I posted earlier this week that we found the perfect house. It's so different than other houses in my city--it's a custom home in a neighborhood of all custom homes, very Southern feeling (columns, white, huge trees), it's on a large lot (VERY rare for my city), it's in a guard gated community, it's close to work and family and friends, close to shopping and walking trails, great local community, good school district. The downside is that it needs a bit of updating like painting and carpet removal (burgundy carpet!), but nothing major. We put in an offer for list price, which is right where we feel the appraisal will come in, and we were beat out by 4 cash offers at list price. My realtor came up with a suggestion last night. We offer $40K over list (for a total of $440K) and offer to pay cash for any amount over the appraisal. So if the appraisal comes in where I think i will (around 400K), we'd be paying 20% down plus 40K straight cash. Its a short sale so the realtor kinda hinted that there's a good chance the sellers would take the higher offer to the bank because it has the greatest likelihood of getting accepted. That's especially true if we are willing to pay the cash difference for any amount over the appraisal.
FWIW, this is our forever and ever house barring any crazy, unforseen circumstances. DH owns his own business and my job seems secure (knock on wood). And we would have plenty in savings and our efund in tact even after this goes through.
I feel like I'm fairly with it when it comes to finances which is why I can't believe I'm even considering it. I need someone to knock some sense into me. I'd be automatically walking into an upside down house that also needs about 10K in work! Our market seems to be turning around but I can't see earning back the deficiency in equity anytime within the next 5 years.
It's worth $440 to me, but I think the appraisal will come in around 400K. It's tough because it's a custom home in an all custom home neighborhood, so the comps are based on the selling prices in the neighborhood but don't take much else into account, like the uniqueness of the home. But if we bought it today and tried to sell it next month, I doubt we'd make 440.
Post by mccallister84 on May 17, 2012 7:12:59 GMT -5
How long do you plan on being in the house? If I remember correctly you've been looking for more than a year. If its truly a forever house and you easily have the funds......
Good memory...I've been looking for over a year. We plan on staying in the house indefinitely. This would be it for us unless some crazy circumstances forced us to move away from the city. It's plenty large enough for our family.
I love it a lot, I just feel like I'm making a really dumb financial move by moving into a house that I'm already upside down in by like 50K.
If this matters at all, our budget is twice the amount of the asking price, so we'd be spending a lot less than we were planning to. But I'm still thinking that coming in so high over the appraisal is a bad MM decision.
Since you plan to stay long term in this house, buy it. Being underwater should not be a factor in your consideration - that only comes into play if you plan to sell. Houses are not investments - they are your home - a place to live your life.
I sure thought everyone would tell me what an idiot I was being for even considering it. Apparently predicting post responses on MM hasn't been my forte this week.
We probably overpaid on the house we are buying by about $10k, maybe even $15k. It was worth the extra $ for us to not have to move twice, and to get a house we love in the area of town we want to be in. Sometimes, it's not just about the money.
I love it a lot, I just feel like I'm making a really dumb financial move by moving into a house that I'm already upside down in by like 50K.
If this matters at all, our budget is twice the amount of the asking price, so we'd be spending a lot less than we were planning to. But I'm still thinking that coming in so high over the appraisal is a bad MM decision.
In this case, I'm less likely to tell you it's a bad move. You could easily pay extra each month towards the mortgage so you wouldn't be under anymore.
Since you plan to stay long term in this house, buy it. Being underwater should not be a factor in your consideration - that only comes into play if you plan to sell. Houses are not investments - they are your home - a place to live your life.
This is how I feel about it too. Since its your forever house and you are absolutely 100% sure you love the things that can't be changed easily, do it! You'll be kicking yourself later if you end up looking for a 2nd year and still think about this house...
I love it a lot, I just feel like I'm making a really dumb financial move by moving into a house that I'm already upside down in by like 50K.
If this matters at all, our budget is twice the amount of the asking price, so we'd be spending a lot less than we were planning to. But I'm still thinking that coming in so high over the appraisal is a bad MM decision.
In this case, I'm less likely to tell you it's a bad move. You could easily pay extra each month towards the mortgage so you wouldn't be under anymore.
But she wouldn't be underwater on the mortgage. The mortgage would still be less that she paid and less than the house was worth. Paying extra each month wouldn't help.
It's more like someone who bought in 07, put 20% down and then spent cash remodeling. Sure, you can sell and pay back the bank, but you still have 100k in lost cash.
That all said, if you never plan to move, have the cash, and love it - eh. Go for it.
I would do it if it's your forever home. (and you say you can afford twice the asking price) It would be no brainier for me. Carpet and paint isn't that hard or expensive to replace.
We walked when a house wouldn't appraise, but only because we have NO idea when we might have to move again. One year? 5? Who knows. In your market and knowing that you plan to stay, I would consider making the offer.
In this case, I'm less likely to tell you it's a bad move. You could easily pay extra each month towards the mortgage so you wouldn't be under anymore.
But she wouldn't be underwater on the mortgage. The mortgage would still be less that she paid and less than the house was worth. Paying extra each month wouldn't help.
It's more like someone who bought in 07, put 20% down and then spent cash remodeling. Sure, you can sell and pay back the bank, but you still have 100k in lost cash.
That all said, if you never plan to move, have the cash, and love it - eh. Go for it.
You're right; she won't be underwater on the mortgage but if she turned around and sold it immediately she would lose money on it so she can either take the extra money each month and toss it to the much smaller mortgage to offset the "loss" or take it and toss it into savings to offset the "loss." It's just which POV works the best for vegas to mentally get over the perceived "loss."
Ugh, it makes sense in my head but I don't think I'm explaining it well.
But she wouldn't be underwater on the mortgage. The mortgage would still be less that she paid and less than the house was worth. Paying extra each month wouldn't help.
It's more like someone who bought in 07, put 20% down and then spent cash remodeling. Sure, you can sell and pay back the bank, but you still have 100k in lost cash.
That all said, if you never plan to move, have the cash, and love it - eh. Go for it.
You're right; she won't be underwater on the mortgage but if she turned around and sold it immediately she would lose money on it so she can either take the extra money each month and toss it to the much smaller mortgage to offset the "loss" or take it and toss it into savings to offset the "loss." It's just which POV works the best for vegas to mentally get over the perceived "loss."
Ugh, it makes sense in my head but I don't think I'm explaining it well.
I think I get what you are saying now. Sort of a mental underwater.
But the best line in here is the one about Vegas and perceived loss. It's cracking me up bc of the irony of gambling in Las Vegas. Sorry Vegas, I know it's where you live, but it was just an apt line here
You're right; she won't be underwater on the mortgage but if she turned around and sold it immediately she would lose money on it so she can either take the extra money each month and toss it to the much smaller mortgage to offset the "loss" or take it and toss it into savings to offset the "loss." It's just which POV works the best for vegas to mentally get over the perceived "loss."
Ugh, it makes sense in my head but I don't think I'm explaining it well.
I think I get what you are saying now. Sort of a mental underwater.
But the best line in here is the one about Vegas and perceived loss. It's cracking me up bc of the irony of gambling in Las Vegas. Sorry Vegas, I know it's where you live, but it was just an apt line here
Yes! and LOL. I may make no sense but at least I can be funny.
I think you should go for it! If in your heart you feel that it's worth 440k, then it's worth it. If this is your forever home, you need to love it enough to take a risk!
If you can afford it, I would. But only because you've been looking for a year and haven't found much.
I agree w pp to give yourself a limit in the contract, like "I will pay up to X above appraised value.". Keep in mind that appraisals can surprise you. We just refi'd and the appraisal came in $18K higher than what I thought the highest possible number would be. You also mentioned unique neighborhood, etc., so things could def work out better than you expect!
LOve the Vegas pun! Yes, we were going to offer $440K and say that we'd pay cash up to 440K for whatever over the appraised value. Does that make sense? Or should I say we'll pay up to 40K over the appraised value. I'm very confident that the house will appraise at 400K. But je55, I definitely thought about the possibililty that it will appraise for the full amount.
Just to give you an idea of why we are so excited. Here's a pic of a standard house in Vegas (aka stucco central)
And here's the one we like. It has trees. Nothing has big trees in Vegas!
We just looked at a house on Monte Cristo that looks just like that, but had too much structural damage. We don't have the $150k liquid it would take to bring it back to life
We just looked at a house on Monte Cristo that looks just like that, but had too much structural damage. We don't have the $150k liquid it would take to bring it back to life
Is it sad that I think I know exactly which house you are talking about? Yeah, if there's structural damage we are out. That's why we are still going to have the appraisal and inspection--two things we'd never waive on a house of this age.