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Home Buying - Age, Buying a Duplex, Let's play the offer game

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PistolGrip

sex vacation in Guam
Alright GAF today is the day I make my first ever offer on a house.

I talked to about 10 real state agents for advice and just about everyone I know and I think I'm ready.

I probably shouldn't be posting this on GAF but I am bored an nervous and cant stop thinking about it.

Here's the deal.

House:
791k house in Astoria Queens,
14 mins walk from the subway (10 if you walk fast, 5 if you run).
2 Family with finished basement and nice backyard.
Building size is 1840 ft squared
Lot size: 20x100 (2000 ft^2)
Both floors have 2 bedrooms and are in good shape.
Top floor has a nice balcony.
EDIT: Private Driveway as well.

What do you think my offer should be? I plan on having them pay the closing cost (up to 3%) to have money for renovations and rent out the second floor.

Note that this house has no listing broker, and I don't have a buyer agent. The seller is saving 6% if he takes my offer. Also it has little to no marketing but time is of the essence because this neighborhood is hot.
 
PistolGrip said:
Alright GAF today is the day I make my first ever offer on a house.

I talked to about 10 real state agents for advice and just about everyone I know and I think I'm ready.

I probably shouldn't be posting this on GAF but I am bored an nervous and cant stop thinking about it.

Here's the deal.

House:
791k house in Astoria Queens,
14 mins walk from the subway (10 if you walk fast, 5 if you run).
2 Family with finished basement and nice backyard.
Building size is 1840 ft squared
Lot size: 20x100 (2000 ft^2)
Both floors have 2 bedrooms and are in good shape.
Top floor has a nice balcony.

What do you think my offer should be? I plan on having them pay the closing cost (up to 3%) to have money for renovations and rent out the second floor.

Note that this house has no listing broker, and I don't have a buyer agent. The seller is saving 6% if he takes my offer. Also it has little to no marketing but time is of the essence because this neighborhood is hot.
Click to expand...

What.....?

We bought a home recently and is not even close to that....
 
astoria.png


Ok now that this is settled, lets move on to an offer.
 
House I recently bought has 25% more square footage and cost 97k in Rhode Island.

Had to spend about 25k to make it livable/safe but still holy shit.
 
teruterubozu said:
I just looked it up on Zillow too, but you played with the parameters. PLenty of others in the 300-500K range and many foreclosures.
Click to expand...

Show me a 2 family house for less than 500k in Astoria in zillow. Are you looking at co-ops? Not even condos are that cheap.
 
I watch a lot of HGTV, and now I finally get to ask the question. How the fuck can you afford a 791k house? How much money do you make?
 
teruterubozu said:
Well, from what you show it indicates that you have almost zero wiggle room at 791K. You may even have to up the offer.
Click to expand...

Sorry I put 800+, there are some 700k ones out there but not many.

Also the asking prices are always inflated by around 6% to pay the brokers.
 
ToxicAdam said:
Did you have a professional inspector look at this property?
Click to expand...
That's usually done after the offer. If we dont agree on an offer then I dont want to spend money on an inspection. The offer is always pending the inspection comes out ok and you can then negotiate further if there are problems.

AlexMogil said:
Did you get an appraisal? Get that.
Click to expand...

Same thing. It usually comes after the offer otherwise you lose money and the bank does one too which you pay for meaning you would need to do it twice in that case.

Hari Seldon said:
How much are the property taxes on that thing? In my area, something for 800k would be about 21k/year in property taxes.
Click to expand...

NYC property taxes are low, from 3k-5k
 
lol. One day there will be a thread about living in NY that is not focused on real estate costs. Not today, but someday.
 
make sure the monthly mortgate isn't going to put a lot of strain on you. aside from that price looks about right. my parent's house in brooklyn which is similar in configuration (townhouse) without a driveway is about $800,000+. i am not very experienced about real estate at all to advice you on how much you should offer, i am just stating the price is about right depending on condition. however you may want to have an inspector appraise the property to make sure you don not have to make expensive repairs.
 
Make sure you are comfortable with whatever offer you make.

If you are really serious about the property, make sure your first offer is serious.

Does it come with a Tenant or will you have to find one? If it comes with a tenant then that is instant income, but you cant really mess with the current rent. How much would you be planning on renting the second floor for? Try to squeeze it to 3/5->3/4 of the monthly mortgage. It will pay off dividends in the future. I would normally say 100% of the monthly mortgage, but I think even in NYC that would be to expensive of rent.

I see this as a great deal, provided you can make the income portion work for you. Remember if you ever move, renting both flats should make this property free (both rents bringing in more than the mortgage). I find this is the most overlooked aspect of starting out at renting properties (under pricing)
 
Draft said:
lol. One day there will be a thread about living in NY that is not focused on real estate costs. Not today, but someday.
Click to expand...

haha. No one has given a suggestion on an concrete offer yet (20% under one was close I guess but didnt take into account closing cost). This thread turned into a "ny real-state is expensive thread" real quick.
 
That calculator is madness. It's conservative monthly cost estimate is about 800 dollars more than I currently pay in rent, and that's already stupid high (city life. those in the burbs with $100k homes can fuck off to Costco and McDonalds.) That rent payment already gives me indigestion, another $800 a month and I'd probably develop financial crohns.
 
PistolGrip said:
I think its probably worth 810k. That would mean 648k holy moly!
Click to expand...

Ha. I was being a bit aggressive and I'm coming from buying places in the 200k range so my numbers might be a bit off. lol

We are looking at a few places that I price at current market as being worth 225k and asking is around 235k. So we are actually offering around 195-200. So more like the 10-15% range. Yeah, it is probably low balling, but we know how much the place is more or less worth and we want negotiating room. With the hopes of getting it at 225 or 5-10k less. We also don't need the place so we couldn't care less if they flat reject the offer.

For New York and 800k houses it is probably different. :P

I've heard people say that they don't want to offer too low so that they are taken seriously. I've never quite understood that. I mean if they outright reject your offer it never seemed like a big deal to me. Just take some time and come back with an increased counter offer.
 
PistolGrip said:
haha. No one has given a suggestion on an concrete offer yet (20% under one was close I guess but didnt take into account closing cost). This thread turned into a "ny real-state is expensive thread" real quick.
Click to expand...

You haven't been on GAF long enough if you didn't expect this to happen. Expect to see more "my house in the middle of nowhere costs 100k!" I don't have much experience in offering the prices on home but based on my study of game theory, the general advice is to offer whatever you think it's worth to you on the first offer.
 
PistolGrip said:
Use this calculator:
http://cgi.money.cnn.com/tools/houseafford/houseafford.html
Click to expand...
This calculator thing says I could afford a conservative loan of over 400k, but doesn't factor in monthly maintenance charges in NYC, which are often over $1000/month. So in reality, I think the most I could go for is 300k...which means I couldn't get much more than a studio, and I just don't see the point in owning a 300 square foot apartment.

Is there a maint cost for your house, OP? Judging from the comps I'd say you go pretty close to the offer...maybe 780k and have them pay closing costs.
 
Zippedpinhead said:
Make sure you are comfortable with whatever offer you make.

If you are really serious about the property, make sure your first offer is serious.

Does it come with a Tenant or will you have to find one? If it comes with a tenant then that is instant income, but you cant really mess with the current rent. How much would you be planning on renting the second floor for? Try to squeeze it to 3/5->3/4 of the monthly mortgage. It will pay off dividends in the future. I would normally say 100% of the monthly mortgage, but I think even in NYC that would be to expensive of rent.

I see this as a great deal, provided you can make the income portion work for you. Remember if you ever move, renting both flats should make this property free (both rents bringing in more than the mortgage). I find this is the most overlooked aspect of starting out at renting properties (under pricing)
Click to expand...

Thank you. This is exactly the reason why I am looking at this place. The second floor has a tenant renting for 1650 but they are friends with the owners which means the rent is cheap. I can easily get 1900 for this apartment with some renovations (close to 3/5 the mortgage). This is why I want the seller to pay closing fees to free up more cash for that. The basement also has a tenant who is paying 800 but it is not a legal basement by NYC standards so that can be a sticky situation.

Also I dont drive and they have a driveway which by the going rate in the neighborhood can go for 200 a month.

Thats $2900 of income. If I do move out and rent it out I can probably get 2100 for the first floor (comes with backyard and it's a very nice setup) basically getting positive cashflow.
 
PistolGrip said:
haha. No one has given a suggestion on an concrete offer yet (20% under one was close I guess but didnt take into account closing cost). This thread turned into a "ny real-state is expensive thread" real quick.
Click to expand...
That is why you normally have an agent who can give you more comprehensive comps and detailed information on the local market. Especially if you are in the 800k range.
 
AlexMogil said:
An appraisal is not the same as an inspection.
Click to expand...

Yeah I know. Both are usually done after the offer to avoid losing money if there is no agreement on a deal. Deals are based on good faith meaning that the seller/buyer feel that the house is in good shape pending an inspection. Inspectors always find something and that gives even more leverage to the buyer because he can now negotiate the price lower and have the owners fix what is wrong. If the house has major problems then the buyer can aways walk away without a problem.

poppabk said:
That is why you normally have an agent who can give you more comprehensive comps and detailed information on the local market. Especially if you are in the 800k range.
Click to expand...

A buyer agent will add 3% to the seller. I rather get him to pay my closing cost then get a buyer agent.

Plus I already have a few buyer real-state agents who told me the house price should be around 780k-800k (in that neighborhood at that size). BTW most buyer agents lie about comps. They always tell you that the house is under-priced. My two brothers went through this with buyer agents and on both cases the appraisal came out 50-60k less than what offer was. Both separate buyer agents gave the same excuse that the guy doing the appraisal is a moron or has made a mistake.
 
fancimus said:
This calculator thing says I could afford a conservative loan of over 400k, but doesn't factor in monthly maintenance charges in NYC, which are often over $1000/month. So in reality, I think the most I could go for is 300k...which means I couldn't get much more than a studio, and I just don't see the point in owning a 300 square foot apartment.

Is there a maint cost for your house, OP? Judging from the comps I'd say you go pretty close to the offer...maybe 780k and have them pay closing costs.
Click to expand...
Maint cost depends on the house but its always cheaper than condos and usually not much the firsts years when you make sure everything is fixed before you buy. Maint. Fees in condos cover doormen, super, amenities (common rooms), building repairs and any small repairs in your unit. For a house you can do most of that and be the super yourself. However to be extra conservative they say you should save 3% of the house cost every year for maintenance cost. So that would be around 20k a year or 1700 a month. I can definitely _save_ that on my bank/investment accounts but I will probably not pay that out. In reality it will be more like ~4800 a year.

Also there are maintenance insurance where you pay a monthly fee and then only pay fix cost for them to fix anything in the house. Depending on how much you pay you get more coverage.
 
The only thing I'd be concerned about would be being a landlord for the other half. I could see that being all kinds of nightmares. Other than that, good luck and I hope you buy something you'll be happy with.
 
Hmm

Don't know anything about the real estate environment in NYC, nor can i quantify how "hot" the neighborhood is. Do you know if the seller will be receiving any other offers? That is the first thing i would find out(and where an agent comes in handy). My offer would firstly depend on the amount of other offers the seller is likely to receive and secondly, factor in how fast property sells in the market. Here where i am, property can get hot enough that people will offer 20-30k over the asking price... i know cause i got outbid X_X. And at the end of the day, the most important question to ask, factoring the two things above, is "how much is this house worth to me?"
 
PistolGrip said:
A buyer agent will add 3% to the seller. I rather get him to pay my closing cost then get a buyer agent.

Plus I already have a few buyer real-state agents who told me the house price should be around 780k-800k (in that neighborhood at that size). BTW most buyer agents lie about comps. They always tell you that the house is under-priced. My two brothers went through this with buyer agents and on both cases the appraisal came out 50-60k less than what offer was. Both separate buyer agents gave the same excuse that the guy doing the appraisal is a moron or has made a mistake.
Click to expand...
When I bought a house we sat down with the agent and pulled up comps with them, both on sale at the time and recently sold. Our final price and appraisal matched almost exactly. Having an agent makes things move more smoothly and helps prevent any mistakes although it obviously costs a lot of money.
 
Kambing said:
Hmm

Don't know anything about the real estate environment in NYC, nor can i quantify how "hot" the neighborhood is. Do you know if the seller will be receiving any other offers? That is the first thing i would find out(and where an agent comes in handy). My offer would firstly depend on the amount of other offers the seller is likely to receive and secondly, factor in how fast property sells in the market. Here where i am, property can get hot enough that people will offer 20-30k over the asking price... i know cause i got outbid X_X. And at the end of the day, the most important question to ask, factoring the two things above, is "how much is this house worth to me?"
Click to expand...
Most homes here are priced by experience listing agents who always overprice their listing. Especially in hot neighborhoods where you may get someone to buy it at the asking.

I am basically putting pressure on the Seller saying "If I came in with a buyer agent you would have to pay him around 24k, why not pay my ~15k cost instead and save some money"
 
AlexMogil said:
The OP did:

http://www.neogaf.com/forum/showpost.php?p=49039932&postcount=21

They are not to be confused.

OP: Are you financing? What type of financing, if you are?
Click to expand...

You misread this. I said "Same thing" meaning the same explanation as in I will need to do it after the offer.

I am getting a mortgage. Not sure which product yet and until I have a signed contract I probably will not decide.


Anyway I made the offer at 750, with seller paying closing cost up to 10k. Got back counter at 779 with no closing and a close date of july!

What do you guys think? Doesn't seem too good to me but now we have the ball rolling.

July closing is terrible though as I have interest rate and price risk.
 
Whenever I read these threads, I get jealous of some of the American housing costs being thrown around in the thread.

I JUST bought a house (inspection is this Saturday) for $480K CND and it's 1900 square feet fully detached in the burbs.

To the OP, have a walk away price whenever you're buying...There's always going to be property to buy, so don't feel like you have to rush into things.
 
PistolGrip said:
I am getting a mortgage. Not sure which product yet and until I have a signed contract I probably will not decide.
Click to expand...


Ok, then did you get prequalified?

Otherwise you are the beginning of the bidding game - stand your ground, but be willing to bend a bit. It's exciting and nerve wracking.
 
AlexMogil said:
Ok, then did you get prequalified?

Otherwise you are the beginning of the bidding game - stand your ground, but be willing to bend a bit. It's exciting and nerve wracking.
Click to expand...

Yeah I got pre-approved and all my supporting evidence was verified.

Owner finally accepted. We ended at 765. Not bad I would say.
 
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