[QUOTE=bengangmo]
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”.
[/QUOTE]
Actually, we’re looking to spend quite a bit on renovating to taste, which is why we’re hoping the whole “They won’t have to carry an empty property for months or spend a penny on marketing” thing can be played to our favor. We came into the house as a rental, so it currently has off-white walls and off-tan carpet that we’re not presently allowed to alter. And not very well done, either - it’s the typical “drop an M-80 in a bucket of paint and run” style. If we buy the place, pretty much every wall will be painted in colors of our choice.
On the other hand, I do realize that not having to move brings significant value to us - no buying boxes and paying movers with serious money or bribing friends with food and gas money, not to mention avoiding the aggravation of having to find new places for everything and changing addresses on probably sixty accounts, subscriptions, utilities, etc.
Just waiting to hear back from the bank people. At a quick flyby, we’ll qualify for more than enough, based on neighborhood comps. Now for the deeper dive… eta: The bank guy said not talking price before qualifying for financing is normal for this particular corporation.
No idea how many homes they’re liquidating, but I do know that they’ve already liquidated the local office staff with the usual “You’re free to follow your job as we move it an hour and a bridge toll away” nonsense.
On another topic, if you live in a town with rent control, iit’s quite possible you can’t be evicted just because the owners want to sell. New owners can evict you if they intend to live in the building.
Being in the same general geographic area (if my memory is correct), it’s very common for sellers to re-acquire a pre-approval of a buyer before they’ll talk about the sale. In fact, the market is so hot, I think it would also be extremely unlikely to find anyone who would talk to you without a pre-approval.
The market is also so hot that no “tarting up” of properties is required. They will save on the agent’s percentage, and that’s it. They’ll likely negotiate a discount on that as well, since there’s no expense to find the buyer (you’re already there), so I doubt you’ve got much room to push on a discount.
I’ll also throw in that I’ve been in the landlord’s position a few times. One time I sold at a discount, because I liked the tenants and genuinely wanted them to have a home they wanted. Call me a softy. On the other occasion, the tenant came back with a low ball and I didn’t sell it to them. They were not in a position that required a 30% discount on the home, and I wasn’t in a position where I felt like throwing money away. To be honest, they were so aggressive with the discount seeking that I felt they were trying to take advantage of the situation. It’s not that much trouble for me to find a buyer. A lot more hassle for them to move, I would think. (But then, I’m tired of moving.)
My point is that in a hot market you may have less leverage than you think. If you like the house, get the pre-approval and the appraisal and negotiate in good faith. You may save a little on agency fees, but be prepared that you’re unlikely to get more.
My folks had some rental properties back in the day, and one of them had a long-term, very good tenant. Dad wanted to dispose of all property in California, and offered the guy the house, for a very good price. Guy didn’t want to buy, just rent. Dad made him an offer he couldn’t refuse, but managed to anyway. The offer included a below-market price and retroactive credit for rent towards purchase. No go! Gave the guy every chance he could.
So, the house went on the market for the fair market price, sold immediately, and the guy got kicked out. House was so nice, the new owners bought it for themselves. He had lived there for 20+ years, put all kinds of his own money in upgrades and stuff (I know, weird, huh? What was this guy’s deal?) and ended up with not a damn thing.
Moral of the story: You just can’t help some people.
[QUOTE=ddsun]
The market is also so hot that no “tarting up” of properties is required. They will save on the agent’s percentage, and that’s it. They’ll likely negotiate a discount on that as well, since there’s no expense to find the buyer (you’re already there), so I doubt you’ve got much room to push on a discount.
[/QUOTE]
Three percent is still a savings.
This particular neighborhood doesn’t seem all that hot. The house across the street has been vacant since August, and another house about a block away has been on the market since June or so with one pending sale that apparently fell out. Just a WAG, but if the market here really is hot, they wouldn’t dawdle for months when an empty house can be painted and carpeted in two or three days.
I remember the unnaturally hot market of 2004-05, and seeing houses up for sale that hadn’t even been cleaned, let alone painted or staged, and wondering how many dumpster loads it would take the get all the garbage off the property.
We started renting a house in 1994 for a reasonable rent. We spent lots of time and some money fixing it up. In 1997 the owner approached us about purchasing with no money down and he financed it with a very low rate of interest. He let us choose our payment. We got a great deal.
We would never have been able to buy otherwise. The house is worth four times what we have paid if not more. Good luck.
Exactly. It is not odd in any way for the landlord to want you to be preapproved for a mortgage before spending time and effort negotiating. He wants to make sure you are able to getting a mortgage, pure and simple. There are a lot of people who are not, due to employment lapses, not paying bills, etc.
Most home sellers now only want to deal with potential buyers who are preapproved, so as to not waste time on people who can’t qualify for a mortgage. Don’t take umbrage.
As for the price, figure out what the house is worth based on recent sales and listings. The landlord should be willing to sell it for less due to not paying a realtor’s commission, as well as not incurring remodeling expenses. What is that worth? Whatever the buyer and seller negotiate, but I’d venture that 4-6 percent is entirely reasonable, perhaps a bit more.
I would go into this open, honest and forthright. The landlord should be willing to tell you what he thinks it’s worth and what he will sell it to you for, and provide comparable sales. You should do the same, and then negotiate.
I agree that the pre-approval isn’t really very weird at all.
There are a lot of people renting properties they couldn’t get a mortgage to purchase - even if the mortgage payment and the rent were the same. One of the first things our realtor (who was specifically our buyer’s agent - a real estate agent can be either buyer’s agent, seller’s agent or a dual agent) asked us when my husband and I were shopping for our first house was whether we were prequalified for a mortgage (in our case, the answer was no, as we intended to pay cash, which we did). The seller doesn’t want to waste time with people who are interested, but couldn’t actually complete the transaction, which is totally reasonable for someone who wants to sell a property.
Re agents you can contract with a buyer’s agent to assist you in pricing and negotiation for a set fee (effectively a consulting fee) if you just need pricing and comparable information for negotiation purposes. This assumes your interest is in the property you occupy so they are not going to be taking you around to various properties.
The objective here is to (1) get an accurate handle on realistic, arm’s length pricing for your residence and (2) gauge the deal they are offering. If they are apparently in a hurry to sell you should be offered (IMO) at least a 10-15% discount off standard pricing to close quickly otherwise they will have marketing and holding costs.
The problem you may run into is that large REITS and holding companies may (in some cases) not have a finely tuned notion of current market values and be fairly stubborn about initial pricing. The real key in all this is how active your local real estate market is. If stuff is flying off the shelf you may have to move quickly to secure your deal if it’s a slow market you can be more aggressive in negotiating. Let your consulting agent advise you on this.
In the end most of the time the buyer is calling the tune in real estate unless it’s a red hot market so don’t jump at anything. I would suggest paying for some outside expertise that’s devoted to your side of the deal.
There’s nothing weird about wanting you to get pre-approved for a loan, they want to have some assurance that you can actually buy the house. Pre-approval is quick and free if you’re going to be able to get a loan, and there is just no point in negotiating a price with someone who can’t get a mortgage at all.