing to cover it. They also like to skimp on the moisture barrier so best case 1 of your 3 walls of your tub/shower enclosure has a moisture barrier, and only on the load bearing wall. It means you will have tiles pop off, walls sag, and shit ton of mold and mildew growth inside your walls.

http://www.hgtv.com/hgtv-holmes-on-homes/videos/index.html

Watch 'Toxic Bathroom Troubles' episode starting at about 9 minutes in for a great example of a bathroom not properly done, and this is less than a year after the home builder 'fixed' the initial problem.


The house has already been winterized, so I'm not too worried about that, but I'll definitely watch your video. I guess you're right that I could have really lowballed them, but I don't really have the time to make continual offers on a property over the course of several weeks. If the offer's not accepted, I'll move on and circle back if they drop the price again in a few weeks. I will definitely take note of the BINSR if anything is found of note (if we make it that far).


The agent should do all of the countering work for you. It's not a lot of work, it's just a few pieces of paper. You could even pre-sign blank counters if you know your agent well enough (like he/she is a longtime friend). The banks usually just counter you in an email and once you come to an agreement, you make a formal counter and acceptance. The banks don't usually sign anything until after acceptance. But you're on the inspection window clock as soon as you get that acceptance email.

henry33 said:   I think that's one of the drawbacks of using mud, it's more likely to crack, plaster is better but harder to work with.
plaster...huh? nobody uses plaster for anything anymore in building modern homes...been 50+ years since they did.

generally, you can put tile onto drywall, but not inside shower or tub enclosures.

HOME INSPECTORS ARE NOT STRUCTURAL ENGINEERS. it is not easy to assess whether a slab home was built properly...and for $300 and next to NO training, they are not in a position to tell you. homes with evidence of strucural or foundation problems almost ALWAYS get discounted heavily.

We have a name for a home inspector that has no comment on structural issues: Fired!

Thanks, guys. While home inspectors are not engineers, I think a healthy mix of experience (e.g. not picking the inspector who advertises on a bus stop who get certified last week) will head off most problems. And as I said earlier, if anything at all turns up, I'll hire a structural engineer to come in for a consult -- no reason not to spend $200 for a bit of piece of mind.

I called around to hire a structural engineer to comment on a house I was looking at purchasing years ago due to some vertical cracks in the foundation (slab).

He wanted $800 and basically told me that would get me his "opinion only" and the only way to get an objective answer would be to get a soils test done to determine if the pad was prepared correctly and that would be at least an additional $750.

vegas4x4 said:   I called around to hire a structural engineer to comment on a house I was looking at purchasing years ago due to some vertical cracks in the foundation (slab).

He wanted $800 and basically told me that would get me his "opinion only" and the only way to get an objective answer would be to get a soils test done to determine if the pad was prepared correctly and that would be at least an additional $750.


I've gotten quotes in the $75 - $100/hour range -- and I would be more worried about cracks in the slab rather than cracks in the drywall.

IMHO home inspectors are usually pretty worthless, they just go through the house and document obvious things that are wrong, then to cover there ass they say, recommend inspections by structural engineer or by masonry contractor or by electrical contractor.

You need a home inspector that is all of those guys, i can go through the house and take pictures of cracks in drywall too and once i take the picture i can say its Fd up but what is that worth.

If drywall is cracking in a 4 year old house, its because of settling, i would also guess some of the doors dont close without touching the frames. That can cause a big unknown later since who knows if its done settling or if itll keep doing it. If its done, you have a patch and paint problem, if its not.... well you dont want the house.

ShaftSlinger said:   IMHO home inspectors are usually pretty worthless, they just go through the house and document obvious things that are wrong, then to cover there ass they say, recommend inspections by structural engineer or by masonry contractor or by electrical contractor.

You need a home inspector that is all of those guys, i can go through the house and take pictures of cracks in drywall too and once i take the picture i can say its Fd up but what is that worth.

If drywall is cracking in a 4 year old house, its because of settling, i would also guess some of the doors dont close without touching the frames. That can cause a big unknown later since who knows if its done settling or if itll keep doing it. If its done, you have a patch and paint problem, if its not.... well you dont want the house.


Fair point -- how would you determine whether it's done settling or not? Soil test? Structural engineer?

BTW be VERY careful with Homepath houses. One across the street had a really really bad case of mold in the kitchen (ceiling area). I personally took a look and it was VERY bad. The issue was a pipe started leaking 6 months before the family noticed. Lender foreclosed, homepath sent in laborers who simply patched the hole cut in the kitchen, patched the broken pipe, painted the patch, and left. Home was bought and new family has noticed problem (duh! mold spreads) is back.

Skipping 25 Messages...
bevo2k1 said:   ltcm said:   

they won't let it go for less than $300K and they shouldn't, it's worth that much.

To be fair, I still think $300K is a good price for the house,

but I bet it will sell for $300K or higher, it seems very unlikely the bank will let it go for less than that.


Your mindset is still wrong. learn from this mistake. seems like you are going to overpay for your house no matter what with this mindset.


You're certainly entitled to your opinion, but I think enough anecdotal evidence has been posted in this thread to support the idea that not every place in the country is holding a fire sale on foreclosures -- the bank certainly knows a lot more than I do about foreclosed properties in my area and what they think it will bring. Maybe they're wrong and the house sits there for another year, but I'd be surprised if that ended up happening.



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