Purchasing a home advice

[Danno]

My experience with signing a buyer's agent contract was terrible. She didn't need to do anything to receive a commission from a sale. She showed me some properties that were nothing like the descriptions of something that I would purchase. I ended up looking and finding a home to purchase, she had no incentive to do anything. Then, when I find something she's right there looking for her commission.

Why should anyone pay another commission to the buyer's agent when the agents typically split the commission from the sale?

You still don't seem to get it. There was no additional commission paid anywhere. It is merely an issue of how many people divide up the existing commission. SO your agent did nothing for you, but you were not harmed in the least by her sucking; the only people "harmed" by you having her on your side were the selling agents. If she sucked, you should have fired her.

My buyer's agent was a good guy, trustworthy and knowledgeable. Yes, I did some leg work on my own (anyone who doesn't is dumb). But given that he didn't cost me a thing, it made it a no-brainer to have him on my side with all of his knowledge and experience, even though I did some work on my own. And I would use him again in a heartbeat.

[skuff]

I had a very sucky agent. She wouldn't release me from the contract because she thought she would find a house for me. All she showed me were homes I had no intrest in. The contract ended and I never spoke to her again.
Again, why should a buyer pay a commission for the purchase of a home? Typically the seller pays the commission. I could see paying a buyer's agent if I lived out of state and I had difficulty finding time to search on my own.

Well, that's fine. You had a sucky agent. They are out there. But a GOOD buyer's agent will make sure you are taken care of from the day you first see a house until after the closing.

Why didn't you fire her? If someone wants to get out of a contract with me...I will ask them why and then let them (hasn't happened yet, though).

[Danno]

I had a very sucky agent. She wouldn't release me from the contract because she thought she would find a house for me. All she showed me were homes I had no intrest in. The contract ended and I never spoke to her again.
Again, why should a buyer pay a commission for the purchase of a home? Typically the seller pays the commission. I could see paying a buyer's agent if I lived out of state and I had difficulty finding time to search on my own.

Hello, McFly!!! Knock, knock, anyone in there?

You never paid the buyers agent a cent. Not. a. cent. If you did, you fucked up and were taken for a ride. The seller paid their commission. Not you.

[4matic]

WURD!
2. 30 year fixed; no ARM loans and not 15 year fixed at your age either
Predicting interest rates is a joke. Nobody knows what will happen to rates. Get a fixed to ward off surprises.

ARMS's are required by law to have an overall cap. Therefore, you can accurately determine your risk from day one. So, to categorically write off ARM loans is a disservice to a borrower when other than a brief period in the late 70's early 80's an ARM would have been a good bet. Remember that ARM loans were not even available in the USA until the mid 80's. As far as predicitng interest rates, well, you can do research and make an informed decision based on history. History has shown that after housing prices peak SHORT TERM rates fall dramatically. So here we have two of the brightest people in the interest rate arena, Bill Gross and Alan Greenspan, one predicting lower rates and the other saying that ARM's are a better deal for consumers. Remember that the Fed's reason for raising rates as much as they have was to reign in house prices and moderate the economy. Right now we have an inverted yield curve. Something will give. History is on the side of lower short term rates down the road. Good luck!

From the Federal Reserve website:

By law, virtually all ARMs must have an overall cap. Many have a periodic cap.
http://www.federalreserve.gov/pubs/a...ms_english.htm

[skuff]

The contract I signed in 1991 had a $2,000 commission fee that the buyer (me) was supposed to pay in addition to the seller paying a commission. Close to fucking up, but I didn't pay anything because I didn't buy a house with that agent. I didn't have enough information about those contracts before meeting with that agent.

Hello, McFly!!! Knock, knock, anyone in there?

You never paid the buyers agent a cent. Not. a. cent. If you did, you fucked up and were taken for a ride. The seller paid their commission. Not you.

[lemon boy]

1. The standard idea is to buy as much home as you can afford, because your income will go up and you won't be house poor for very long. I think it's worthwhile to warn him of being house poor, but ultimately, it's a personal decision. I had to go house poor to get a place I wanted to live in, and less than 2 years later it is already easier to make the payments.

There is a big difference between what people can realistically afford and what they can get approved for. Generally people get approved for payments that would equal one third of their gross monthly income. Making a bit of a strecth is fine but most people can't reasonably afford the full approved payment. That is the terrain where people get fucked by ARMs b/c if one third of your gross monthly income is already going to housing...that little extra really hurts.

[lemon boy]

The contract I signed in 1991 had a $2,000 commission fee that the buyer (me) was supposed to pay in addition to the seller paying a commission. Close to fucking up, but I didn't pay anything because I didn't buy a house with that agent. I didn't have enough information about those contracts before meeting with that agent.

You got totally taken/fucked on that deal. That is an atypical situation. Your advice should read: Don't ever sign a contract where the buyer pays a fucking dime to an agent. Having a buyers agent is nice if you have a decent one.

[Danno]

There is a big difference between what people can realistically afford and what they can get approved for. Generally people get approved for payments that would equal one third of their gross monthly income. Making a bit of a strecth is fine but most people can't reasonably afford the full approved payment. That is the terrain where people get fucked by ARMs b/c if one third of your gross monthly income is already going to housing...that little extra really hurts.

I agree 100%. In fact earlier in this thread I said

You need to figure out what you can pay each month, not what they will lend you.

And as has been said, each person has to make that call as to what they can afford.

[skuff]

You got totally taken/fucked on that deal. That is an atypical situation. Your advice should read: Don't ever sign a contract where the buyer pays a fucking dime to an agent.

What LB says. Damnit, I need a translator.

[altagirl]

Skuff - I've never even heard of anything like that before. Apparently you did get screwed - at least in having to wait out the contract.

[The AD]

2. 30 year fixed; no ARM loans and not 15 year fixed at your age either

I'm curious what your reason is for avoiding a 15 year fixed.

[powder11]

real estate investment 101

find a home representing good value in a good neighborhood (preferably near a school). buy the house in need of a cosmetic makeover; kitchen/bath update, new paint and some landscaping. get the home inspection and walk away from anything requiring more work than the above 3 things.

go with a low interest/low payment loan to keep your carrying costs low and factor in a home equity loan to cover the work, prolly 10k-15k for a starter house. utilizing free labor is a must. offer your buddies free beer. since your only 22, your family will be more than happy to come over for a painting party or yard day to help you out. any educated human can install a new kitchen.

as soon as your done with your cosmetic makeover, turn around and sell that biatch for a profit. use your realtor to maximize the sale price, the commision you pay is the cost of doing business. if you've done your homework and bought a value property, money will be made.

next, find another home similar in nature and do the same thing all over. if you roll your profits into the new investment within a certain time frame of closing, you avoid capital gains on your profits.

again your 22, so being house poor aint so bad because your investing for the future. when you aquire a pile of cash big enough, go after value oriented mulit-family units. enroll in your states licensing course. get your RE license and find a broker willing to take you on part time so you can list your own properties.

if your good at this, it will become your main source of income and you will be able to ski all winter.

[Jim S]

I'm curious what your reason is for avoiding a 15 year fixed.

Arguably, and arguably and there is no absolute right or wrong


You could take the extra $and invest it diversifing your assets or enjoy

If you won't be in the home for long, the first several years of payments are interest with little principal paid off in either scenario

I've seen 15 year fixed recommended if you want to pay the house off fast such if you are in or close to retirement


I do stand corrected on several accounts and it's just my .02 as a maggot. In fact, if one stays in the home only for several years then an ARM could be a decent idea, to contradict myself. I know about caps but still, many folks have gotten burned with ARMS. Not all but not isolated cases: and it's their own fault for not being prepared. And I believe a younger person is more prone fall into that situation.

As I said, I'm not expert but have tried to learn and pay attention. "Damn it Jim, I'm a doctor; not a financial guru!"

[flatNshallow]

If the house is not "new" (like more than 5 - 10 years old) give some serious thought to buying the "home warranty" they will offer you at or before closing... typically will run about 200 pr 100k house value and is generally baked into your loan so you are not out of pocket... one major applaince failure and you are more than paid back... the older the house the more you should consider the warranty.

[The AD]

You could take the extra $and invest it and diversify your assets or enjoy

True, but would most people actually invest the extra money? My guess is no. My opinion is, if you can afford the 15 year payment, you might as well go for a 15 year loan.

[altagirl]

True, but would most people actually invest the extra money? My guess is no. My opinion is, if you can afford the 15 year payment, you might as well go for a 15 year loan.

If you set something up as an automatic withdrawal type investment, you probably would do it though. And by that token, arguably, in a decent real estate market, you could do an interest only loan, put the money you would be paying as principal into an investment of some sort, and do better than paying off the house. The equity you have in your home isn't earning any money - the house appreciates the same whether you have it paid off or 100% finance. The only cost is the interest on the loan. Can you find an investment that will get better returns than the interest you're paying on the loan?

Granted, this all requires the discipline to actually invest that extra money and not just spend it. If you can't do that, then by all means, pay off your house ASAP.

[The AD]

Can you find an investment that will get better returns than the interest you're paying on the loan?

In the short term (which is presumably what we're talking about)? I wouldn't bet on it.

[freezorburn]

DO NOT GET A RELATIVE OR FRIEND “in the Business”. That is the kiss of death.

You need to know of a new listing with’in hours. Most brokers slack off here, If your lucky you will find a broker who checks once a day if not once a week. Many times I've black listed a broker becuase they did tell us about a property till a few days later . Try and get a email service to notify you.

If you find a house, All you need is a closing lawyer they can hopld your hand threw the process. They are really the ones that represent you anyway. Find out what they charge for a “standard” closing.