DIYbanter - View Single Post - Need advice on home buying process, PLEASE HELP!

dpb

wrote:
....
My realtor is actually my friend since college.. I think he wouldn't
do anything fishy to take advantage over me or this situation.

Not to impugn your friend, but...

The point is it his job is to represent the seller, _NOT_ you. Friend
or no, you need somebody on your nickel who's fundamental and fiduciary
duty is to look out for _your_ interests to make sure you don't get
stuck w/ some hidden fault in a title, undisclosed defect, any of a
multitude of things that can (and do) go wrong...

....

the house overall was neatly kept and clean. It didn't appear that it
requires any major work..

Inspection? Who pays? If the seller, there's an incentive (and often a
sweetheart kickback deal) to let stuff go buy to close the sale...I
repeat, who's looking after _your_ side of the transaction?

....
...it was sold at $260000 2 or 3 years ago,
initially came out as $270000 a year and a half ago, and now it was
captivated by a bank and priced $179900.

What it sold for back then is almost immaterial to its value in the
market today...again, you need to be looking at what similar properties
in the same neighborhood of roughly same condition are _closing_ for
_NOW_ (or at least within 6-months to a year at the outside depending on
how fast stuff is moving). In a volatile market, historic prices are
just of no use in actually assessing value.

I put my proposal in with 181000 with putting down $1000 as earnest
money. My friend was doubtful about this move since there was already
competition on that house (when we arrieved, there was already one
agent showing that house around and saw another family coming in
though it's been out only 5 days), earnest money is too little,
(according to my friend, banks wouldn't bother to review the offers
when a house that was captured is in good condition and earnest money
is too little, they would look for $5000 as minimum) Later I read this
artical which says that if you are going to put more than 3% as
downpayment, there is no reason not to put more for earnest money
because the amount of money stands out and make you as a serious buyer
and put you in better position on negotiation process. My question
was more like If $5000 large enough to make my position as committed
buyer when my purchasing property is about 200000, so a little more
than 2.5%.

I think that article is bull**** -- dealing w/ a bank in foreclosure is
somewhat different than a homeowner, but the offer is required to be
submitted and the lender will look at the overall gain to them --
earnest money is a trifling amount and of really no value to them unless
the market is slow--on this particular property obviously there was a
lot of interest.

My offer was rejected and later I was told from my friend that the
house is going through contract with another guy. (my friend told me
10 people including me made an offer and i don't know at how much it
was sold, my friend thinks it must be sold at way more than 180000,
probably over 200000).

The offer was rejected because they got better offers, _not_ because of
lower earnest money.

This earnest money thing is a red herring. It could only possibly be of
major significance if you are not already qualified by a lender for the
size of mortgage you're going to need for the range of properties that
you're looking at and/or don't have the upfront cash besides. If you
are pre-qualified, you're earnest enough.

I again recommend highly you find Bruce Williams on the radio tonight or
his book and bone up on real estate purchasing in a hurry...

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