Anyone here have any experience with a landlord that’s looking to get rid of the house they’re renting?
Thanks to some corporate mergers and whatnot, the company that owns our house apparently needs to get rid of it. We have the first option to purchase the house, but if we don’t buy the place, we have to leave at the end of our current lease this summer. Good news there is we have a little time to get things together. I’m told that other people that were on month to month tenancies have been given two months to buy or move.
We don’t know what they want for the house yet - they’ll discuss price after we get prequalified for a mortgage. Sounds odd and not to our advantage. If we manage to qualify for a $600,000 loan, what’s to keep the price from magically becoming $595,000? (Zillow’s “zestimates” for this area are in the $350,000 - 400,000 range)
I think our biggest bargaining position will be that we’re already in the house. If we walk away, they’ll have to sink money into the place for paint and general curb appeal type work, not to mention carrying the place on the books and paying for property tax and insurance for however many months. They divested the house across the street from us in September and the renovations took nearly four months - that’s over $9,000 of lost rental income. Not to mention, this area’s been a somewhat slow market. A house about a block away has been on the market for several months, and winter is traditionally a lousy time to try and sell a house. Of course, I have no idea if the place around the corner is really an overpriced wreck, but this isn’t the crazy market we had back in 2004-2005 where there would be five-way bidding wars over tarpaper shacks in bad neighborhoods.
How do you put a value on that concept of “We’re ready here and now, so you don’t have to spend a penny on paint, repairs or marketing?”
If the house is well built and you like the floor plan, the neighbors and the neighborhood, then do some negotiating. I am sure it work out well for everyone.
That sounds odd to me too and I would balk at that. Housing prices shouldn’t be based on the amount a potential buyer qualifies for. That said, it doesn’t cost anything to get prequalified or pre-approved. It is just a minor hassle. You could get that, tell you you did it and refuse to tell them the upper limit until they state a price of their own. You already know the Zillow amount and you could also have it appraised (at some cost to you) if their number sounds too high. You will probably have to pay for the appraisal and inspection anyway before you can close on the mortgage.
My guess would be that it is about the same as “you’re already living in the house, you don’t have the stress of house hunting, renovating to your taste and moving”.
In reality - probably of a more easily quantifiable value would be what they don’t have to spend on an agent
Can’t you just get pre-approved for the amount you are willing to pay, not the top amount the bank will loan? If you think $350K is the value, apply for that amount.
As for tenancy value, I’m not sure it does much. You could perhaps use it as a bargaining chip to get them to pay closing costs.
My wife and I recently bought a house. Whenever we made an offer, we’d just call our lender and ask for a pre-approval letter for exactly the amount of our offer. It’s none of the seller’s business whether we could get a larger mortgage.
Even if you get pre-approved for the max, you don’t have to tell the seller the amount, on,y that you’re approved for what you’re offering. It’s not unusual for a seller to want to know the buyer is pre-approved. That’s been the case each time we’ve bought and sold houses. We’ve never disclosed (or had it disclosed to us) the amount we’ve been approved for.
The appraisal is what will keep them from doing that. If the appraisal amount comes out way different from the rest of the area, be sure the mortgage company/bank will put a halt to the sale. Back when I originated mortgages, it was the lender who arranged the appraisal, so if it comes back wonky there’s something weird going on.
If you qualify for a $600,000 mortgage, but the house is only worth $400,000, then the bank won’t give you more than $400,000 (less down payment) for that particular house. And the bank will have the house appraised. That is not a danger.
that sounds very odd. Easy on them, but not to your advantage. I would ignore the comment and start house hunting. Really looking. Engage a realtor and all that. Visit comparable houses in your desired neighborhoods and get an idea of what the house of your dreams costs. If I were you I would tell the realtor about the situation in your existing home. He/she will be able to act as your agent and negotiate a deal. Go get pre-qualified. Make an offer to the existing home if that is still what you want. Make the offer based on the market and what you are willing to pay. You have the advantage that your existing home is effectively off the market until your lease is up. Puts you in a good position.
I agree that, if you’re in a position where you can and want to buy a house, then it can only help to start looking around at other places. Take a first time home buyer class, get prequalified, start going to open houses around, etc.
But…
First thing you need to understand is that, unless you have specifically paid them to be a buyer’s agent, real estate agents are salespeople for the seller. I repeat, they are salespeople. They may be nice, even helpful, but their #1 job is getting as much money for the seller as possible.
Do NOT be open with them about other options, unless you’ve carefully planned it as part of a strategy to encourage them to accept a low bid on something they’re selling.
It would probably be a huge conflict of interest for an agent selling a property you looked at to turn around and try to help you negotiate a lower price from someone else. Would you ask the salesperson at the Apple store to come over to the Samsung shop in the mall and help you get a better deal?
Yeah as SeadragonTattoo and D_Odds said, the bank would balk at a bullshit asking price based merely on what size of loan you qualify for. The reasonable assumption is they don’t want to bother negotiating with you if you can’t afford to buy, like probably the majority of their renters.
It’s more likely they don’t want to price the house at $600k if you only qualify for $550k.
It’s not that they want to do you a favor, but they probably really do NOT want the expense of tarting the place up and of carrying an unoccupied residence (much higher insurance), or the risk of a disgruntled renter (that would be you) withholding rent and damaging the property.
That being said, they’re probably as reluctant as anyone to be taken advantage of. Do a little research and consider using a buyer’s agent for a reduced commission (after all, s/he won’t be doing a lot of leg work).
I’d be careful about engaging an agent. It may be fine, but make sure you understand the consequences first.
Given agents work on commission, I’d imagine a typical buyer’s agent would be looking at 3%. I think in a normal listing the seller pays that, but in this case what if they don’t want to? The agent might not be that enthusiastic about you as a customer if they aren’t sure how they’re getting paid. Or worse, there might be the expectation that you’re on the hook.
We had a similar issue in that the house we were interested in was FSBO, and the seller would have been perfectly happy to do the deal without any agents at all. We ended up hiring a lawyer and an agent at a fixed price to guide us through the process. I’m glad we did that. It is likely that everything would have gone smoothly and we were on excellent terms with the seller, but there are lots of things to sign with far reaching consequences, and having a real estate lawyer to guide us through the implications made us feel significantly better. The agent was able to assist with price comparisons and negotiations as well.
How many properties is the company disposing, and are they all in the same area? If they have many properties, then they are probably stuck between trying not to hold them for too long and not glutting the market.
As has been said by others, The seller is not interested in wasting time & $$ on someone who can not afford to buy their home. Get the approval if you are serious about this home.
I have been in your situation four times so far in my life. Three times it has worked out well for both parties. The other time, I got the notice about my home the day after I was informed at work that I was being transferred. That one worked well for me, but not for my landlord.
I hired a real estate lawyer each time. I am happy with the results. Most of the time, IME, the closing costs are split evenly. These costs can be negotiated with the purchase price of the house. For example, on the last such transaction, for some reason the seller was in a huge hurry to get this done. He offered to pay for all closing costs & to credit us with $3000.00 on the down payment if we would close within 14 days. We did & he did. Everyone won! Including our lawyer & my cousin, the home inspector.
My grandfather bought his rental property in 1942, for £4K. Lovely house, raised a family in it, then extended visits from grandchildren and eventually great-grandchildren. When he died in 2005 it was worth £1M. Worked out for everyone, particularly Her Majesty’s Revenue and Customs who got 40%. (Except perhaps me, as I’d have held on to it if I could have afforded the inheritance tax - and indeed it’s now worth ~£2.5M.)
I did this with my current house about 18 years ago. The landlord was an individual rather than a company so it was easier to negotiate a price we were both happy with.
The only issue I had was with my bank not being happy about there being a sitting tenant. Even though it was me! I had to get an affidavit to guarantee that I would move out and allow the new owner (me) to move in on the completion date. Total nonsense!
I bought the flat in which I now live from my landlord. I was advised that the landlord was selling up. I got a survey done and solicitors hired. I made a low offer which was rejected, then I made an improved offer which was accepted and everything was done in a week or two.
This happened with an aunt of mine. The elderly couple she rented her house from for 20 years passed and their kids wanted to sell, but the appraisal came in much lower than they were asking. Initially, they didn’t care - they had some set amount in mind and had all sorts of crazy ideas for my aunt to make up the difference. It took sitting them down with lawyers on both sides explaining that NO ONE would buy the house for more than it was worth/appraised for to get them to see reason.