Home buying question.. -=The Offer=-

[spacelord]

my advice, I wouldn't buy anything that is at the upper limit of what you are approved for. They typically approve at a certain percent of your salary and you'll be a slave to your house payment if you go to your upper limits.
I have always been approved for WAY more mortgage than I have ever bought.

 

[Vic]

The seller does have the right to insist on knowing how much the buyer is approved for. There are under no obligation to do business or negotiate price with a potential buyer who is unable to be credit approved, or who is credit approved for less than sellers' asking price.
On the other hand, a lenders' credit approval has absolutely nothing to do with the final purchase price of the home. A full appraisal of the home will be required by the lender in order to complete the financing, and lenders will only lend on the LESSER value of either the purchase price or the appraised value.
Words to the wise for your own protection: (1) force your realtor to negotiate from your lowest price point first, if he/she won't do it, fire 'em; (2) don't let you realtor choose your lender or your appraiser (although it is okay, and often required, for your lender to choose your appraiser, just make sure the lender and the realtor aren't good friends ).

 

[lsman]

all depends on the market, the house (condition) and location.
Went to an open house the week before. (house has 4 groups of ppl in line when i am there and have to wait)
nice house in a small lot. not backyard. asking 359. I bid for final of 366. (there are 5 offers on the table and go a second round, high bid get it).
House go for high 370s.

I think there is difference between those pre-approve and prequalify

 

[jemcam]

Like Happy Puppy said, it also depends on the seller's desire. I bought my last house 3 years ago, and I offered them $60k less than their asking price. We negotiated to $50k less. Nothing ventured, nothing gained. I've seen lots of people put their houses up for sale for much more than they're worth because the sellers want to pay the realtor and make a profit on the house. Many times, especially nowadays, it's just not possible. Somtimes you have to wait for them to figure out they're not going to make what they wanted on the house.

 

[Parrotheader]

Originally posted by: AU Tiger

Originally posted by: PipBoy
Of course the seller doesn't know what you're approved for. It's none of their business.

Exactly. At least I don't see why they would know, unless you were going through a builder who also processed your loan app.

That's what I was thinking. It's none of their business. We were approved for about $60,000 more than we actually ended up paying.

We used a buyer's agent to represent us and it helped. The asking price for our house was $159,900 when we were looking. It had been on the market for almost 6 months, which was surprising since it was a very nice neighborhood with houses much bigger than a lot of the newer patio home style houses in the area (the previous owner had passed away, the daughter had other inheiritance rolling in and hadn't been in a huge rush to sell.) The house was already a good deal since most houses in the neighborhood go from $165k - $200k. So at first we were hesitant to offer TOO much below that with this being our first experience with a purchase like this. We originally thought about $155k. Then we found a problem with the upstairs air conditioner during the home inspection (the daughter's husband, who was in construction *red flag*, had tried to use one of his company's contractors to patch it up temporarily to make it seem like it worked properly.) Obviously we were VERY close to making an offer at this point, but we used that incident as a chance to use the same tactic people use with car salesman - get up and walkaway. Our agent let their agent know we were DEAD serious about walking away (we started booking appointment to look at other homes again) and when they came crawling back offering to pay for the repairs it worked. We had leverage. They paid to fix the air conditioning (by a company of OUR choosing) and they accepted our lowball offer of $144,000.

 

[LakAttack]

Originally posted by: jaybert
My mom is a realtor, so all that I say is hearsay from what I've seen. There is no way your realtor is going to tell the seller that you are willing to pay more for the commission. They, on average, get paid 3% of the total selling price. The difference of $5000 is $150. They would rather you get a good deal and refer then to your friends and make another $3-4grand instead of making that $150. Also, there is a chance that with the rise of price that the customer may not be willing to get the house, so thats losing out on another few grand trying to make a couple hundred. Ultimately, the realtor's job is to make their customer happy, since a good deal of business is repeat business and word of mouth referrals.

That's good info. If you have reason to think that your buyer's agent is not working for your BEST INTEREST, you should consider getting a new agent.

 

[awanSky]

good info. I am in the market also right now and about to make an offer to FSBO (ForSaleByOwner). Bought an offer letter from OfficeDepot and adding some extra terms like ( termite letter, refri stays, etc). Any idea where to get the actual offer letter like RE agent use?

Also, Checkout www.erealty.com before you get an agent. 1% rebate if you purchase through em. Lastly, all RE agents are the same, they want to make money ( flamer, keep your cr@p in your pants) so do your own DD cause you are responsible for your own best interest. Internet is a beautiful thing. Find your own mortgage, inspector, handyman, etc.

 

[spidey07]

to the point about the seller not knowing your approval amount.

By all means the seller can dictate in the contract that you must provide a certified pre-approval letter from the lendor.

I wouldn't dare take an offer from you without this info first.

 

[HomeBrewerDude]

Actually you want them to know you are preapproved. Its makes your offer stronger. If they are in a hurry to sell, they will be more likely to take a pre-appoved offer rather than one that will require approval. Your bank should be happy to write you a letter pre-approving the amount of the offer. Do this and include a copy with the offer to buy.

Since you are offering below their asking price, you need to make your offer seem attractive in other ways. Pre-approval, more earnest money are two good ways of doing that.

edit: grammar

 

[HomeBrewerDude]

Originally posted by: CptObvious

The seller has no right - or no business knowing what the purchaser is qualified for

Bah, like the poster above said...most sellers will do NOTHING unless they get a pre-qual letter from your lender.

pre-qual is different and less than pre-approval.

 

[HomeBrewerDude]

Originally posted by: CptObvious
Indeed it is, but most sellers will do nothing until they have at least that...if not complete approval

true, i just wanted to make the distinction for the uninitiated.

 

[Vic]

Originally posted by: awanSky
good info. I am in the market also right now and about to make an offer to FSBO (ForSaleByOwner). Bought an offer letter from OfficeDepot and adding some extra terms like ( termite letter, refri stays, etc). Any idea where to get the actual offer letter like RE agent use?

Also, Checkout www.erealty.com before you get an agent. 1% rebate if you purchase through em. Lastly, all RE agents are the same, they want to make money ( flamer, keep your cr@p in your pants) so do your own DD cause you are responsible for your own best interest. Internet is a beautiful thing. Find your own mortgage, inspector, handyman, etc.

As the buyer, you should always use a realtor. It costs you nothing. BUT... not all realtors are the same, not at all. Some are far more competent than others, some are far more honest than others. Try to find one that comes highly recommended or referred.
And of course they all want to make money.... do YOU work for free?
This is not a flame, but a legitimate question, and something you should think about before dealing with your realtor or lender. Remember that you pay for what you get.

 

[awanSky]

Okay tell me again what kinda of work they do other than drive you around and prepare a template document and pass them back and forth? Don't tell me because they refer you an inspector, mortgage, etc. Who's interest is at stake when the buyer agent has to depend on Seller to make money? However, I heard about Exclusive Buyer Agent but never use em yet.

As the buyer, you should always use a realtor. It costs you nothing. BUT... not all realtors are the same, not at all. Some are far more competent than others, some are far more honest than others. Try to find one that comes highly recommended or referred.
And of course they all want to make money.... do YOU work for free?
This is not a flame, but a legitimate question, and something you should think about before dealing with your realtor or lender. Remember that you pay for what you get.

 

[Vic]

A fool is his own lawyer, a fool is his own contractor, a fool is his own builder, a fool is his own realtor....

What do they do? They find you a home, one that meets your qualifications and specifications. They save you countless hours searching through newspapers, listings (which actually wouldn't even exist without realtors), driving out to see potential homes, negotiating with sellers, etc. Don't believe me? Hey, I don't care, go out and buy a home without one.
As for how to find out if a realtor is honest or not, that's easy. Ask them to do something (legal, please) that is in your best interest but not in theirs and see if they do it. For example, the easiest way to test this is to ask them to submit a low-ball bid on a house. If the realtor refuses, fire 'em. What they should do is warn you that the bid may be refused (and that such refusal could cost you the house) but do it anyway. Then you'll know.

BTW, what do YOU do that is so all-fired holy and important?

 

[jaeger66]

Originally posted by: awanSky
Okay tell me again what kinda of work they do other than drive you around and prepare a template document and pass them back and forth? Don't tell me because they refer you an inspector, mortgage, etc. Who's interest is at stake when the buyer agent has to depend on Seller to make money? However, I heard about Exclusive Buyer Agent but never use em yet.

You are making a huge mistake. This is a house, not a damn sofa. The fact that you even have to ask why you need an agent means that you need one. As has been mentioned several times, a buyer's agent is legally obligated to negotiate in your best interest. Good word of mouth business is far more profitable than screwing someone over a 3% commission.

 

[FeathersMcGraw]

Originally posted by: djheater
I'm pre-approved for 170, the house is priced at that but HONESTLY it's only worth 157-160 I plan on offering 155 to start (is that to low? I want to offer 150 but don't know if that's insulting (part of me says who cares and the other part says "don't peeve the seller or negotiations could be tougher)).

Anyway the real reason I'm posting is to figure out if my approval amount is relevant. Should I get another approval letter showing 160? (I'm willing to go to $165 actually) or does it even matter? Are sellers privy to that information?

The only thing which is really relevant is the existence of the letter. When making an offer, indicate that you have a letter in your possession and will make it available to the seller within some reasonable period of time (say, a week). The amount of approval is certainly of interest to the seller, as it indicates (to some extent) the strength of your financial position. Your lender should be able to provide you with an updated letter with a lower amount if you request one.

The initial offer is very context-dependent. Look at similar houses for sale in the area (similar lot geography, layout, size, etc.) to gauge the approximate square footage price you should be targeting (or go to the city tax records to see what homes have been selling like in the area). Lowball offers are appropriate if the housing market is weak (many houses for sale in the area, house you're interested has been on the market for six months or more, house you're interested is not occupied), but keep in mind that offering very low and then bumping up your offer to a "normal" price weakens your bargaining position later on (since it becomes very apparent that you were trying to lowball at the start, which puts the seller on guard for other nickel and dime tactics).

Unless your realtor is a buyer's agent under contract, be very careful of the sorts of financial information you divulge, as they will likely have a legal obligation to disclose that information to the seller.

 

[awanSky]

Vic, chill dude,

You can search for the house that you want using the internet for free!! How the hell they gonna help you find your dream home. You should know your dream home. Dont tell me when you ready to buy a home you didn't drive around neighbourhood that you like? go to bankrate.com and read the articles. They actually recommend you do that, driving around during rush hour/morning/night/etc.Negotiating with seller? I thought you negotiate and the agent pass it along, no?

buying home should not be complicated. Technology improve everything. Real Estate is one of those areas affected. Checkout erealty.com, ziprealty.com, c21clickit.com, they are changing the RE business. Commission is lower and you get a rebate when you buy through em.

ps: I don't work for any of the companies above but am very satisfied with em.

Check out this interesting thread.

edit: Sorry djheater, not trying to cr@p your thread.

 

[jaeger66]

Originally posted by: awanSky


buying home should not be complicated. Technology improve everything. Real Estate is one of those areas affected. Checkout erealty.com, ziprealty.com, c21clickit.com, they are changing the RE business. Commission is lower and you get a rebate when you buy through em.

Obviously you have no intention of listening to anything anyone says, so this will be the last moment of my time that I waste on you. There are a thousand details that come up during a real estate transaction. Once escrow opens, you will find yourself overwhelmed trying to coordiante very little detail between the seller, the title company, the insurance company, the bank, the county assessor, the title insurance company, the various inspection companies, and who know what else that will come up. At closing, the seller will show up with his attorney. Who will you show up with, a sock puppet?

 

[FeathersMcGraw]

Originally posted by: awanSky

You can search for the house that you want using the internet for free!! How the hell they gonna help you find your dream home. You should know your dream home. Dont tell me when you ready to buy a home you didn't drive around neighbourhood that you like? go to bankrate.com and read the articles. They actually recommend you do that, driving around during rush hour/morning/night/etc.Negotiating with seller? I thought you negotiate and the agent pass it along, no?

Good realtors narrow housing choices based on their clients' preferences (lot layout, neighborhoods, interior features, etc.). They will point out salient features and/or shortcomings of the houses being examined. They will offer advice about the homebuying process. Based on existing relationships, they may have preferential access (compared to solo homebuyers) to make housing appointments. If all your realtor is doing is driving you around, I'd get another realtor.

Could a person buy a house without a realtor? Absolutely. It depends how much legwork you want to do on your own. I used a buyer's agent to purchase my home, and I think that the process went far more smoothly because of it. In addition, the agent I used also made me a far more knowledgeable homeowner by explaining how home systems (structural, plumbing, electrical) actually work, and pointing out deficiencies which should be addressed (and most have been) in the house that I finally purchased.

 

[Vic]

Originally posted by: jaeger66

Originally posted by: awanSkybuying home should not be complicated. Technology improve everything. Real Estate is one of those areas affected. Checkout erealty.com, ziprealty.com, c21clickit.com, they are changing the RE business. Commission is lower and you get a rebate when you buy through em.

Obviously you have no intention of listening to anything anyone says, so this will be the last moment of my time that I waste on you. There are a thousand details that come up during a real estate transaction. Once escrow opens, you will find yourself overwhelmed trying to coordiante very little detail between the seller, the title company, the insurance company, the bank, the county assessor, the title insurance company, the various inspection companies, and who know what else that will come up. At closing, the seller will show up with his attorney. Who will you show up with, a sock puppet?

The only real thing that the internet has proven is that competent salespeople, motivated and eager to handle all the details in complex transactions, are more valuable than ever.
After all, that was the big promise for e-commerce, wasn't it? That salespeople were no longer needed? Loan officer-free loans, realtor-free homes, salesperson-free cars... O how the bubble didst burst!

 

[awanSky]

Obiviously, you have no clue what yer talking about or you are one of those RE agents. If you read my posts you understand where I am coming from. Who look out for your best interest? Now, I did mention about an Exclusive Buyer Agent that I think protect your interest better. You are suppose to find your own mortgage to get the best rate, own inspector so they can freely disclose any problem with the house, own title company (btw, they handle county stuff, check the deeds, title insurance, in some state they can act as closing agent, etc) . In the state of GA, buyer choose a closing attorney.

I am not saying all RE agent is bad but one is enough to make your life a nightmare.

Obviously you have no intention of listening to anything anyone says, so this will be the last moment of my time that I waste on you. There are a thousand details that come up during a real estate transaction. Once escrow opens, you will find yourself overwhelmed trying to coordiante very little detail between the seller, the title company, the insurance company, the bank, the county assessor, the title insurance company, the various inspection companies, and who know what else that will come up. At closing, the seller will show up with his attorney. Who will you show up with, a sock puppet?

 

[awanSky]

thats a good one...

The only real thing that the internet has proven is that competent salespeople, motivated and eager to handle all the details in complex
transactions, are more valuable than ever.

Agree...

After all, that was the big promise for e-commerce, wasn't it? That salespeople were no longer needed? Loan officer-free loans, realtor-free homes, salesperson-free cars... O how the bubble didst burst!

Look at Dell, Saturn, etc. it takes time.

 

[Doggiedog]

First of all, it would be helpful to know where you live since living in a hot urban area can really determine what price you pay for your place.

I am closing on a house next week. We gave the owners exactly what they wanted because we knew the place was worth more than they were asking. After getting an appraisal, we were right. The property is worth much much more than what we are paying. If you have the time to keep looking, then you should try and find the best value you can. But if there is something you like that fits exactly what you want and is within the price range you are looking for, sometimes it doesn't pay to wiggle around and risk losing the property.

From what I have seen in this area, Northern NJ, I can tell prices are flattening to going down. I see for sale and for rent signs everywhere. The expensive homes are the ones that are coming down the fastest. When you get to the cheaper ones, there really isn't much more they can go down.