OT:Desperately need home purchase advice, please!

[Annam26]

I posted this in the comm board, but I wanted to bring it here because I need all the advice I can get, and perhaps someone here knows if being disabled (wheelchair) plays a factor in this problem.

I hope bringing it here is OK!

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My family and I want to buy a home. We live in Miami, and renting is becoming more and more difficult to pay. So we are trying to own our first home.

We are not wealthy, so is not like we can buy "the home of our dreams". After doing some searching, we found a condo that looked promising. The apt is in mint condition; however, the building is not in such great condition (needs painting, doesn't look that good from the outside) and the neigborhood is not the best one. We planned our budget and put in an offer.

Buying in Miami is extremely difficult. People from all over the world want to buy a place here sometimes just to spend a month here, so middle and low-income people are being driven out in favor of the uber-wealthy.

Now our realtor called us saying that the condo was valued at 10,000.00 less than what the current owner is asking for. The owner wants that amount paid up front. So is 10,000, plus the down payment, closing costs, etc. This is way too much money for us.

The realtor says that we should offer to pay 5,000.00 and hope the owner will accept.

Perhaps we could do this, but only by really, really stretching our budget. I'm so afraid to do so. I have very good credit. I build it slowly in the hopes of buying a home someday. I don't want to ruin it

I want some advice, please. Would paying the extra 5k be worth it? Like I said, the Apt is great, the building and neighborhood not so much. Would you buy it?

I want to ad that a Wal-mart is being build a few block away from the building. Would that add or lessen the value of the condo?

What would you do?

An advice would be greatly appreciated!

 

[wide awake]

This is not a good deal. Never pay more for the property than its assessment value. Also, neighborhood is the MOST important factor in choosing a home. Is it possible to buy on the outskirts of Miami ? Have you thought of finding another realtor that has your interests in mind ? This person is thinking of their wallet, not you.

 

[Aneille]

This is not a good deal. Never pay more for the property than its assessment value. Also, neighborhood is the MOST important factor in choosing a home. Is it possible to buy on the outskirts of Miami ? Have you thought of finding another realtor that has your interests in mind ? This person is thinking of their wallet, not you.

Did you mean market value? Tax assessment is usually much lower than the market value here in the northeast. Maybe its not everywhere though.

I am unsure what value the OP is asking about. Is it tax assesment, market value or a bank appraisal.

 

[Cheshire Figment]

Is this agent one that you have selected and trust, or is it the agent of the seller?

When I bought my first home my real estate agent (who I had known through an organization for several years) first met with me and asked what I was looking for. He then asked what I thought Judy (wife to be) was looking for. After that he met with Judy without me being present and asked what she was looking for as well as what she thought I was looking for.

Then he took us to places that he told us were about $50,000 more than we could afford. He wanted to see our reactions to the layouts and amenities. That gave him a good understanding of us and allowed him to find what was just about perfect for us in the way of size, layout, area and price.

On a second item, the seller's agent is supposed to present all offers, without giving potential buyers his own judgement, to the seller. At that point the seller will either accept the offer or turn it down. If the seller turns down the offer it is then void and the seller can make a counter-offer.

For example, if a property is listed for $200,000 and you offer $185,000 the agent must present the offer. The seller, at this point can either say yes, in which case there is now a contract, or say no by itself, or say no and make a counteroffer of $195,000 (for example) which you may then either accept or turn down. If you make an offer of $200,000, which is full asking price, if the seller turns this down he is immediately liable to the agent for his commission.

(I am not a real estate agent, but a CPA with lots of experience doing taxes (with a couple of RE agents as clients) as well as working with people who buy and sell their homes.)

 

[wide awake]

Aneille,
It sounded to me as if the OP meant assessed value...i.e. they couldn't get a loan to cover the mortgage minus the standard downpayment, because the seller is asking for more than the house is worth. Here in California the assessed value for tax purposes is 1% of the original purchase price...thank you Prop 13...but the assessment for loan purposes, be it home equity, or for selling, is usually right at the market price. We bought our house for $167,000, and that is the amount we pay taxes on...and it cannot change, even though the market value of the house is now $475,000.

 

[headoflife]

As a Realtor, I need to second what others have said. I would almost never encourage a buyer to go over the appraised value of a home. The only way this is a wise move is when the appraisal is based on faulty comparables. An appraisal is done using comparable homes in the area that have sold in the last few months. If there have been very few sales the appraisal may be off because the coparable properties chosen are not really comparable to the suject property. The other time an apprasal can be off is in a very rapidly appreciating market. It is possible is some markets for the value of a home to increase by $10,000 in just a few months. If you really loved the home, and would be heartbroken to have the deal fall through, it may be worth the added cost, but that would be an emotional decision not nessesarily a financially wise one. I would also advise you that it is far better to buy the worst home in a great area than the best home in a bad area. You can always fix up your unit, but improving the building requires money that the building may not have in reserve, and the consent of the majority of the owners. The neighborhood is probably the most important factor in deciding on a home purchase. I know this is the largest purchase you have ever made, and it is a very hard decision. Good luck no matter what you choose!

Edited to add: I don't believe that this has anything to do with a disability. The only effect that may have is limiting the numberproperties that would work for you.

 

[Aneille]

Aneille,
It sounded to me as if the OP meant assessed value...i.e. they couldn't get a loan to cover the mortgage minus the standard downpayment, because the seller is asking for more than the house is worth. Here in California the assessed value for tax purposes is 1% of the original purchase price...thank you Prop 13...but the assessment for loan purposes, be it home equity, or for selling, is usually right at the market price. We bought our house for $167,000, and that is the amount we pay taxes on...and it cannot change, even though the market value of the house is now $475,000.

I understand, that is what I meant with bank appraisal. Unfortunately my tax assessment goes up every few years. I wasn't clear to what value she was speaking about. I would probably never pay more than what the bank market value came out to be. I say probably.

However I have heard stories where a bank appraisal has come under the offer of a home. This happened when the market here was unreal and a total sellers market. Usually the sellers broker would then speak to the bank (bank appraiser) and provide comparisions of homes in the area that help show that the price reflects the market value. A lot of times the agent knows the area far better than the bank appraiser.

I had 3 bank appraisals done on my home for an equity line, 2 came out pretty close but 20K difference. One was about 70K less than the other 2.

If it were me, I would probably not pay 10,000 more, unless I was really, really sure it was a fair price and I really really wanted it. Because your bank that you are using for the mortgage could say no and another bank could say yes and then someone else may buy your house. Heck your bank if using a different appraiser could approve the loan especially if its only 10K.

Are you working with the sellers agent or is this your own buyers agent? It makes a difference. If you are working with a buyers agent put some pressure on them. They should understand the market and should be able to help you understand if this is a truly fair price, make them show you examples of comparable homes.

If its the sellers agent your dealing with I'd still put the pressure on them. They want the sale, you want the house. If you aren't worried about losing the house, tell them you aren't paying 10K up front because the bank doesn't believe the house is worth what they are asking and make them prove it to you and to the bank. If they can't, then you know what to do. If they can, then whether you pay the extra 10K either up front or included in your mortgate is up to you.

Are there any other offers? Has the bank shown you the homes they used as comparisions? See if you can the agent to show you the homes they used when they came up with the asking price.

Sorry it seems we can't be of much help here but again as WideAwake said, your not going to be getting a deal on this home. Unless this condo is unique in its price because its something you can afford, and in better shape than others at the same price, I am sure there are others homes/condos out there.

It is my understanding most people go through a couple of offers on different homes before they finally get one.

 

[Annam26]

Thanks for all you replies!

wide awake, Cheshire Figment, Aneille, headoflife, you have no idea how much I appreciate the time you took to help me out.

I'm sorry I took so ling to answer.

The appraisal is the bank appraisal. They wont cover 10K the seller is asking for.

Is this agent one that you have selected and trust, or is it the agent of the seller?

The realtor is the one who is supposedly working for me. I say supposedly because I never met him before and I can't possibly know if he really has my best interest at heart.

As a Realtor, I need to second what others have said. I would almost never encourage a buyer to go over the appraised value of a home.

Oh, how I wish you were here!

Today I called him and told him I wouldn't pay the extra money the seller wants. He told me I was making I big mistake, since the condo would probably be worth between 20k and 50k in a few months.

Funny thing that when I offered to pay 1k over the value, he said an offer like that would be "insulting" to the seller, because she had spent a lot of money renovating the place. He told me she most likely would be getting offers even over the price she was asking for. He went on and on how fast the place would go, and how lots of people would pay whaever she asked for.

But I told him I wouldn't pay the extra cash.

So he calls back about 15 minutes later with "good news". Apparently the seller suggested that we could get a second mortage on the place so I wouldn't have to pay the money up front, but in "convinient monthly payments".

So I guess that means that the seller hasn't gotten any offers.

I told him that I don't want to pay more than the value of the home, and that we should look at other places. He agreed, but said that I would encounter the same situation again, because the market is "so hot now" that sellers ar asking -and getting- what they want -though oviously this seller isn't getting what she wants, otherwise why would she have suggested the second motgage to me.

 

[Aneille]

Thanks for all you replies!

I'm sorry I took so ling to answer.

The appraisal is the bank appraisal. They wont cover 10K the seller is asking for.



The realtor is the one who is supposedly working for me. I say supposedly because I never met him before and I can't possibly know if he really has my best interest at heart.



Oh, how I wish you were here!

Today I called him and told him I wouldn't pay the extra money the seller wants. He told me I was making I big mistake, since the condo would probably be worth between 20k and 50k in a few months.

Funny thing that when I offered to pay 1k over the value, he said an offer like that would be "insulting" to the seller, because she had spent a lot of money renovating the place. He told me she most likely would be getting offers even over the price she was asking for. He went on and on how fast the place would go, and how lots of people would pay whaever she asked for.

But I told him I wouldn't pay the extra cash.

So he calls back about 15 minutes later with "good news". Apparently the seller suggested that we could get a second mortage on the place so I wouldn't have to pay the money up front, but in "convinient monthly payments".

So I guess that means that the seller hasn't gotten any offers.

I told him that I don't want to pay more than the value of the home, and that we should look at other places. He agreed, but said that I would encounter the same situation again, because the market is "so hot now" that sellers ar asking -and getting- what they want -though oviously this seller isn't getting what she wants, otherwise why would she have suggested the second motgage to me.

It doesn't sound like this realtor is working for you. For himself by getting a bigger paycheck and for the seller by getting them more for the house.

I think you did the right thing.

BTW when my husband and I were looking for our home we offered asking price on a home. We were young and it was a lot of money to us but we saw potential. Our offer was turned down because they had another full price offer, they wanted us to bid higher. We said no way. Well about 2 weeks later we went to another open house. This house was a lot cheaper and was a much better neighborhood, town and well just better. We offered under asking, countered and got the house for a little less then asking. The day our offer was accepted, the other agent from the first house called and asked if we wanted the other home. The other offer fell through. Too bad for them and good for us because I can't imagine my life if I lived in that other home.

I also have friends that a similar thing happened too. They had no contingincies, but were young/. Their were 3 other offers so my friends went up to their top point (the one they were planning on if they got a counter), well they still didn't get the place. This home needed to sell and close very very quickly because of a relocation. Well guess what, 2 weeks in the realtor called back and the other buyer wasn't turning out to be the best. My friends got the house.

Moral of the story. If its meant to be, it will be. Thats how I look at these things. Think it through, offer what you think is fair and to the amount that you will never regret going over and things will turn out well for you.

 

[Annam26]

It doesn't sound like this realtor is working for you. For himself by getting a bigger paycheck and for the seller by getting them more for the house.

I think you did the right thing.

I hope I did.

BTW when my husband and I were looking for our home we offered asking price on a home. We were young and it was a lot of money to us but we saw potential. Our offer was turned down because they had another full price offer, they wanted us to bid higher. We said no way. Well about 2 weeks later we went to another open house. This house was a lot cheaper and was a much better neighborhood, town and well just better. We offered under asking, countered and got the house for a little less then asking. The day our offer was accepted, the other agent from the first house called and asked if we wanted the other home. The other offer fell through. Too bad for them and good for us because I can't imagine my life if I lived in that other home.

I also have friends that a similar thing happened too. They had no contingincies, but were young/. Their were 3 other offers so my friends went up to their top point (the one they were planning on if they got a counter), well they still didn't get the place. This home needed to sell and close very very quickly because of a relocation. Well guess what, 2 weeks in the realtor called back and the other buyer wasn't turning out to be the best. My friends got the house.

I don't know why this realtor considers "insulting" to offer a little less than the aking price. Bizarre

Moral of the story. If its meant to be, it will be. Thats how I look at these things. Think it through, offer what you think is fair and to the amount that you will never regret going over and things will turn out well for you.[/QUOTE]

I agree. Thanks.

 

[headoflife]

It sounds like you should be shopping around for a new agent. First of all, your agent is obligated to present your offer, even if he does think the seller will be insulted. He may well believe that you will turn a profit buying this place, and that it would be in your long term best interest to pay what the seller is asking, but the only one to make that decision is you. I work in a very competitive sellers market, especially for anything at the low end pricewise, and around here that means any single family home under 500K! I have had clients pay over asking price, in a situation with 7 other offers, all at or above the asking price. I told them they had to do what they were comfortable with, but that they would probably not get the home unless they went over asking. In that case, the house was underpriced (shame on the seller's agent) and I knew that even at over asking price, they would have nu problem with it apparasing at over the sale price. They closed about a month ago, and I am sure they could turn around and sell it and make money. The most important thing, though is not that they could make money, but that they love the house. I wish I could help you find eactly what you are looking for, and I know that at the low end of a fast market that can be tough, but I hope you find an agent you really feel is working in your best interest. Feel free to call and interview a number of agents, until you find one you feel in heart is right. Good luck!

Muriel

 

[Cheshire Figment]

I think what you need to do is talk to some people you know in the area who have bought a house within the past few years and ask if they would use their buying agent again. If the answer is yes, then contact that agent and let the agent know whose recommendation was involved.

Similarly, just as good practice calls for a seller to talk to at least three agents before making a decision, you should talk to several agents to find one you feel comfortable with.

If you don't know any people who can refer an agent, you might want to drive around some neighborhoods you are thinking of and look at the names and phone numbers on various For Sale signs; this will give you an idea of the agents who are probably very familiar with the neighborhood and who are hired by sellers. Then interview a few of them.

Basically, as others have said, this person does not appear to be working for your best interest and should be replaced. And you don't owe him anything (money or otherwise).

 

[bopper]

Unless you are directly paying the real estate agent, the real estate agent gets paid by the seller in normal circumstances. Even if you went to an agency, and said I would like someone to help me buy a house. Unless you wrote them a check, they are not a 'Buyers agent", but are getting a cut from the seller. So they don't have your best interests in mind at all. They just want a commission. Do not pay more than the appraised price. The bank is telling you it isn't worth it. If you need to sell can you count on someone wanting to pay over the market price? I doubt it. Keep waiting and find another place. You can save while you are waiting.

Your agent said it was "insulting" to ask appraisal value? Get a new agent. Tell the agent that you think it is insulting for the seller to ask you to pay over appraisal value! Remember anything you tell them will be passed to the buyer, so only tell them things you wouldn't mind the other side knowing. For example, if you want to pay 150,000 but could go up to 170,000, don't tell your agent that! They just want to maximize their own commission. So a higher selling price gives them more money. Stand firm. They have to offer what you tell them to. I mean you can't really go in at 25% under asking price, but certainly shouldn't go anything over appraised value! With condos it is easy to compare with other condos so I am sure it is accurate.

 

[headoflife]

Bopper,

I have to disagree with you. Comission does generally come from the sellers proceeds. The comission is really paid to the brokers, and so really my comission comes from my broker, not from the seller. No matter how the comission is funded, my loyalty is to my client. No information my buyer client discloses to me gets passed to the sellers agent, or to the seller directly without my client's consent. In my state an agent is allowed to act as a dual agent, representing both buyer and seller, but both parties must agree to that in writing, and many agents choose not to act in a dual agent role to avoid any question about whose interest they are representing. While I agree that this agent is not right for the OP, and that this push to pay over the appraised value is probably not in their best interest, defaming all Realtors simply clouds the issue. We have a very stringent code of ethics, and most of us really do work in our clients best interest.

 

[goofyforlife]

I agree with the other posters....you need another agent.....

I bought a house last year....the dc market is tough too...

but our agent knew that we needed full financing and always checked to see what the comps in the neighborhood were like before she showed us an overpriced home because she knew that we didn't have the extra money....

a good agent should be able to do that for you.....