October 2009 Weddings
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*kel*

Hey, real estate question for you! 

An agent emailed me today because a house we were looking at earlier in the year is still unsold and they are offering a 3.5% purchase incentive to cover buyer's closing costs for homes that enter contract in the next month and close by the end of June.  

Can you translate?  

We were only half looking earlier this year because the house needs A LOT of work and neither of us even had time to think about buying a house, much less buying a house we'd have to work on before moving in.  But we'd already noticed the price had gone down and were thinking about looking into it again. 

So, with that said, I'm curious to understand this incentive more. 

THANKS!

Re: *kel*

  • This just means that if you go into contract and close within their desried timeline (read: they just want to unload it already), then they will give you back 3.5% of the purchase price at closing to cover yur closing costs. This sounds like a good deal, but you need to make sure the house is going to appraise for their asking price. Giving cash back is their way of reducing the cost to you without lowering the sale price, but it can come back to bite you in the tushy if it doesn't appraise. If you decide to move forward, just make SURE there is a clause in your contract that says you can gt out free and clear if the appraisal is not high enough. Also, considering how much work needs to be done, I would negotiate and not just give them the asking price. At this point, they will probably be willing to work with any reasonable offer. Let me know if you have nay other questions. I'm happy to help!
    Lilypie Pregnancy tickers 
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    After 22 cycles and 4 failed IUIs, Serafina joined our family through IVF/ICSI, born 8.28.12
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  • Thank you!!  That's what I thought it meant but I am very uneducated in the realm of real estate. 

    Why is the appraisal part an issue?

  • Because they should not be selling a house for more than it's worth...and that's what the appraisal will tell you...how much the house is worth. If you agree to go into the deal and then the house appraises for less than what you are going to pay, you get screwed and lose money in the end.  So if you include in your contract you can walk if that happens, it covers your tushy and saves you moolah. Big Smile

    Sorry to butt in....I hope that's right...if not I'm sure Kel with say so Big Smile

  • I never mind butt-ins!  Big Smile
  • What she said.  Smile

    But also consider that you will be putting money into the house as well. Make sure you do the math and that the total amount you are spending (house plus renovations) is a reasonable resale value in that market. If it's over what other similar houses are selling for in the same neighborhood and condition, then it's still overpriced. You don't want to be under water from the start.

    Lilypie Pregnancy tickers 
    Lilypie Second Birthday tickers 
    image 
    After 22 cycles and 4 failed IUIs, Serafina joined our family through IVF/ICSI, born 8.28.12
    Surprise! The Sequel is due 12.8.14!

  • I just saw this... I haven't been on here much the last couple weeks.  I will definitely take everything into account before we jump into an offer.  The reason we're considering it despite the work it needs is because it's a lot that's zoned R2 which means somewhere down the line we could build a second house on the lot and have rental income.  Real estate still overwhelms me but I'm at least smart enough to know that having a rental unit on your property can be helpful in the long run.  Smile

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