Posts Tagged real estate agent
A Real Estate Agent’s response to a Buyer’s Questions
Posted by Top Home Loans in Economy, Investing, Real Estate on June 15th, 2009
The following is a list of questions the buyer asked, and the real estate agent’s response:
Why is the home owner selling?
The Answer: The home owner is selling to move closer to work. The seller is selling because he had been there since 2003.
Both of these answers are incomplete and it seems as if either the real estate does not know the client, or does not care enough about the buyer to find out the answer. The response seems to be either a guess or made up.
Is the home owner buying another property?
The Answer: The real estate seemed uninterested in this question and did not provide a response.
The selling agent almost always helps the seller purchase the seller’s next property in the process of selling there current property. If the seller is not interested in this question or does not know the answer, then it is likely the buyer is not buying again. This leads me to believe that the seller is not interested in home ownership after this experience.
What was the seller’s original Purchase Date and Purchase Price?
The Answer: July 28, 2004 for $307,000
The seller’s agent knew the answer, which is a good thing, but this property was listed in 2009 at only $365,000. This is a bad sign because the property only increased in value by 18% at the posted price which is only 3.6%/year. The final selling price ended at $345,000 which makes this even worse.
How long has the property been listed for? Has it been relisted?
The Answer: The property listed has been extended past the regular 90 days.
The seller is unwilling to negotiate a fair price. This has caused the listing to extend a long time, and the seller has no motivation to move within a short period of time. An unmotivated seller makes for poor negotiation.
What time frames is the seller looking to close for: 30/45/60/90 days?
The Answer: The seller has not started looking for another house, so they would prefer a longer closing.
This tells the buyer that the seller is not motivated to sell, and the seller is not interested in negotiating prices. The seller is not searching a property currently, and is not interested in selling unless the right price comes along.
Can a Seller Property Information Statement be completed?
The Answer: The seller will not complete one.
This is a major turn off, and any seller that is unwilling to complete this form for an offer, is not interested in selling. This is sometimes a deal killer because there is a lot of information on this form that a buyer needs to know.
What chattels are included with the purchase?
The Answer: All major appliances are included.
It is fairly standard for the major appliances to be left with the residence. This does not affect the negotiation of the price.
What fixtures will be included?
The Answer: All lighting and drapes will be included.
This is fairly standard as well. This does not affect the negotiation of the price.
Would a clause be included in the agreement that states if any unstated repairs are required in the inspection, then they will be covered by the seller?
The Answer: The seller is unwilling to make this agreement. Make the offer conditional upon inspection and review the inspection upon completion.
It sounds like the real estate is gambling that your inspector will not pick up on certain things, and you will be stuck with a lemon of a property. If the seller is unwilling to guarantee the property, then something must be wrong with it.
Is there any plumbing, electrical, or flooding issues?
The Answer: No issues.
The seller does not have to be honest about a question like this. Once again, the real estate agent may not know the answer or may lie to get the sale.
What is the history of the house? Has there been any fire, flooding, major damage, or major crime?
The Answer: Nothing to the real estates knowledge of this type of thing.
The seller does not have to be honest about a question like this. Once again, the real estate agent may not know the answer or may lie to get the sale.
In conclusion, some serious issues are apparent. The first issue is that the seller is unwilling to negotiate at all, and with the high price, this makes for a bad combination. It also appears that the seller is trying to hide something about the house. Maybe there is some hidden damage or a history with the house. The seller does not have any motivation to move, so it may be difficult to secure a proper moving date. This is definitely a house you would not want to be interested in.
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The Mortgage Approval Process: One Day Approvals
Posted by Top Home Loans in General Business, Mortgage Advice, Real Estate on June 13th, 2009
The Process of Getting your Mortgage Approved
The first thing you should have is a covenant approval. If you do not have a covenant approval, then you need to contact your mortgage specialist immediately to get them to start working on your mortgage. Get a full list of all the documents you need to collect, and setup the time that the appraisal will be completed. Next, contact a property inspector to assign a time for the inspection to be completed.
Even if you do everything exactly how it should be done, the bank may be way behind schedule causing your approval to be days or weeks late.
When completing a mortgage application, you cannot assume that a bank will drop everything that they are doing to look after you. Instead, expect and anticipate that it may not be completed on time, and you may have to push back the waiver date.
Unfortunately, if you are trying to get the lowest possible interest rate, then the bank your doing your application with will be incredibly busy, and will have a difficult time getting your mortgage approved.
How to Avoid the Quick Close?
To avoid the quick close, the first thing that you must understand is that this is not the last house for sale, and if they are unwilling to negotiate, then you won’t be getting the best possible deal. When speaking with your real estate agent, advise him that you are unwilling to make certain sacrifices in order to close on the property. The most important sacrifice that you are unwilling to budge on is the timeframe that you have to complete your financing, inspection, and appraisal of the property. If your real estate agent is unwilling to settle with your terms, then you should be looking for a different real estate agent.
The second way to avoid the quick close is by choosing low demand properties. Low demand properties have been listed for more than 30 days. Usually on these properties, you can negotiate a better deal, have a longer closing, and have a longer time to waive the condition of financing. By choosing these less demanded properties, it will not only save you money, but it will also save you the stress when closing.
Before deciding on placing an offer in on a location, make sure that you know and understand exactly what you are getting into. Do the affordability calculations beforehand. Have the professionals on your team before you make an offer, and always maintain full control of the process. Do not let anyone who is working for you push you around.
How much You can Afford when Buying a New Home? Not how much You can be Approved for!
Posted by Top Home Loans in General Banking, General Business, Mortgage Advice, Mortgage Rates, Retirement Planning on June 11th, 2009
However, before placing your final offer, consider what you may be looking at in several years in the future.
How much You can be Approved for?
When getting approved for a mortgage, the bank will calculate the maximum mortgage payment that you can afford to be, at the absolute maximum, approximately 40% of your annual income. To describe this in actual numbers let’s use the following situation:
Your Annual Income: $40,000
Interest Rate: 4%
Amortization: 35 years
Your Property Taxes: $200/month
You have no outstanding loans, lines of credits, car loans, credit cards, etc.
You could potentially purchase a property for $300,000
Now you will be thinking ‘wow, I can buy a great house with such a little annual income’; however, this is definitely not the case.
Albeit, the bank may approve your mortgage, but let’s compare your take home dollars versus your household upkeep:
Total Mortgage Payment: $1,456.28
Total Monthly Property Tax Payments: $200
Monthly Home Insurance Payment: $62.50 approximately
Monthly Utility Bills: $300/month
Monthly Food Bills: $5/day or $150/month
Transportation: $200/month
Entertainment and Communication: $100/month
Total Expenditures: $2,468.78/month
Total Income: $40,000
Taxes and Other Deductions: $8,698.58
After-Tax Income: $31,301.42
After-Tax Monthly Income: $2,608.45
This means that you have a monthly surplus of $139.67 when living on an extremely light budget.
What Happens if Interest Rates go up?
When first applying for a mortgage, the bank is more than happy to approve your mortgage with a financial situation like this, but when you analyze what will happen if interest rates go up, then if some major financial improvements have not been made for the borrower, then the borrower could be in big trouble. Let’s see what happens if rates rise 50% and 100%.
Mortgage Amount: $300,000
Mortgage Rate: 6%
Mortgage Payments: $1,695.76
Payment Increase: $239.48
Mortgage Amount: $300,000
Mortgage Rate: 8%
Mortgage Payments: $2,102.48
Payment Increase: $646.20
These are incredible increases, and it will cause the borrower to go from a surplus budget to a deficit in a short amount of time. This will cause the borrower to have to refinance the equity from the property to keep up with the payments, or the borrower will have to have an ever increasing income.
Don’t think that these rates can happen? Take a look at a Historic look at Prime Rate
Why would the Bank lend like this?
The bank lends like this because they are assuming that the property value will increase, and that the borrower’s income will increase with inflation. The loan is based on today’s dollars, while the future payments are based on future dollars. Although, it appears to be a large increase in payments with the change in interest rates, but the bank is hoping that a portion of their clients will be able to make the payments, some will have to refinance to be able to afford the property, and a small percentage will default on the loan.
Even though some of the borrowers default, the bank is still expecting that the property values have increased, so they can sell the property at a profit.
Protect Yourself from Perpetual Debt or Default
By purchasing a house that has mortgage payments that are well within your means is a great way to prevent either of theses situations. By applying the additional surplus that you will have against the principle balance of your mortgage, then you will be able to pay your mortgage off quicker. As you pay down your mortgage, then you will be able to get away with lower monthly payments. In a few short years, you will be able to upgrade your property to a much bigger property with fairly low monthly payments as well.
By keeping your mortgage balance low, your payments low, and your budget surplus high, then you will be able to get debt free faster, and have more money to buy the home of your dreams without the risk.