Making an Offer

So I'm making an offer on a duplex. I'm bidding too low, but I'm super nervous about the property and I want to protect myself. The duplex is about to go into foreclosure. The bottom unit is rented out ($950/month) and I would live in the top unit. The property is listed at $241K, but I'm bidding $215, with a Genesis gift program wrapped into it, which means the owner would "gift" me about $12,000 from the actual amount I pay him, so I can use that for my down payment. That means I'm essentially bidding $202. Here's why:

$280,000 (similar houses in the area went for this last year)
-$42,000 (15% property value loss: 10% last year + 5% conservative estimate for this year)
-$17,500 (siding: siding is crap, and while functioning right now, it needs to be replaced. Online estimates put siding at about $7 square foot with removal. House is about 2500 square feet of surface.)
-$4,000 (furnace: this unit has 2 furnaces, and one of them is 25 years old)
-$7,000 (windows: some of the windows could probably be fixed, but a few are fogged and they're all 25 years old, and not the best quality. I put this at 14 x$300 (small windows) + 4 x$700 (bay windows))
-$5,000 (it's next door to some kind of halfway house--it's a giant brick mansion, but it's still a halfway house. I didn't realize this the first time I looked at the property.)

= $204,500

The repairs I list are honest, but not necassary right away. They are right on the edge, however, and I don't want to risk it. I KNOW this is asking a lot (the guy bought this one year ago at $340k, but that was a lame deal), and I'm probably asking too much, but I was panicking last night and decided that I wanted to go way too low, and get laughed at, so at least I feel like I'm covered in case of all eventualities.


I put down $350 to lock my interest rate at 5.5%, with a one time "float down" option, to bring it down to a lower interest rate if one should appear. I have this interest locked for 90 days--even if I don't use it, this is worth the investment.

I'm bummed about putting in such a low offer, because I don't think it will be accepted, and the financials are nice even at a higher price. My GF wants me to jump on the property. At $241K (the asking price), my mortgage would have been around $1800, and as I get $950 from the bottom tennant, my GF and I would split the rest of the mortgage, each paying $450.

There are other deals in the world, however, and I don't want to jump at the first one I see.