Looking to buy a house

[RJP2741]

Originally Posted by Noles20

Don't just get fixated on the house itself. The old adage "you aren't just buying a house, you're buying a neighborhood" is a very true one. If you are interested in a house, drive up and down every street in that neighborhood. If you plan on having kids, try to find a place that you would be comfortable raising them in. Check out the schools, the youth organizations etc.

We aren't at the "kids" stage. Thinking this would be a house we'd be in for 5-10 years. We want it to be safe enough for us, and for young kids, but we luckily don't have to worry about school systems and things like that yet.

Good advice nonetheless though. I've definitely gotten enamored with the pictures of houses I can find on Zillow or whatever, but they don't say anything about the neighborhood.

[YouNeverKnow25]

Originally Posted by DTWinslow

No agent can work for buyer and seller at the same time. Like you say, its a conflict of interest. And against most states laws. All of em, I think. Sellers agents can, however, simply fill out paperwork for the buyer without signing anything. Or rather help them fill out the paperwork. Tell them where to sign and what not.

I've been a Realtor for a number of years and have met a couple Buyers only agents, but they are few and far between. Its terrible advertising. Hey look, I've got a buyer! is a terrible headline for an ad.

also, dual agency legal in a lot of jurisdictions

[Benny003]

Originally Posted by DTWinslow

No agent can work for buyer and seller at the same time. Like you say, its a conflict of interest. And against most states laws. All of em, I think. Sellers agents can, however, simply fill out paperwork for the buyer without signing anything. Or rather help them fill out the paperwork. Tell them where to sign and what not.

I've been a Realtor for a number of years and have met a couple Buyers only agents, but they are few and far between. Its terrible advertising. Hey look, I've got a buyer! is a terrible headline for an ad.

I'm pretty sure they can represent both, but the caveat is that the buyer has to be informed of it and agree in writing to allow it to happen. Our realtor that we're currently using had it built into her standard contract to accept or reject it. Rejecting it would mean she couldn't show us any houses that she was also trying to sell.

[Lee3691]

If you are a buyer, and well informed of the process, using the seller's agent will allow you to ask for part of the real estate's commission returned to you - I'd ask for at least 1.5% (half the 3% they'd be getting for the second side of the deal)

[YouNeverKnow25]

and if I'm the seller, I'm asking for givebacks too--and in my case, they might actually give it to me

teh buyer asking for a commission giveback, probably is getting laughed at. not that they aren't entitled to ask, agents just dont see it that way

[Noles20]

Originally Posted by YouNeverKnow25

and if I'm the seller, I'm asking for givebacks too--and in my case, they might actually give it to me

teh buyer asking for a commission giveback, probably is getting laughed at. not that they aren't entitled to ask, agents just dont see it that way

But the buyer can mention that maybe since I am paying the full 3% anyway, I ought to have my own realtor. Then the seller's portion goes from 6% to 3% just like that.

[YouNeverKnow25]

buyer doesn't pay commission

i get that it's baked into the price, but that's how they see it

[Noles20]

Originally Posted by YouNeverKnow25

buyer doesn't pay commission

i get that it's baked into the price, but that's how they see it

I understand where the money comes from and it doesn't change the point I am making.

[Lee3691]

Originally Posted by YouNeverKnow25

and if I'm the seller, I'm asking for givebacks too--and in my case, they might actually give it to me

teh buyer asking for a commission giveback, probably is getting laughed at. not that they aren't entitled to ask, agents just dont see it that way

I know multiple people who've done this.

[YouNeverKnow25]

I think both buyer and seller receiving a 1% refund of the purchase price is a fair dual agency situation

caveat: I don't think there's such a thing as a fair dual agency situation

[Lee3691]

Also for informed buyers, there are companies/websites, that will refund most of the buyer's commission to just do the paperwork. Haven't looked at one in a while, so don't have a name.

[DTWinslow]

Originally Posted by Benny003

I'm pretty sure they can represent both, but the caveat is that the buyer has to be informed of it and agree in writing to allow it to happen. Our realtor that we're currently using had it built into her standard contract to accept or reject it. Rejecting it would mean she couldn't show us any houses that she was also trying to sell.

In Maryland, one agent cannot represent both buyer and seller as exclusive signed parties. This is true in many states. Dual agency in Maryland is when buyers agent and sellers agent work for the same broker. Both parties have to agree. Dual agency with a single agent is when the agent represents one party and assists the other with ministrral acts. I'm looking but I can't find a jurisdiction that let's agents sign and represent, fiduciarilly both clients.

I apologize for the confusion. Terminology differs from state to state. Maryland is said to be the most confusing.

[scoot_14]

Originally Posted by RJP2741

Does anyone have a recommendation on how to find out about new listings in an area? Is it just subscribing to like a Zillow e-mail notification? A specific real estate agent e-mail? Or are there other sources people have used?

In MA you can get an MLS log in for free from a lot of realtor sites. If you can snag a log in its a lot easier to browse properties that are actually for sale. Zillow is ok but not great. Don't trust their values.

[scoot_14]

Originally Posted by Lee3691

Regarding the mortgage, I'd recommend not going to a bank, but finding a broker - that's where you will get your best rate. A simple internet search and filling out forms will suffice.

Good luck!

I couldn't disagree with more than I do. I'll allow for the possibility that maybe in certain parts of the country this could be true...but if a broker gets you a lower rate you're paying for it elsewhere in the deal.

I am biased. I'm a mortgage underwriter at a credit union.

[Lee3691]

Originally Posted by scoot_14

I couldn't disagree with more than I do. I'll allow for the possibility that maybe in certain parts of the country this could be true...but if a broker gets you a lower rate you're paying for it elsewhere in the deal.

I am biased. I'm a mortgage underwriter at a credit union.

This has just been my experience. Although I've never been a broker, I have worked in the industry, and the banks couldn't compete in their retail divisions. The broker has the ability to shop the deal around versus a bank.

[smokew11]

if I was working as a dual agent and a buyer or seller asked me to take a reduction on my commission, there's a lot of factors I'd have to look at before doing it. Since the buyer doesnt pay, I def. wouldnt do anything there. Noles point doesn't work- if I'm working with a buyer, have a contract and show them the home, they can't really leave me and buy it from someone else (well they can, but i'll still get paid for procuring cause).

If a seller asked, it'd have a lot to do with my relationship with the seller- are they selling to buy a new house and working with me on that? Have I done business with them in the past? At the end of the day I probably wouldnt change my commission unless they were adamant about it- that's how I get paid, it was what they agreed to when they signed the contract, and at the end of the day I did exactly what they wanted- I sold their house for an amount they were fine with.

I think the only way I'd give up some of my commission is if the buyer and seller are a couple thousand apart and the deal is going to fall through...5% is better than 0%

[Lee3691]

Originally Posted by smokew11

if I was working as a dual agent and a buyer or seller asked me to take a reduction on my commission, there's a lot of factors I'd have to look at before doing it. Since the buyer doesnt pay, I def. wouldnt do anything there. Noles point doesn't work- if I'm working with a buyer, have a contract and show them the home, they can't really leave me and buy it from someone else (well they can, but i'll still get paid for procuring cause).

If a seller asked, it'd have a lot to do with my relationship with the seller- are they selling to buy a new house and working with me on that? Have I done business with them in the past? At the end of the day I probably wouldnt change my commission unless they were adamant about it- that's how I get paid, it was what they agreed to when they signed the contract, and at the end of the day I did exactly what they wanted- I sold their house for an amount they were fine with.

I think the only way I'd give up some of my commission is if the buyer and seller are a couple thousand apart and the deal is going to fall through...5% is better than 0%

I'd recommend to anyone looking for a commission refund to make sure that it is in the contract. Also, I disagree with the notion that a buyer doesn't pay commission - it's part of the home's price.

This also brings up a good point though - if you are selling your home, and then using the same agent to buy one, I'd definitely negotiate that as well. A real estate agent my in laws used gave them 2/3 of the commission back on the house they bought, after collecting the full 3% on the selling side.

I have real issues with how real estate agents are compensated. The amount of commission earned on each transaction is ridiculous. If I can sell my home for 300k, to get the same take home, an agent would need to sell it for 319k. I think a commissions should be more of 2% (1% to each the buyer and selling agent), and then anything above the expected selling price, the selling agent gets 30% of the difference.

Hence, if they do sell the house for 319k, buying agent gets 3k, selling agent gets 3k + 6k = 9k, about the same they would of gotten. However, if the house sells for 360k, buying agents gets about 3500, selling agents gets 3500+ 18k = 21.5, a much higher commission for getting a bigger number on the house. This is probably a poor explanation.

[Julia Roberts]

I'd recommend first taking some riding lessons. If you have already done that then maybe consider leasing for a few months, maybe even a year. Remember this is a huge commitment. You have stable fees, feed and medicine, saddle and other tack, etc. I'd also recommend staying away from Arabians.

[Benny003]

Originally Posted by scoot_14

I couldn't disagree with more than I do. I'll allow for the possibility that maybe in certain parts of the country this could be true...but if a broker gets you a lower rate you're paying for it elsewhere in the deal.

I am biased. I'm a mortgage underwriter at a credit union.

So what is your recommendation for finding the best rate? If you go to multiple institutions to request a bid, don't they all check your credit report and doesn't that lower your credit score?

[scoot_14]

Originally Posted by Benny003

So what is your recommendation for finding the best rate? If you go to multiple institutions to request a bid, don't they all check your credit report and doesn't that lower your credit score?

You'd have to get a ton of credit inquiries pulled to significantly lower you're credit score. The effect of just pulling a report is pretty minimal. Besides that...you don't need your credit pulled to find out rates. Every bank/credit union/whatever posts their rates daily. All you need to do is look on their websites or just ask.

My honest advice is don't focus entirely on the rate. People worry about this WAY too much. They think they're winning some huge game by getting the lowest rate when in reality it's not as significant as you'd think. Competition is pretty tight out there so realistically if you're really aggressive maybe you'll get a rate that's .50% lower than another place, but realistically you're probably fighting and clawing over .25%.

What does that even mean? Here's an example: if you get a 30 year loan at 3.75% for $175,000 the payment (principal & interest) is $810. If you get the same loan at 4% the payment is $835. That's only $25 a month...$300 a year.

You may think "damn that's $300!" but what you really need to think about is what the closing costs are and how much getting that .25% lower rate might cost you. Close costs on a loan of that amount could be anywhere between $1,000-5,000. That's the part that is hardest to uncover. One place may offer lower rates but charge a $300 application fee and a $100 processing fee and an underwriting fee...and another place may waive fees entirely for First Time Homebuyers but not offer the lowest rates in town. I get applications from other banks and brokerages (I approve subordinations too) and I see all kinds of weird closing cost set ups. I saw one recently from a rather large and well known lender where the application showed they were waiving $3,000 in closing costs...but the closing costs were almost $7,000 which is ridiculous. In my opinion they were overcharging so they could waive a huge amount and act like they were doing some huge favor. Insane.

But back to the $300...if you get the lower rate but end up paying an extra grand in the deal it's going to take you 3 years to recoup that money. Furthermore...people are going to tell you "but you'll save tens of thousands of dollars on interest over the life of the loan by getting the lower rate!" That's certainly true...however that only becomes a reality if you actually stay in that same mortgage for a long long time. Most people refinance, or move, within 5 years.

The best way to compare places is to actually apply and get Good Faith Estimates to get exact details. Now I wouldn't want to apply to too many places, I completely get that, applying for mortgages can be a pain...so find a place that you can trust, with people that seem transparent and knowledgable.


What's important (to me) is that you get the house you want. The mortgage is just how you get there. Do not obsess with every detail and seek the best deal on earth...find a fair deal, find a lender that's helpful in all areas of the transaction, and get into a house. Once you're a home owner you're winning the game no matter what because you'll be building equity in a great investment and you'll hopefully be happier in life in general.

[Benny003]

We already have a house. Looking for a new one. On the mortgage we're looking at every 0.125% increase in interest will cost us about $13,500 in interest over the life of the loan and we're planning on staying in this house for a LONG time if all goes well. With interest rates being historically low right now, I can't imagine we would refinance later since interest rates are almost certainly going to be higher in the future.

More to my point is that we're putting 20% down and have an 800+ credit score. Why shouldn't we deserve the best interest rate possible?

[rustysurf83]

Can you afford a 15 year?

[scoot_14]

Originally Posted by Benny003

We already have a house. Looking for a new one. On the mortgage we're looking at every 0.125% increase in interest will cost us about $13,500 in interest over the life of the loan and we're planning on staying in this house for a LONG time if all goes well. With interest rates being historically low right now, I can't imagine we would refinance later since interest rates are almost certainly going to be higher in the future.

More to my point is that we're putting 20% down and have an 800+ credit score. Why shouldn't we deserve the best interest rate possible?

How many times have you refinanced your current house, or how long have you owned it?

How do you know that when you get your balance down to a smaller amount, say the last $50,000, it won't be advantageous to refi into a shorter term to pay off your loan faster? If you're thinking about saving money now you'll be thinking about saving money then.

The rates are historically low catch phrase has been being used for over five years now. I'm not saying rates aren't low, or anyone should pay a higher rate on purpose, but a lot of it is marketing to encourage people to buy houses and borrow more and refinance multiple times.

I'm just saying it's not a simple process and you need to be careful and be careful where you focus your energy. Focus on your life in the nearer future and make sure you can live comfortably long enough to make it to the 20-30 years down the road part.

[Benny003]

We refinanced our current loan down to a 15-year two years ago because our original 30-year interest rate was 5.875%. We've owned it for 6+.

For the house we're looking at now, we're trying to get 4% interest on a 30-year. You make a good point about refinancing to a 15-year once the principle balance gets low. All just depends on what the rates are, but seriously, it's more than likely that the interest rates will be higher in the future. They are almost artificially low at this point and I can't imagine the Fed will want to keep them that low forever.

Again, more to my point, I just don't think we should have to pay more in interest each year than we really should given our credit score and such. You make a good point about comparing closing costs though. Certainly that should play into the equation.

[scoot_14]

Originally Posted by Benny003

We refinanced our current loan down to a 15-year two years ago because our original 30-year interest rate was 5.875%. We've owned it for 6+.

For the house we're looking at now, we're trying to get 4% interest on a 30-year. You make a good point about refinancing to a 15-year once the principle balance gets low. All just depends on what the rates are, but seriously, it's more than likely that the interest rates will be higher in the future. They are almost artificially low at this point and I can't imagine the Fed will want to keep them that low forever.

Again, more to my point, I just don't think we should have to pay more in interest each year than we really should given our credit score and such. You make a good point about comparing closing costs though. Certainly that should play into the equation.

It sounds like you understand things a lot more than the average borrower. I don't think you'll have an issue finding a fair deal. You're going to do your homework. I wish I could recommend a lender in your area.

Rates have been really interesting. The longer these rates stay low the less logic seems to apply. At its base mortgage rates are actually tied to certain treasury notes (I think) that have little to do with real estate and more to do with larger economies. I don't pretend to understand it completely.

[Benny003]

How much are closing costs typically? We just got an estimate (not a GFE) from a lender (a correspondent lender) and the closing costs were about 0.9% or 1.1% of the loan amount (it will be a jumbo loan, not conforming). I thought I had heard they are typically 2% to 5% of the loan amount, but maybe that % gets smaller with bigger loans since some of the fees are just fixed rate.

[smokew11]

Originally Posted by Benny003

How much are closing costs typically? We just got an estimate (not a GFE) from a lender (a correspondent lender) and the closing costs were about 0.9% or 1.1% of the loan amount (it will be a jumbo loan, not conforming). I thought I had heard they are typically 2% to 5% of the loan amount, but maybe that % gets smaller with bigger loans since some of the fees are just fixed rate.

that really depends on a lot of things...how much the title and appraisal cost, the property taxes, when you buy, etc

you can search and find a lot of calculators online

[TheLastStop123]

so I'm 25 years old, have some money saved up and am tired of pissing away $775 in rent each month living in an apartment. I'm thinking I want to buy a townhome. My question is, what percentage do people usually put down as a down-payment? I was thinking it was at least like 10%, but I've spoken to a couple of friends, and some say you can go as low as 3%, or anywhere between 3.5-5% for someone that's a first time buyer doing just a townhome.

Looking at a couple of places, I've already determined that it would be cheaper each month if I bought a townhome. This seems like a no-brainer to me. Anyone have any tips/suggestions?

[scrock25]

Enter the "If you can't afford 20%, you can't afford to buy a house" crowd

My wife and I did 10% on the house we own right now. That just means we pay PMI until we have 20% equity in the home.

Nothing wrong with it, congrats and good luck.

[YouNeverKnow25]

I'll start by saying if you want to do it, go for it. There's no magic number.

I'd also say, look harder at the costs. I would be somewhat surprised if it's cheaper to own versus rent on a per-month basis for comparable properties.

Make sure you factor in taxes and insurance.