First home buyer help, please analyze.

[Dasanii19]

Alright well first things first. We are first time home buyers, we started off with a lead from my mother to talk with her long lost high school friend which had become a realtor. Although my mother hasn't spoken with this realtor in over 40 years, she seems to trust him. So we call the realtor up and tell him basically that we know nothing about real estate and that we are looking for a first home and are not pre qualified, so he tells us to speak with the lender he uses. So we drive down to the lenders office to give her all our information to get pre qualitfied. She told us that our credit looked fine and that it shouldnt be a problem to get a FHA 30 year fixed loan. She said that we would shoot for 160,000. She says that everything would have to go through under writing first and then we would get approved. So we leave the lenders office and call the realtor back up and ask when we could start house shopping, he told us tomorrow. So we get home and start searching google looking at all the foreclosures in all the surrounding areas,narrowing it down to one area we liked and could afford (keeping 160,000 in mind). So we email the realtor a few addresses that we would like to look at. The next day we meet up with the realtor and start our quest... We had 7 foreclosure houses to look at, the first house was junk... 2nd was junk, 3rd was junk.. 4th was junk... 5th was junk... 6th was junk... and then the 7th house we looked at looked perfect, it was basically everything we were looking for but with a few fixer upper projects.. The price was awesome!! This foreclosure was marked way down and was at a low of price of 144,900. The realtor knew we liked it and we knew we liked it. So we all leave and go home, my girlfriend and I start discussing this home all night and finally decide that we would put an offer on it. So we call the realtor back up the next day and tell him that we want to offer 136,000 with 5000 closing costs paid by the bank. The realtor sorta put off the vibe that 5000 was a lot to ask for the abk to pay for but said it was worth a shot. So we meet the realtor at his office the next day and sign the offer papers. At first there were a few errors on the papers of which my girlfriend caught. The errors were things such as where it should have stated "paid by seller" but instead it said "paid by buyer".. The realtor said they could change those later, but we said we wanted them to be changed now before we signed and they did so and we signed.. So we get all that taken care of and leave the realtors office.. He calls us up later saying that the home was owned by Country Wide and that we need to be pre qualified through their lender first before he could submit the offer.. So we call Country Wide up and give all our info to them, getting pre qualified was no problem.. So now the offer gets submitted. And now the waiting game.. As we are waiting we call the realtor back up and ask for details on that house, he tells us that its been on the market for 98 days and that the price had just dropped 20,000 just a few days ago, he also told me that there were no offers on it. So we think to ourselves, "awesome, we have a good shot at this then". The next day we get a call from our realtor saying that Country Wide countered offered us and that there is now a second offer in on the house putting it in multiple counter offer mode.. He said they countered with 144,900 and only paying 2000 closing costs. The realtor said that if we really like the house to take it because we might loose it to the other offer.. We said no and that we wanted to counter back at 144,900 with 5000 closing costs paid. He said ok and we hung up.. The realtor then faxed over to us a paper for us to sign stating that we understand that this is a multiple counter offer bid and that the bank it gong to take the highest bid on a certain time and date.. We then signed and faxed it back....... Now in this time frame, the realtor had called us about 3 times asking us if we were suuuuuure about our offer and that he still had time to change it if we wanted. See he wanted us to counter back with lower closing costs to be paid out of our pockets but we stood firm with our offer and didn't budge. He even suggested that we should up the price of the house by 4000 (putting the offer at 149,900 and closing costs at 3000), but we said no way...... A day passes and the realtor calls us back with the bad news, he said we were out bid.

So now we start looking for homes on google again and find about 4 foreclosures. The next day we drive out and look at all 4 houses, but this time we find an even better house then the last one we looked at. This house had everything the last house didn't. This house is newer, bigger and in great shape. It is a foreclosure and the asking price is 154,900. My girlfriend and I knew that this was the place as soon as we walked in. So we put an offer in at their asking price 154,900 with 3% closing costs paid. The offer was submitted and was counter offered back on at 157,720. with closing costs paid. So being that we loved this house and 2820 dollars over a 30 year stretch wasn't much of a big deal in our eyes so we accepted. I also asked the realtor the history of this house, he said that the day we offered on it was the day it just got reduced by 20,000. So I guess we felt like we had a head start with our offer over the other buyers. We didn't want to take the chance to loose the house we really liked.

So after all this, I have to ask.. Was the realtor/lender/bank playing a game with us? did we fall for it? I know its illegal but could the realtor or lender have tipped off the banks? It just seems strange to me that both banks stood completely firm on their asking prices. Its like they knew exactly what we could afford and what they had to work with and what not to exceed. Am I thinking to deeply about this? or is this how foreclosure homes work?

I do have some questions about the lenders fees and such but id like to hear your opinions on all the above first. Im not the greatest writer and hope you could follow along. Id like to know if we did alright with the negotiations? All your opinions are welcome.

Thanks

[admin]

Originally Posted by Dasanii19

Alright well first things first. We are first time home buyers, we started off with a lead from my mother to talk with her long lost high school friend which had become a realtor. Although my mother hasn't spoken with this realtor in over 40 years, she seems to trust him. So we call the realtor up and tell him basically that we know nothing about real estate and that we are looking for a first home and are not pre qualified, so he tells us to speak with the lender he uses. So we drive down to the lenders office to give her all our information to get pre qualitfied. She told us that our credit looked fine and that it shouldnt be a problem to get a FHA 30 year fixed loan. She said that we would shoot for 160,000. She says that everything would have to go through under writing first and then we would get approved. So we leave the lenders office and call the realtor back up and ask when we could start house shopping, he told us tomorrow. So we get home and start searching google looking at all the foreclosures in all the surrounding areas,narrowing it down to one area we liked and could afford (keeping 160,000 in mind). So we email the realtor a few addresses that we would like to look at. The next day we meet up with the realtor and start our quest... We had 7 foreclosure houses to look at, the first house was junk... 2nd was junk, 3rd was junk.. 4th was junk... 5th was junk... 6th was junk... and then the 7th house we looked at looked perfect, it was basically everything we were looking for but with a few fixer upper projects.. The price was awesome!! This foreclosure was marked way down and was at a low of price of 144,900. The realtor knew we liked it and we knew we liked it. So we all leave and go home, my girlfriend and I start discussing this home all night and finally decide that we would put an offer on it. So we call the realtor back up the next day and tell him that we want to offer 136,000 with 5000 closing costs paid by the bank. The realtor sorta put off the vibe that 5000 was a lot to ask for the abk to pay for but said it was worth a shot. So we meet the realtor at his office the next day and sign the offer papers. At first there were a few errors on the papers of which my girlfriend caught. The errors were things such as where it should have stated "paid by seller" but instead it said "paid by buyer".. The realtor said they could change those later, but we said we wanted them to be changed now before we signed and they did so and we signed.. So we get all that taken care of and leave the realtors office.. He calls us up later saying that the home was owned by Country Wide and that we need to be pre qualified through their lender first before he could submit the offer.. So we call Country Wide up and give all our info to them, getting pre qualified was no problem.. So now the offer gets submitted. And now the waiting game.. As we are waiting we call the realtor back up and ask for details on that house, he tells us that its been on the market for 98 days and that the price had just dropped 20,000 just a few days ago, he also told me that there were no offers on it. So we think to ourselves, "awesome, we have a good shot at this then". The next day we get a call from our realtor saying that Country Wide countered offered us and that there is now a second offer in on the house putting it in multiple counter offer mode.. He said they countered with 144,900 and only paying 2000 closing costs. The realtor said that if we really like the house to take it because we might loose it to the other offer.. We said no and that we wanted to counter back at 144,900 with 5000 closing costs paid. He said ok and we hung up.. The realtor then faxed over to us a paper for us to sign stating that we understand that this is a multiple counter offer bid and that the bank it gong to take the highest bid on a certain time and date.. We then signed and faxed it back....... Now in this time frame, the realtor had called us about 3 times asking us if we were suuuuuure about our offer and that he still had time to change it if we wanted. See he wanted us to counter back with lower closing costs to be paid out of our pockets but we stood firm with our offer and didn't budge. He even suggested that we should up the price of the house by 4000 (putting the offer at 149,900 and closing costs at 3000), but we said no way...... A day passes and the realtor calls us back with the bad news, he said we were out bid.

So now we start looking for homes on google again and find about 4 foreclosures. The next day we drive out and look at all 4 houses, but this time we find an even better house then the last one we looked at. This house had everything the last house didn't. This house is newer, bigger and in great shape. It is a foreclosure and the asking price is 154,900. My girlfriend and I knew that this was the place as soon as we walked in. So we put an offer in at their asking price 154,900 with 3% closing costs paid. The offer was submitted and was counter offered back on at 157,720. with closing costs paid. So being that we loved this house and 2820 dollars over a 30 year stretch wasn't much of a big deal in our eyes so we accepted. I also asked the realtor the history of this house, he said that the day we offered on it was the day it just got reduced by 20,000. So I guess we felt like we had a head start with our offer over the other buyers. We didn't want to take the chance to loose the house we really liked.

So after all this, I have to ask.. Was the realtor/lender/bank playing a game with us? did we fall for it? I know its illegal but could the realtor or lender have tipped off the banks? It just seems strange to me that both banks stood completely firm on their asking prices. Its like they knew exactly what we could afford and what they had to work with and what not to exceed. Am I thinking to deeply about this? or is this how foreclosure homes work?

I do have some questions about the lenders fees and such but id like to hear your opinions on all the above first. Im not the greatest writer and hope you could follow along. Id like to know if we did alright with the negotiations? All your opinions are welcome.

Thanks

So after all this, I have to ask.. Was the realtor/lender/bank playing a game with us? did we fall for it? I know its illegal but could the realtor or lender have tipped off the banks?

First of all I would like you to remember that anything we discuss on this subject is purely speculation and that there is no way for us to know for sure what happened. They may have been playing a game and your agent could have spilled the beans, however, from your discription I think it is highly unlikely that this is the case. I say this because your agent would not have been in touch with the bank one bit unless they had the listing on the home. Your agent could of made the banks agent privy to this information but it is unlikely as your description had nothing that seemed overly fishy.

It just seems strange to me that both banks stood completely firm on their asking prices. Its like they knew exactly what we could afford and what they had to work with and what not to exceed. Am I thinking to deeply about this? or is this how foreclosure homes work?

Alot of people are suprised on how firm the banks tend to be on their asking price. But, what most do not realize is that the banks have 2 to 3 different agents and asset management companies give them values that the homes should sell for in less than 90 days. Plus their asking prices are almost always significantly below the current market value of resale properties. You often can negotiate with the bank when the homes are beat up and have alot of things to repair just to make them liveable. You described a property with very little wrong with it and foreclosures in good shape get tons of interest and massive numbers of offers. In the Houston real estate market foreclosures in good shape usually get 20 to 30 offers. Multiple offer generally have the final selling price pushed above the original asking price. Now in the case of the banks knowing what you could afford, Country Wide absolutely did....And that is the problem with them making the buyer get preapproved through them. I hate this because it gives a negotiation advantage to the bank. However, it is not illegal and if you do not Country Wide will not look at your offer. They can get away with this because of how much interest foreclosure properties get. The media makes it out like you can steal homes and that is not the case.

You were not thinking any more deeply than any other first time home buyer does. When you buy your first home you are very inexperienced and no amount of homework can give you the readiness that experience does but preperation goes along way to reducing your mistakes. When your are inexperience you are putting alot of trust in those serving you and that easily leads to feelings of vulnerability. Just keep informed, do not take anyones word at face value, and educate yourself on each and every part of the process. Please let me know if this post has not answered your questions and also do not feel uneasy in asking more questions if this post has brought more of them to the fore front. If you have a question you can rest assured that hundreds of thousand of new home buyers have the exact same questions. And forums such as this give an opportunity for all to learn.

[Dasanii19]

Wow,this forum is great!! I've been browsing around for only a few minutes and have already learned a few things!!

Ok, I understand how the first bank would know my budget but im thinking the second bank did too. Reason being is that my real estate agent is with Dickson, Dickson is the company that is representing the house. With that being said, isn't it possible that there could have been some notes exchanged between the house agent and my realtor? My realtor told me that the agent representing the house was in the same building as him. Am I catching on here? Tell me its possible.

Ok, so say worse comes to worst and the bank did know my budget. How do I figure out how badly I got taken? I mean, by the numbers and offers I explained to you above, does it sound that bad? or did I do okay? I will be happy as long as I know that I didn't get too ripped off. In my eyes, basically what happened is any major negotiations went out the window

Am I on the right path here?

[admin]

Originally Posted by Dasanii19

Wow,this forum is great!! I've been browsing around for only a few minutes and have already learned a few things!!

Ok, I understand how the first bank would know my budget but im thinking the second bank did too. Reason being is that my real estate agent is with Dickson, Dickson is the company that is representing the house. With that being said, isn't it possible that there could have been some notes exchanged between the house agent and my realtor? My realtor told me that the agent representing the house was in the same building as him. Am I catching on here? Tell me its possible.

Ok, so say worse comes to worst and the bank did know my budget. How do I figure out how badly I got taken? I mean, by the numbers and offers I explained to you above, does it sound that bad? or did I do okay? I will be happy as long as I know that I didn't get too ripped off. In my eyes, basically what happened is any major negotiations went out the window

Am I on the right path here?

Yes, there could have been some cross talk on this deal with it being a inside office transaction. In fact it ups the possibility that it occurred greatly. From your story I think you did just fine as you didn't pay higher than asking price once you figure in the closing costs. This leaves you with a price that is almost surly below the market value of the home. The one way you can find out is to have two or three agents in your area do a market analysis. That is when actual sold prices of homes comparable to the one that caught your fancy are reviewed. I think you are doing fine but you really need to compare rates and fees with more than one lender. This assure that you do not over pay on your loan. Since home loans are for a very long period over paying on the loan can cost you far more than not having negotiated a deal down severl thousand dollars.

[Dasanii19]

Originally Posted by admin

Yes, there could have been some cross talk on this deal with it being a inside office transaction. In fact it ups the possibility that it occurred greatly. From your story I think you did just fine as you didn't pay higher than asking price once you figure in the closing costs. This leaves you with a price that is almost surly below the market value of the home. The one way you can find out is to have two or three agents in your area do a market analysis. That is when actual sold prices of homes comparable to the one that caught your fancy are reviewed. I think you are doing fine but you really need to compare rates and fees with more than one lender. This assure that you do not over pay on your loan. Since home loans are for a very long period over paying on the loan can cost you far more than not having negotiated a deal down severl thousand dollars.

Ok, well now that you know where I stand. Being that I was very flexible in negociations with the house and closing costs, id really like to get a good rate and low fees from my lender. I'm getting a little worried the more I read about lenders and what they try and pull. I keep reading about how they can lower your rate but increase the fees and or raise the rate and lower the fees.. I mean, being that I didn't shop around for a lender in the beginning I feel like I am stuck with the lender I have. The reason I feel stuck is because the lender has already got all our information and has already submitted it to the under writer, and as of yesterday we had been officially approved for 160,000 30yr. FHA loan. So for simplicity, I want to atleast give her the benefit of the doubt and hear what she has to offer and negotiate the best I can with her, dont you agree? The lender sold me by saying that "she's not a broker" Quote " I am not a broker, I am Wells Fargo".... and so on about how Wells Fargo is one of the last banks standing. Was this a lie? or is she telling the truth?

How do gain the knowledge on what to expect from my lender? How do I gain the knowledge on when and what to call her out on BS? I hear lenders try and charge a bunch of "junk fee's", is this true? Also, I spoke with another realtor (friend) that said that since we didn't shop in the beginning, the lender already has a rate in mind for us. How can she already have a rate in mind for us if the rates change daily? Can the lender tamper with the rates? I just simply want reasonable fees and the correct rate. I want to walk in the lenders office knowing what I should be charged and or what rate I should be getting. How do I do this? One more thing, I asked my lender if she would be giving me a local rate or a national rate, but she didn't give me a straight forward answer. Does that sound fishy? I feel like everything is a scam, in this business......

And to respond to the last part of your answer above. My lender told me my closing costs will not exceed 3%. And also told me that we should still have a couple hundred for a cusion. So being that the bank is going to pay 3% closing costs, shouldnt I be fine? I did read on google some where that a good rule of thumb is 2%-4% of the what the house sold for.

I feel like this is a huge maze.

[Dasanii19]

Originally Posted by admin

This leaves you with a price that is almost surly below the market value of the home. The one way you can find out is to have two or three agents in your area do a market analysis. That is when actual sold prices of homes comparable to the one that caught your fancy are reviewed..

Couldnt I research that myself? Ive been looking on www.zillow.com and when looking at the house we are buying, it shows comparable houses that recently sold. The houses that are popping up are higher then what I paid.

Also, what is the best source to track current mortgage rates? Again, ive been using zillow for this but dont know how accurate it is..

Would you say that this is a good bible to go by when we are talking to our lender about rates/fees? http://rateinformer.com/?q=fees.htm I thought it seemed pretty usefull.

[admin]

Originally Posted by Dasanii19

Couldnt I research that myself? Ive been looking on www.zillow.com and when looking at the house we are buying, it shows comparable houses that recently sold. The houses that are popping up are higher then what I paid.

Also, what is the best source to track current mortgage rates? Again, ive been using zillow for this but dont know how accurate it is..

Would you say that this is a good bible to go by when we are talking to our lender about rates/fees? http://rateinformer.com/?q=fees.htm I thgouht it seemed pretty usefull.

Zillow is known to be highly inaccurate and should not be counted on for information but their site is fun to play on. You should just take their stuff with a grain of salt and consider them for entertainment purposes only.

I think Zillow's data will get better as time goes on.

If your state is a non-disclosure state you have no good source to look up sold data yourself. A non-disclosure state is one in which it is either illegal to publically post detailed sales data or it is not required so the records are poorly kept. The best source I know of for the public is http://propertyshark.com but this is only good if you are in a disclosure state.

To directly check mortgage rates I do not know of a good source, however, if you are trying to watch what will happen to rates (Ex. Go up or down) the best thing to watch is what happens to the price of bonds because the price of bonds sets interest rates.

If the price of bonds goes up then interest rates go down and if bond prices go down then interest rates go up.

Rate informer is ok but I woud not call it a bible. As number 7 and 8 are junk fees and you should not pay them. Also do not pay attention to the numbers on the left only go by the numbers titled realistic costs.

The best simplest way to compare both rates and fees is by comparing the A.P.R. on a good faith estimate. As this rate reflects lender charges. Oh, and by the way if a lender does not provide you a good faith estimate without you even asking they are breaking federal law. To compare rates with different lenders ask the first lender to give you a copy of your credit report. If you ask they are required to give you this by law. Then you can go have different lenders give you a rate based on your credit report without having the other lenders pull your credit. If your credit gets pulled to many times it can hurt your credit.

[admin]

Its getting very late and my wife wants me to come to bed. So, I think I will hit the sack now and will answer anymore questions you have in the morning. If you would like to run into me again tomorrow and ask more questions just give me a time after 2:00p.m. and I will see to it that I am online.

[Dasanii19]

Originally Posted by admin

Its getting very late and my wife wants me to come to bed. So, I think I will hit the sack now and will answer anymore questions you have in the morning. If you would like to run into me again tomorrow and ask more questions just give me a time after 2:00p.m. and I will see to it that I am online.

Awesome! So in order to shop rates, you are saying to get a copy of the credit report our lender pulled, and take it to other lenders and ask them, based on what this report says, what kind of rates they can offer us? Is that correct? Do we need the lenders good faith estimate to show other lenders to compare?

Thanks so much for your help, I look forward to hearing from you tomorrow! We are supposed to get back to the lender monday or tuesday, so as much info as you can cram into our noggin's, we appreciate it!

[admin]

Originally Posted by Dasanii19

Awesome! So in order to shop rates, you are saying to get a copy of the credit report our lender pulled, and take it to other lenders and ask them, based on what this report says, what kind of rates they can offer us? Is that correct? Do we need the lenders good faith estimate to show other lenders to compare?

Yes, get a copy of your credit report that the first lender pulled and a good faith estimate and go to other lenders to shop your loan. If the Loan Officer at the first lender who pulled your credit gives you any troubles in getting the credit report tell them that you are aware of your rights in the Truth in Lending Act. If they do not make a good faith estimate available to you with in a couple hours of your request remind them that they are already in violation of RESPA and that you are trying to be nice but if they do not make this document available to you in a timely manner you will report them.

According to RESPA the lending institution must give you a good faith estimate with in 3 days of when you originally gave them all the documentation and personal information they needed to pre approve you.

I will make time to be on here later if you have more questions just let me know.