Sign in to follow this  
Yawo64

Home Price - How to Negotiate with Landlord

Recommended Posts

Hello,

 

I am currently renting a house that I want to buy.  My current landlord bought the house about 6 yrs ago during the bubble - for about $290,000. 

 

for some inexplicable reason, he still believes he can sell the house close to what he purchased and wants to negotiate down from there.

 

But house prices in the area has fallen - and most houses of the type are selling around $220,000.00

 

How can I negotiate with him - I asked him to check the current home prices, to help him determine how much his house is worth.  

 

There is a real estate broker who is willing to give us a BPO (Brokers Price Option) - a sort of an evaluation of the home price.  Is it worth it?

 

I understand however that most loan programs (I'm going with FHA)  will also conduct their own evaluation (appraisal) before the loan is funded, and they will not fund a home whose cost is greater than the appraised value.   If that is the case, then is it not better to go with one of the appraisers that does this sort of work ?

 

cheers, Yy

 

Share this post


Link to post
Share on other sites

Maybe take over payments? 

 

I'm actually on the other side of the table right now.  I've got a house to sell...I owe 30% more than its currently appraised.  not much room for negoitiation.

Share this post


Link to post
Share on other sites

Yours. 

 

You have to go thru the same paperwork and essentially get his bank to transfer the loan to you.  They might even do some "mortgage modification" in the process, which would lower your actual obligations...but might wind up in taxable income to him.

 

You'd want a real estate LAWYER involved...

Share this post


Link to post
Share on other sites

Or just forget the house and look for another one. There are houses on every corner. You should not pay more than a house is worth simply because the seller is underwater.

  • Like 2

Share this post


Link to post
Share on other sites

I have to agree  walk away from this purchase.  My landlord wants me to buy the house I am renting.  I do LOVE the home but the problem he has is the same to yours.  They paid $135,000 5 years ago and now the homes in the area have fallen by almost HALF.  I will not pay more than the home is worth and he cannot afford to pay off his mortgage for the difference.

 

The problem you are going to have (and any other buyer) is that the bank will not finance for more than the home officially appraises for.  I would not waste the money on a BPO because it will not tell you anything you do not know now.  The LL is underwater in this house.  There are too many nice homes on the market to get stuck in a really bad financial deal.  

  • Like 1

Share this post


Link to post
Share on other sites

@WhoCares1000 @Clydesmom  Reluctantly, I guess I agree.  Its the LL's problem...not yours.  If he can get a loan modification AND transfer the new loan to you...maybe...but if he's not prepared to deal with the tax consequences, then walk away.

Share this post


Link to post
Share on other sites

Thanks very much - I will speak with the landlord again this weekend.  He appears to still have  his head in the sand regard the real market value of the property.  I will urge him to consider paying or splitting the cost of the appraisal or at least the CMA fee.


 


In the meantime, I am keeping my options open - only problem is we have a lease that expires on August 1, 2014.  So short of breaking the lease or voluntary release from the landlord (which I doubt he would do),  I will have to postpone any home purchase until next year, if we are unable to agree on a realistic price. 


 


Will update the board of any developments... thanks for all your input ...


 


Happy Thanksgiving !

Share this post


Link to post
Share on other sites

If he needs to sell the place, he may talk to his lender about a short sale.  You purchase the home for the appraised value, he accepts that, and the bank writes off the difference.  The bank may or may not do this, but they know times are tough also, and they may consider it if the land lord is in financial difficultlies, and in danger of foreclosure.  Otherwise, you should look around for homes for sale in the area, you might find something better, and cheaper.

Share this post


Link to post
Share on other sites

That's what I meant by "tax consequences".  If the bank does agree to a short sale, the LL may get a 1099c for the difference between what he owes and the selling price.  I'm actually trying to work out a self-arranged short sale.  Say I owe $150k on the house, but I sell it for only $120k.

 

Rather than doing a real short sale, and owing taxes on $30k, I'll "borrow" $30k from my 401k...and use what I was paying for house payments to pay myself back.  The transaction is tax free, and if my calculations are correct, I'm might actually break even interest wize.

Share this post


Link to post
Share on other sites

Breaking the lease might still be cheaper than paying $70000 over appraisal, especially if you consider the interest payments on that extra $70000. Otherwise, wait until spring to start looking. House prices will not recover so quickly that the home you live in will go up $70k and so you will save money anyways. Plus, you can save more to over and lease payments due and/or a larger down payment.

Don't get so hung up that you make a stupid decision. Remove all emotion and think of this as a business decision (which is what the landlord is doing) and you will realize that buying this house is a bad deal no matter what. You do not need to buy a house tomorrow and if the landlord will not negotiate, be prepared to walk away.

Share this post


Link to post
Share on other sites

WhoCares1000

 

Thanks very much for the thoughtful suggestions ... 

 

As you and others suggested, I have decided not to rush into any bad mortgage decision merely out of convenience (of staying in the place I am already renting, if the seller insists on selling over the appraised value.  It sure will be a big financial mistake to pay too much for the house.  So I will wait it out, and start looking around for a new home in mid summer, save more money for down-payment and closing costs - so I am not necessarily dependent on seller generosity.  Above all, the fact that the mortgage has hit my credit report is also good in that any, skeleton in my credit closets - is likely to be picked up by fantom, bottom-feeding collectors, giving me time to deal with it.

 

Sure, your advice is a treasure !

 

Happy thanksgving - - Oyiwaa

Share this post


Link to post
Share on other sites

The answer is simply to tell him I will agree to pay the appraised value. if that value is lower than the current amount owed, will you agree to complete a short sale? If he says no then walk away because he CAN'T sell the house right now. He will either have to face reality or sit on the house until something changes. Either way, no reason to make his problem yours. Just ask him  if he will sell for market value even if its below what he owes. his answer will let you know if you have something or not.

 

God Bless!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this