Getting ready to make an offer on a townhouse, help please!?

[Eileen_O]

So, I just got pre-approved for a mortgage loan. Next, I called my attorney who advised me to go ahead and make the owner an offer. I was pre-approved for the selling price of the townhome, 149,500. However, this would be too much for me to get by on, I would be living paycheck to paycheck and it would be too difficult. So, I began negotiating with her and she said the lowest she could bring it down was 140,000. I know that alone is a drastic deduction, but I was hoping she could bring it down even more. She said that I need to let her know by tomorrow because there are other people who are interested in the place.

I just don't think I would be comfortable with that price. Friends and family have been telling me to decline the offer at that price and see what happens. She may be bluffing is what everyone's telling me. But, and I know this sounds so naive, I really do think there's some truth to what she says about the urgency in my decision and the impossibility she has to go lower. I think that if I decline, then I'll lose the home to someone else. Everyone else seems to think she'll offer it to me for a lower price. But I don't know and I'm really afraid to take such a chance.

By the way, I LOVE this place!

I know this is such a typical situation and it really comes down to my decisions and every buying goes through something like this. But, this is my first time and I'm trying to take in all advice possible. Any advice, ANY advice would be SO STRONGLY appreciated! Thank you so much in advance!

[Brent]

Listen to your gut.  It sounds like it is telling you to leave this deal.

[alines]

If you know that you won't be able to live comfortably with the current price, don't bid. I'm sure there are other homes out there that will suit you tastes and wallet, if you can be patient. But you never want to risk ruining your credit.

[zocko]

the thing about townhouses is that the make a whole bunch of them so when you go to buy one all you have to do is find out what the others have sold for in the recent past and you then know what a good or a great deal is or what a rip off is. So you either see if there is a on line "zillow" site that has past sales info or ask your banker if they can research it. This is when a Real Estate buyers agent is a great thing to have. How many of them are for sale right now? what state are you in? have you looked at any others? How much can you afford, to feel good about the deal? You will have to get an appraisal from the bank so that will also tell you if the price is right.

[Reena]

You need to find a home with a price that you can handle.

No matter how much you love the place when you sit there and can't pay for anything else but the mortgage even a palace will soon turn into a cage.

First of all you should not spend any more than 28% of your gross monthly income on the mortgage payment every month.
Anything above this is putting you into the danger zone.

You need enough discretionary income to pay for all other bills like utilities, water, garbage and you need to be able to budget enough savings to be able to pay for your yearly taxes, any repairs that may come up, etc.

Multiply your gross yearly income by 3 and you get price of a house you can comfortably afford. If your dream home doesn't fit this price bracket back off and either wait until the house prices fall further or find something in your range.

[Christin_K]

Do yourself a really big favor here and absolutely DO NOT make an offer if you know ahead of time  you cannot or will not be able to afford to live in the place!! This is the absolute WORST mistake you can make.

Yes, you love the place. But there will be other places too. And if you do not make your offer, then the price MAY come down. You can't expect a seller to lower a price if they are getting the price they want, and if you make an offer it will be binding. You will be stuck with it.

So back off. Don't offer more than you can afford. Look at it this way: if you don't get it, you weren't meant to get it--and there is something better waiting for you around the corner. In this market you should be able to pay exactly what you want to on a place you love--and not be pressured into paying more than you need to. THere are a lot of places on the market now, and more coming on every day.

You've got the advantage. Don't be pressured. Don't pay it.

[knoelle12]

Hello,

First, as I read your question, I see nowhere in your question that you are working with a real estate agent. You have gotten pretty far in the process without one and that is great. However, what you really need is a Comparative Market Analysis on the property to see if the price is really comparable to the market. An agent would be able to run one of these reports for you.

While the owner went down on the price for you, perhaps you should have started negotiating at a lower price. All that in the past, what is really at hand here is your financial comfort level. If you know you cannot afford the monthly payments at this price. WALK-AWAY no matter how much you like the condo. Go online and use a mortgage calculator to determine what end purchase price would put you in a comfortable or target monthly payment range. Let the owner know what your bottom line offer price is. Donot approach it from a negotiating point of view, but a candid honest discussion. Make sure you are being honest about what you can afford and not just taking advantage of a bruised market to get the property for an unreasonable price.

If she cannot/will not come down to that price, then walk away. There is nothing worse than living "house poor". You will not enjoy your home. You will regret the purchase and eventually have to give up the property if you cannot afford it. Keep in mind assessments, maintenance, utility bills and other incidentals that may arise. Are you prepared for those expenses as well. As a real estate agent, I have advised many clients to walk away from properties they loved. Trust me, there is another out there for you.

Well wishes in your decision. Do not be discouraged.

[Kay]

First, you need to ask yourself what price range would be comfortably and realistically affordable based on your current take home pay. You have to start from this point in purchasing a house. You don't want to be like most of these foreclosures who really liked the house and went into debt without being realistic about net take home pay against mortgage and other expenses combined.

Don't be like them. Find a property which you really can afford comfortably. This townhouse is not the only place on earth for you. Try to look for a place below $120,000 and make down payment of 20% or more. If you cannot make down payment of 20% or more, wait until you have the money.

In the end, the decision is yours but I don't want to see you having to work just to pay the mortgage and nothing left over to enjoy your life.

[kec613]

Never make a large purchase off emotions,

Try and curb your feelings and do the "money smart" deal. There are plenty of homes in this market,