Real Estate Bubble

[beigledog]

Last week we talked about writing a letter to the seller of the home explaining why you are low-balling on the offer. This is the letter that I've written that we'll be giving with our offer over the weekend. Let me know what you guys think.

Dear Seller,

Please consider our offer for $161,000 for the home at ## XXXXXX Ln. We feel this is a very attractive offer at nearly $85 per square foot. Houses on XXXXX Ln. have sold for an average of about $81.50 per square foot over the past 4 years (See attachment p. 1). We are making this strong offer for the following reasons:
• Median home prices in our town have declined 3.75% since the same time period last year (See attachment p. 2). This could be a result of the widely talked about “housing bubble.” As an investment professional, it is my responsibility to carefully observe the economy. The “housing bubble” could be the most talked about item in the economy this year; many economists believe that housing prices will continue to drop across the country over the next few years.
• We feel the home is in need of many updates. We estimate that the house needs about $25,000 in updates. We feel that the kitchen appliances ($2,500 for oven, refrigerator, and dishwasher), kitchen cabinets ($6,000), carpet ($2,500), foyer/bathroom/kitchen tile ($4,500), and deck (~$7,500) need to be replaced. We have included estimates for each of these items (See attachment p. 3-6). We feel that all of these items are necessary to bring the house up-to-date. When you include the remodeling total of $25,000 in our offer, it brings the offer price to nearly $98 per square foot. (The above estimate does not include items such as paint, light fixtures, doors, and other smaller items that we also feel need replaced.) This is substantially higher than any other house that has ever sold on XXXX Ln.
• We are ready and prepared with our bank. We have also attached an online statement of our savings account (we will put 10% down – See attachment p. 7) and a copy of our pre-qualification letter from M&T Bank (See attachment p. 8). The offer is not contingent on the selling of a home and we can move in soon after closing.

Thank you for considering our offer and we look forward to your response.

Sincerely,
Mr. and Mrs. beigledog