Home Buying Negotiations - Help, Please!?

Negotiating to purchase a home, need help to know best way to be successful. House on the market for > 7 months, originally 350k, gradually reduced to 315k. Sale due to death of spouse, and seller buying new condo, with 2 new mortgages. I offered 260k because her orig mortgage 6 years ago was for 158k, & I added 100k to it to motivate her to sell since one of her new notes is for 100k. Tax assessment is 287k.(all figures obtained from courthouse) She countered with 305k, I offered 267.5k. My real estate agent conveyed there was frustration on the buyer and agent's part, and they brought up a recent appraisal which reported around 300k, and agent stated the seller might agree to reduce to 300. House needs work - new kitchen, paint including ceilings, carpet. Advice as to how I should proceed? I want this house, but am really starting to stretch my limits. Also, ideas on contingency that would give me an out up to closing? I think assessment is high, and need to get in for <285k. Thanks!
Additional Details
I can't use the mortgage contingency, because I'm paying cash. It seems like a quick cash closing should be appealing, especially considering she's making 3 mortgage payments right now. All of this advice sure has me thinking mighty hard! Please keep up your kind work. Thanks.

Dang Goldenbear...a little harsh, don't ya think? A couple comments regarding your post:

- Just because a property sells for +/-$100K below original asking doesn't necessarily mean it's going to drive down prices in the area! Oneâ€¦it's quite obvious that the original asking was too high ($50K above their appraisal). Two...if a property sells significantly below market (not asking price!), there are usually some circumstances that made the sale a non-arm's length transaction (motivated buyer, seller financing, etc.). Any appraiser with an ounce of common sense would not use this transaction as a comparable without taking these non-arm's length circumstances into consideration.

- How the heck did you get out of her question that she's taking advantage of the elderly? Sure, the odds are in your favor (death of the spouse and downgrading to a condo is a clue), but something like this could just as likely happen to someone in their 20s! Shouldn't rag on someone when you don't have all the facts.

Now, to address drbernice's question! Some things you should consider:

- The assessed value of a property does not equate to the *market* value of the property. It is used solely for estimating a property's real estate taxes and is not market driven (thus, has nothing to do with the market). There are many instances where the assessed value is much lower than the market value (like in California).

- Regarding the comment that the house needs work...are these all things that you noticed that you'd just like to replace? Or are they truly deferred maintenance on the property? If it's dated, but still functional and in good condition...then it's not deferred maintenance. If the property is truly in bad shape, then you could use this to build your case for a lower sale price. If you just want to replace some things that are still in good condition to make it more pleasing for your tastes, then it's going to be hard to use this argument in your negotiations. You should get a qualified building inspector to inspect the property to identify any items of deferred maintenance. If they find deferred maintenance, you may be able to negotiate a credit based on the cost to cure.

- Regarding the appraisal, you should see if you can obtain a copy so you can take a critical look at it. Some things to consider are the effective date (How recent is recent? Was the appraisal done a couple weeks ago or back when the first listed it. If market conditions have softened in your market since the effective date, then it should warrant a new appraisal) and the comps utilized in the report (i.e. Did the appraiser make reasonable and appropriate adjustments for age, condition, quality, land size, market conditions, etc? Are there more appropriate comps in the market that they could have utilized?).

- Have you considered engaging an appraiser to do an appraisal for you? In many instances where financing is involved, this is typically handled by the lender. However, since you are paying cash, don't have a lender ordering you an appraisal. True, the seller has had an appraisal done already, but it could be in your best interest to get one done yourself. True, appraisers should always remain biased, but some can sometimes give into the pressures of the client to push for a higher value. In addition, appraisals are the *opinion* of value of a property...two appraisers using the same exact comps can (and many times do) arrive at different value estimates.

- If your appraised value ends up close to their appraiser's number, then it may be difficult to negotiate lower than that point. Despite the fact that you're paying cash, they seem hesitant to sell for below market. Considering that the property has been on the market for more than 7 months, it may be that you are not working with a motivated seller. Some sellers out there are still holding out for top dollar and are not getting any interested buyers because they're unwilling to budge (like some markets in Arizona). They don't care that the market is slowing nationwide, they want the price their neighbor got 6-12 months ago. The fact that their original asking was $50K above the appraised market value gives a little insight into their mindset.

- You may reach a point in the negotiations where the seller refuses to go any lower. You should start thinking long and hard what you're going to do in this situation and discuss your options with your agent.

You have stated you have a REALTOR working for you. You need to be talking to her/him.

It matters not what the county assessment is, what it was originally purchased for or what the current mortgage is. What matters is what the seller is happy accepting and what you as a buyer are willing to pay. If those figures are 285 and 300 doesn't sound to me like you are going to get this home. Move on or pay what she wants.

I think you should look into finding another house. seems this was way overpriced to begin with and you have a tubborn seller plus a house that needs work. and you want an out until closing? it ain't happening.

Who did the appraisal? If it was someone from her real estate agents office I would pay to have an independent appraisal done. I would also pay the money to have an inspection done on the house that will list if the roof,foundation and so forth needs repaired because this will lower the price of the house. I would also bring up that the kitchen, carpets and other items need to be redone because of their condition. If it gets drug out they might opt out of the deal which means you could get your earnest money back.

Here is a strategy:

Make an offer at 280 with a 2 weeks deadline. After two weeks lower your offer to 275 also with a 2 weeks deadline. And go on ... It is a buyers market. use it !

Go with 290 to 300 and have her fix up the place.Or go with your original offer and buy it as is without inspection.

All you can do is offer what you are willing to pay. The "tax assessment" is meaningless as a true indicator of value, because it's subject to how much the taxing body needs to collect that year. If you make your best offer, and the seller doesn't get a better one, she'll call you back. But you need to be patient, and not try to force it to work on your schedule. Besides, the housing market is moving from a seller's market to a buyer's market, so time is on your side.

Try to get a face to face with the seller. Maybe you and her can connect on a personal level, and reach an agreement.

You don't want to be manipulative about this, though. If you want the house, and can agree on a price, then close the deal. It's definitley not cool to try to worm out of it. You've got the mortgage contingency, so you can always do something that will cause you to not get financed. Also, your agent will not be pleased if you back out, because he/she has an investment in the deal closing too. They will be reluctant to tender a contract with a lot of holes in it.

If you are not in a hurry maybe they will come down later. After all it has been on the market for 7 months.

Otherwise maybe they will finance all or part of the mortgage at a lower rate so you can afford $300K?

You are paying cash for a home in a market you expect to decline? Since you're offering her $100,000 less than her original asking price, that means you admit to a decline in the property values. I'm not a realtor, but doesn't seem like you would be advised to buy in a downturn market.
As far as tax assessment, that is with the current owner listed. She may exemptions (like Veterans) that you may not qualify for. Have you arranged homeowner's insurance yet? Since you're paying cash, you'll have to pay that each month yourself (rather than taken out of a monthly mortgage payment).
The $267,500 is way too low. And you're actually hurting yourself by lowballing the offer. Every house needs repair, comes with the territory.
As for pulling out near closing, how is your personal time so invaluable that you can waste on something you don't benefit from? Realtor is going to feel the same way, don't expect any of your earnest money back.

Whoa! Seems like you like things frugal. Did your research which was a good but do you really want to bring down the value in home by 100k. Great way to move into the neighborhood. Especially if everyone knows that you just brought down the value in there homes by 100k. I have to agreee with the seller on this and say she deserves the 300k. Cash my be a strong tactic since its a quick closing but I think you know what your doing. Seems like you done this before or watched a lot of TV. Basically you going to low ball the lady to sell. Fix the place up and than pop it back on the market for the same value she was asking orginally. Seriously taking advantage of old people not cool. In the meantime while you take her house tell here to get a reverse mortgage because that is better these days for the elderly. Lady your a investor and you need to move on. Great thing is the Sellers Real Estate Agent already noticed your game.

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