Should I increase my offer price for a townhouse?

Should I increase my offer price for a townhouse? Topic: Case slogans
July 19, 2019 / By Micah
Question: Hi folks. Okay, I am trying desperately to buy a townhouse/condo. I have been looking for months and have made several offers. On one property, I have submitted my offer twice. The first time they said no. They went with another higher bid which fell through. I submitted another offer, this time for $335K for a 2 bedroom townhouse in Burbank (LA County). I know some of yall live in mansions for this price in other states. California real estate is horrendous! Don't move here! Seriously. Anyway, so the seller won't budge. She rejected my bid of $335K, and they have no other offers on the place. Yes, she's retarted. I really want this place. It's great; however, I know I will need to replace the carpet (what is that, $5K in costs?) so I absolutely can't go up in price. The only reason I went to $335K was because I knew I'd get the firsttime homebuyer credit. Well, the deadline for that credit is almost over so I don't know what to do. Based on an annual salary of $55K, can I realistically afford a $272K mortgage (I will be putting 20% down and paying all closing costs). Should I go in for a $340K bid and see if the stupid old witch takes it? I am paying $1,400 a month in rent, by the way. So I am throwing that money away basically every month. HELP! Thanks for everyone's answer. Please note that I live in California. You cannot find a 1 bedroom for under $250K, so it's unrealistic to tell me to buy something that is priced that much. On a $330K house, I plan to put down 20%, so I will carry a $270K loan.
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Best Answers: Should I increase my offer price for a townhouse?

Joss Joss | 10 days ago
You are NOT throwing away money renting! This is a marketing slogan invented by realtors! As others have pointed out, mortgage interest, property taxes, HOA dues, maintenance and repairs in your situation would be much more than your current rent. Renting, in your case, is actually saving you money!
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Joss Originally Answered: Should I increase my offer price for a townhouse?
You are NOT throwing away money renting! This is a marketing slogan invented by realtors! As others have pointed out, mortgage interest, property taxes, HOA dues, maintenance and repairs in your situation would be much more than your current rent. Renting, in your case, is actually saving you money!

Harding Harding
At 335K for a 2 bedroom condo you most likely would be spending around $2200/month for you mortgage payment. Almost half of your monthly income would be going towards the mortgage. You will also need to deal with upkeep of the property. The $1400 rent payment does not seem too bad. Are home prices still dropping in CA? What will this condo be worth in 2-3 years? If I were you I would step back and look at the whole picture... You say you have enough for 20% down + closing costs. That's $70,000+$15,000= $90,000. Do you really want to live in Burbank, CA? Can you find a job in a less expensive part of the country where you would make the same salary? Take that 90,000 and put half of that down on a nice home and have a $45,000 cushion in your savings to ENJOY life. Don't make yourself "house-poor" and set yourself up for disaster should you lose your income.
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Elada Elada
What does your agent advise? You do have a real estate agent representing you, right? Your agent should be able to tell you what similar properties have sold for in the recent past. You don't say what the list price of the unit is...is your offer of $335K within 3% - 6% of the asking price? Have you been pre-approved for the amount needed to purchase the condo ($268,000)? Frankly I don't think your annual income of $55K will allow you to comfortably carry the mortgage payment / insurance / taxes / HOA monthly fees. And remember, that the property must appraise for an amount to satisfy the lender. You might be better off letting this one go for now. But, if you have your heart set on it, consult with your agent and lender to make sure you are okay to move forward. Good luck.
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Cari Cari
How much savings would you have left over if you went through with this? That seems like a really big mortgage for what you are making. Unless you have a nice cushion to fall back on should you lose your job, I wouldn't do it. Don't feel bad about "throwing away" that money on rent. If you bought the condo you would be blowing at least that much on mortgage interest and property taxes each month anyway.
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Allaric Allaric
On a $270k loan, the payment at 5% APR 30 year fixed loan will be $1450 per month. You will also have property taxes of about $350 per month (based on 1.25% of the value), and probably $250-$500 per month for HOA fees. Therefore your total front end payment will be a minimum of $2050 per month which is 44% of your salary. Even if everything else is perfect, lenders usually will not give a mortgage where the front end debt ratio is above 31%. The days of acquiring mortgages with a front end ratio of 44% is long gone.
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Tate Tate
As a general rule, your price should be no more than 2.5 - 3 times your salary. You are paying nearly 6 times this. With so much property on the market & desperate sellers out there, why are you going after this one?? Don't fall in love with a high priced piece of property. I am also in the market for a townhome (here on the east coast). With so many bargains out there, I see no reason to deal with a seller who will not budge on their price. My upper end is 250k, and I make 80k a year. Don't dance to the sellers tune. Move on
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Rita Rita
there is no way you can afford a mortgage of 5 times your annual salary - that is insanity - 2.5-3 times your salary is the basic affordability calculation - you will have property taxes and homeowners insurance on top of that and house utilities are a lot more than an apt, plus you have to pay water, sewer and trash, which costs me $40+ a month in Pennsylvania - probably a lot more in CA a $272k mortgage is going to be more than 1540 a month (5.5% rate) PLUS all those costs I mentioned - you won't qualify for a mortgage anywhere near that
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Missy Missy
Your absolutely right the housing here is insane. Really when it comes down to it, you should just ask yourself is it worth losing money on? Because obviously the owner isn't going to budge, I think you are losing more money in this situation. you might want to try other condo's in the area. but if you have to have this condo then do it (take out a loan or something) just make sure your not cutting your credit to deep for the future.
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Lindsay Lindsay
If you really love it and plan to stay there for a long time, then 5k more is not a big deal. It seems like a lot for a 55k salary though. I don't think you are wasting your money by paying 1400 in rent. If you plan to stay there forever, then it could be a good deal, otherwise I would continue renting.
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Lindsay Originally Answered: An increase in the price of pure chocolate morsels from $2.25 to $2.45 causes suppliers of chocolate morsel?
The price elasticity of supply is very similar to the price elasticity of demand. Es = %change in Q / %change in P. Quick note about the midpoint formula: The midpoint formula to calculate the price elasticity of supply (demand) is defined as the following: Es = (change in Q) / (Q1 + Q2)/2 / (change in P) / (P1 + P2)/2 This formula is tricky, in the sense that is easy to type in the wrong number or operator into your calculator. (Q1 + Q2)/2 is just the average Q, and (P1 + P2)/2 is just the average price. Thus, we can rewrite the equation as: Es = Change in Q/ Ave Q / Change in P/ Ave P Changing this into a multiplication problem: Es = (Change in Q/ Ave Q) * (Ave P)/ (Change in P) Rearranging one more time: Es = [(Change in Q) / (Change in P) ] * [(Ave P) / (Ave Q)] Now, the problem can nearly be solved by observation. The change is Q = 20. The change in price =.20. The average Q = 135. The average price = 2.35. Therefore Es = 20/.2 * 2.35/135 Es = 100 * .0174 Es = 1.74. By definition anytime Es/d > 1, that portion of the curve is considered elastic. Thus, A is the correct answer

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