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lord1234 posted:Interesting. Having a parent who is a realtor, I can tell you the avg commission for agents is between 2 and 2.5%(per agent). Thus we need to find 2-2.5% to pay the agent. Also, there are typically two agents (buyer's agent and seller's agent). Each of them gets that commission - in SoCal it's typically 2.5%-3% each so that's a total of 5-6%, not 2.5-3%.
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Jan 9, 2013 21:38
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I've always been told that (in CA) it's a fixed 6%, not a variable percentage. If one party chooses to forgo an agent, the other party's agent gets the whole bag, there's no money back. Perhaps I was misinformed. It is a good idea to spend some money when selling to really tidy things up, and I'm including that in the cost. Unless you were incredibly diligent about maintenance, it's very likely there will be little niggling things that in this buyer's market the buyer will ask you to pay for. Some really nice landscaping efforts, get the roof cleaned up, a fresh coat of paint inside and out, this kind of stuff costs a little money but enhances the resale value. Staging a house is a good idea, especially if it'd otherwise be empty. That costs money. And finally... you may have to make concessions to the buyer during negotiations. Agreeing to cover part or all of their closing costs is a common one. A great deal depends on the local market during that month and how much interest is garnered. If you go for two or three months without an offer and then one buyer comes along and wants to haggle a lot, you'll be in a tough spot if you literally cannot afford to budge a couple grand on anything.
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Jan 9, 2013 21:54
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Leperflesh posted:I've always been told that (in CA) it's a fixed 6%, not a variable percentage. If one party chooses to forgo an agent, the other party's agent gets the whole bag, there's no money back. Perhaps I was misinformed. You're probably right. I only bought a house once and was trying to repeat what I thought my agent told me. Your explanation makese a lot more sense. My agent was pissed that the selling agent was only offering 2.5% for the buying agent and was going to keep 3.5% for himself.
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Jan 9, 2013 22:04
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My understanding is that the percentage paid to the seller is slightly negotiable. I am hearing that it varies from 5-6% in my neck of the woods. Then, the listing will actually tell buyer's agents what percentage they offer. 2.5% is common, but more buyers agents may bring in clients if it were 3%. So if a seller is offering a 2.5% commission, they could be keeping 3.5% themselves, or the seller could only be paying a 5% commission, in which case the seller's agent is also getting 2.5%.
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Jan 9, 2013 23:14
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Is there any reason to go to a brick and mortar bank to get preapproved over applying with one of the banks on bankrate.com?
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Jan 10, 2013 01:16
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We got much lower rates in town than distance. Like half a percent lower.
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Jan 10, 2013 03:03
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For preapproval it really doesn't matter, because (of course) you won't be spending as much as the maximum you're preapproved for (right?) so the variation of that maximum number from one bank to another won't be important. When it comes time to actually get your loan, you should get multiple quotes from several different banks. I suggest using a broker to maximize your ability to find the lowest rate and fees possible.
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Jan 10, 2013 08:29
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lord1234 posted:Interesting. Having a parent who is a realtor, I can tell you the avg commission for agents is between 2 and 2.5%(per agent). Thus we need to find 2-2.5% to pay the agent. In addition to the fact that you have to pay the commission to both the buyer's and seller's agents as a few have mentioned, you also need to account for any repairs that may need to be done before occupancy (we had about $160 in repairs the township inspector required for the certificate of occupancy when we sold despite the fact that the condo was only a couple of years old), any attorneys fees, realty transfer taxes (varies by state), and possible withholding for state income taxes. For example, New Jersey requires a mandatory 2% withholding if the seller is a non-resident at the time of closing, and you won't see that money again until you file a tax return the next year. All in all, the 10% number being thrown around for seller's costs at closing is entirely reasonable and definitely something for which you need to plan.
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Jan 10, 2013 18:01
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Im 27 and just got a job with NY state at a college earning $27,000 a year. I have 3k in my checking account, 0 debt and each month Im only paying for car insurance and my cell phone. Im looking at houses between 50k-60k but this is of course after a few years of saving up money. My question is how much money should I have saved up before I start seriously looking? Im not looking to buy one in the next few months, I figured 1.5-2 years of saving minimum. Im also sure about wanting to stay in the same city. Am I right in assuming that it would 100% always be worth it to pay as much as you can comfortably afford for the down payment? Cage fucked around with this message at 02:09 on Jan 11, 2013 |
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Jan 11, 2013 02:04
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lord1234 posted:Interesting. Having a parent who is a realtor, I can tell you the avg commission for agents is between 2 and 2.5%(per agent). Thus we need to find 2-2.5% to pay the agent. I'll give you a real world example from a house we're closing on tomorrow: Gross sales price: $435,000 Commission*: $21,750 Title Insurance: $2,632 Title Insurance Fee: $2 Closing Fee: $340 Attorney Fee: $95 Tax Certification: $76 Home warranty: $450 Pro Rata Property Tax: $320 Total Closing costs: $25,665 (6%) In addition we spent $6,406 (1.5%) to prep the house for sale and ate another $4,000 or so (1%) in carrying costs while the house was vacant. 8.5% all together and this was about the best case scenario. * commission was discounted from the standard 6% due to the buyer using my broker too and the fact that it was under contract within a week of the listing going live. SlapActionJackson fucked around with this message at 03:13 on Jan 11, 2013 |
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Jan 11, 2013 03:06
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Cage posted:Im 27 and just got a job with NY state at a college earning $27,000 a year. I have 3k in my checking account, 0 debt and each month Im only paying for car insurance and my cell phone. Im looking at houses between 50k-60k but this is of course after a few years of saving up money. My question is how much money should I have saved up before I start seriously looking? Im not looking to buy one in the next few months, I figured 1.5-2 years of saving minimum. Im also sure about wanting to stay in the same city. Some people would agree with that, but I don't. There are a few thresholds; 1. 3.5% down. This is the minimum down payment for an FHA loan. If you have less than this, unless you qualify for a special program (and you might, as a teacher), you can't buy. 2. 20% down. This is the minimum down payment to avoid paying PMI (mortgage insurance). It's a very good idea to get above this number because mortgage insurance is basically money flushed down the toilet (the insurance policy isn't for you, it's for your bank). 3. ?% down. The point at which your down payment is too much of a percentage of your total net worth, including your retirement savings. Point 3 is where I may disagree with some other posters. Basically, current theory on long-term savings (such as for retirement) is that one should reduce the risk that comes from over-exposure to a single asset or asset class as much as possible, by diversifying. When you put a big pile of cash into a house, you're doing the opposite; you're concentrating your wealth in a single asset, whose performance will therefore have an outsized influence on your ability to build and retain your wealth as you approach retirement age. You can read more about this in The Long-Term Investing and Retirement Savings thread. The exact amount of dollars where #3 is reached is impossible for me to say. It depends on your age, your income, your life plans, your savings, your sources of retirement income, and various other factors: all the things that you'd use to decide what your asset class distribution should be for your retirement savings. You may want to treat money put into your house as not-an-investment-at-all - after all, you'll need to live somewhere when you're retired, too, and that may mean you never withdraw equity from your home. If that's the case, then you should not put any money that you've earmarked for retirement into your down payment. So "comfortably afford" is kind of a hard thing to nail down. Generally the more down payment you make, the less you will pay in interest, and the better you can handle a drop in value (e.g. you'll be less likely to find yourself upside-down on your loan and therefore unable to sell). But, you should carefully consider before tapping sources of money that are for retirement or other long-term investment goals.
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Jan 11, 2013 20:03
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Just went through our home inspection, and all in all things went well! There's some stuff we'll be asking the seller to take care of, but we also discovered a lot of stuff about the house we didn't know, including: * The house has a rainwater collection cistern our front, complete with a plumbing system (very Seattle chic, we'll see how much of a headache it is) * The dryer vents into an air to air heat exchanger (which I know nothing about) * The moisture envelope around the house is built way past code -- metal all over * There's a nice and tidy network panel that runs ethernet throughout the house. Every line was labelled. * The house has hidden places to put routers inside the walls for ubiquitous wireless coverage. * Floor cabinets are 24" cabinets, but built 6" out from the wall, providing access behind them to run conduit, or whatever. It also has some really weird features: * A spigot inside the basement. Like, what you'd hook a garden hose up to. (I think it was for hydroponics?) * Parallel water filtering from the city mainlines (Why?) * Air compression lines that run to a few different rooms inside the house, and centrally gather in the basement * There's a long stretch of the house that isn't heated. That kind of freaks us out for condensation reasons. Looking at maybe installing a ductless heat pump? Thoughts? Anyhow, we're moving forward, things look generally good and there were no major red flags on the inspection. WOO!
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Jan 12, 2013 00:55
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And it's official. We are the proud ex-owners of a house. I can confirm that old adage about boats applies to houses, too: The happiest day is the day you buy it, but a close second is the day you sell it!
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Jan 12, 2013 06:47
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Cage posted:Im also sure about wanting to stay in the same city. Listen to yourself here- if you don't know you want to live there don't buy a house! That's like marrying your girlfriend when you are not sure if you are gay or not. Selling a home costs a ton of money. Save, save, save......then wait. Buy a house when you are someone who is ready to stay in the same place for at least 7 years. You are not one of those people.
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Jan 12, 2013 07:44
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How long does it normally take for preapproval? We went on the 4th (Friday) and the Mortgage guy said he would let us know on Monday the 7th. When I hadn't received a phone call on the 7th, I called him at 5 and he said he had a death in the family and had to fly out because he was the only person on that side of the family who could go. He also said he was taking my stuff home and would try to get it done Monday night or Tuesday.....which he didn't. I should give him slack because of the death in the family I know, but I thought preapprovals were a same day type of thing?
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Jan 12, 2013 14:01
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Cage posted:Im 27 and just got a job with NY state at a college earning $27,000 a year. I have 3k in my checking account, 0 debt and each month Im only paying for car insurance and my cell phone. Im looking at houses between 50k-60k but this is of course after a few years of saving up money. My question is how much money should I have saved up before I start seriously looking? Im not looking to buy one in the next few months, I figured 1.5-2 years of saving minimum. Im also sure about wanting to stay in the same city. $27,000 a year. You don't make enough to be able to maintain a house. What do you think you are going to do when something goes wrong and you need $7,000 for a repair? That's over 25% of your annual income.
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Jan 12, 2013 14:22
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Pillowpants posted:How long does it normally take for preapproval? Pre-approvals don't really mean anything and are a same day kinda thing. Some brokers give them out without even running your credit just cause the numbers kinda look ok using fuzzy, mortgage broker math. Some broker companies give their employees heat for not having enough loans "In the pipeline". When brokers give out pre-approvals to people who don't qualify for any loan on the planet it gets their boss off their back. Pre-qualification letters mean a little bit more, but it's still not a guarantee you can actually get a loan from the company who gave you the letter. Advice? Get multiple pre-whatever from different brokers. Running your credit multiple times for the same thing in a short time frame does not hurt your credit, although they will make you write a letter explaining the other inquiries. They do all the work, you save money by picking the best one.
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Jan 12, 2013 17:22
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Leperflesh posted:I've always been told that (in CA) it's a fixed 6%, not a variable percentage. If one party chooses to forgo an agent, the other party's agent gets the whole bag, there's no money back. Perhaps I was misinformed. It is not fixed, but 6% is what the listing agent usually tries to ask for. The % paid is negotiable between the home owner and the listing agent(represents the buyer). It could be any amount. It doesn't even have to be a percentage of the home value. The listing agent then lists the house and declares what the selling agent (represents the buyer) will get if they bring a buyer into the transaction. If the listing agent finds a buyer they keep the whole amount. e.g. 1) Seller agrees to pay 6%, each agent gets 3% 2) Seller agrees to pay 5%, listing agent gets 2%, offers selling agent 3% 3) Seller agrees to pay 4%, listing agent gets 2%, offers selling agent 2% These splits are not fixed amounts, just common examples If you sell by owner (FSBO) you do not have to pay a commission, but a selling (buyers) agent will not want to show your house to their clients. When you list FSBO you can agree to pay the selling agent a commission (you pick the amount), and then pay a commission only if an agent finds the buyer. Only if a buyer finds you without an agent of their own do you pay no commission. EDIT: this is for California. Your experience may differ.
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Jan 12, 2013 17:43
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Pillowpants posted:How long does it normally take for preapproval? About as long as getting a soda from a vending machine. We did it twice and the longest step was sitting there waiting for the credit report to come back.
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Jan 12, 2013 18:17
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daslog posted:$27,000 a year. You don't make enough to be able to maintain a house. rottenland posted:Listen to yourself here- if you don't know you want to live there don't buy a house! That's like marrying your girlfriend when you are not sure if you are gay or not.
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Jan 12, 2013 18:26
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A roof could cost more than that, easily.
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Jan 12, 2013 18:29
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Advent Horizon posted:A roof could cost more than that, easily.
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Jan 12, 2013 18:32
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Cage posted:Well, yeah. A roof is also something that doesn't just suddenly go bad though. So lets say it didn't, and he's got 5 years to a new roof. He still can't save the money up.
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Jan 12, 2013 18:36
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daslog posted:So lets say it didn't, and he's got 5 years to a new roof. He still can't save the money up.
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Jan 12, 2013 18:40
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Spamtron7000 posted:You're probably right. I only bought a house once and was trying to repeat what I thought my agent told me. Your explanation makese a lot more sense. My agent was pissed that the selling agent was only offering 2.5% for the buying agent and was going to keep 3.5% for himself. I am a licensed real estate agent (in NY) and I used to sell a bit part-time. (I did IT full-time but did my own real estate projects on the side and ended up selling a bit.) Every agent signs up with a Broker and the Broker will have "guidelines" for what % it wants the agents at its office to use, often 7% or 8% when listing a house. Some Brokers have this gimmick where they say you get X amount of service for 6% and more service (advertising, open house, etc...) for 7% and even more for 8%. (I think that blows and would never work at an agency like that.) Despite the Broker guidelines, the agent CAN list a house for less, like 6%. It might be hard to find one to list it for as little as 5%. When the house sells, the fee is split between the listing agent, who represents the sellers and the agent who represents the buyers. (There is a dual agency thing where one agent represents both, but that's complicated and involves a lot of forms and might not even be allowed in all states.) There nowadays are cut-rate agencies that will list for a low 5%. Savvy sellers can even, if they research it enough, find these online broker types from which to buy an MLS number in their area for a couple hundred bucks and list their own house for like $300 - 500 through the online broker. Takes some research to find these. Some give kits and advice; some have an in-house lawyer and legal forms; with some you get the MLS# and are on your own. The problem is that most of the agents doing business are going to hate that listing, if you get my drift.... Brokers like it if agents sell houses listed with their agency. Agents have a fiduciary responsibility to sell their client the best house for the lowest money (and not engage in steering). There are so many online tools nowadays. You should definitely know what similar houses sold for in the past few years, so you don't overpay. Check out zillow.com and sign up there so you can see the foreclosures. Great deals in the foreclosures section. Also use trulia.com and realtor.com. Take control of the search yourself (and be a big pain in the rear-end it's your life and money). If you're selling, to get top dollar make sure the house is in tip-top shape and staged well. [Disclaimer: I'm just saying how it works, not giving anyone real estate advice.]
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Jan 12, 2013 22:12
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Cage posted:
The town you want to live in is irrelevant- the selling costs are what are going to cost you. If you buy a house and decide you want to sell it and buy the house next door it costs just as much. If you don't want to live in the same house for 7+ years you should rent. To answer your question: you want 20% down, plus money for closing costs. Closing costs are probably <$3000 for a house in your price range.
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Jan 13, 2013 00:05
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Cage posted:Well, now we're back to the emergency buffer which I can add to whenever I have extra money sitting around. I didnt mean to derail the whole thread, I only wanted to ask a question about down payment. That's cool. I still think that you shouldn't buy a house with your current income.
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Jan 13, 2013 02:43
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QuarkJets posted:That's cool. I still think that you shouldn't buy a house with your current income.
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Jan 13, 2013 02:52
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I think that people might be discussing the fact that some costs are fixed -- like a new water heater or furnace.
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Jan 13, 2013 03:43
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rottenland posted:Pre-approvals don't really mean anything and are a same day kinda thing. Some brokers give them out without even running your credit just cause the numbers kinda look ok using fuzzy, mortgage broker math. Some broker companies give their employees heat for not having enough loans "In the pipeline". When brokers give out pre-approvals to people who don't qualify for any loan on the planet it gets their boss off their back. This is the opposite of everything I've read and been told. I'm under the impression pre-qual is useless. Cage posted:Well the OP says 2.5x your income, and Im looking at homes below 2x. How are you even finding houses that low that aren't trailers or deep foreclosures? Think about it this way. At a 27k income Monthly Income After taxes: ~$1700....Do you have a 401k? HSA? Union Dues? Health Insurance? Lets assume that number is $1600 Mortgage: Around $450.... Do you have a car payment? Car Insurance? How much would you spend in gas? How about cable? Cell Phone? Electric? How would you heat your house in the winter? If its oil or propane, you're looking at ~$200 a month? Pillowpants fucked around with this message at 15:05 on Jan 13, 2013 |
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Jan 13, 2013 14:33
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Cage posted:Well the OP says 2.5x your income, and Im looking at homes below 2x. That guideline really just defines what you can afford to purchase with a mortgage. It assumes that you're not near the poverty line and that you'll be able to afford upkeep. The house itself may be cheap, but the additional costs of owning a house are still going to be high.
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Jan 13, 2013 20:34
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Pillowpants posted:How are you even finding houses that low that aren't trailers or deep foreclosures? Small houses/condos are cheap where I live.
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Jan 13, 2013 23:00
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Food? Furniture? Vacation? Man cannot live on a rent check plus internet alone. Well, he can, demonstrably, but he shouldn't. Being "house poor" sucks rear end, and it just seems to most of us that this is what you're signing up for.
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Jan 13, 2013 23:03
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Leperflesh posted:Food? Furniture? Vacation? Man cannot live on a rent check plus internet alone. Well, he can, demonstrably, but he shouldn't. Cage fucked around with this message at 23:12 on Jan 13, 2013 |
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Jan 13, 2013 23:09
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I don't think you are interested in the advice being given in this thread. You've made up your mind. Nobody is going to tell you that you cannot in fact afford the payments that you're sure you can afford, because nobody can know your finances better than you do. We've explained what the additional costs are likely to be, and it seems to be more or less unanimous that you're underestimating the degree of risk you'll be undertaking, but if you've read all that and still want to buy, well: I wish you the best of luck. And I'm not being sarcastic, I genuinely hope you don't wind up in trouble and it's certainly a plausible scenario, although it will probably be a small surprise to most of us. Do keep up with us and let us know how it goes, though. We can answer your questions about the details as you go through the process.
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Jan 13, 2013 23:16
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Leperflesh posted:I don't think you are interested in the advice being given in this thread. You've made up your mind. Nobody is going to tell you that you cannot in fact afford the payments that you're sure you can afford, because nobody can know your finances better than you do. We've explained what the additional costs are likely to be, and it seems to be more or less unanimous that you're underestimating the degree of risk you'll be undertaking, but if you've read all that and still want to buy, well: I wish you the best of luck. And I'm not being sarcastic, I genuinely hope you don't wind up in trouble and it's certainly a plausible scenario, although it will probably be a small surprise to most of us.
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Jan 13, 2013 23:26
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That's fair enough, but the answer to your question can't just be "well, 20%" because that percentage isn't just the rule in all cases. It's based also on how much you make, the size of your savings, what those savings are for, what your life plans are, and on and on. So that's why you didn't (and shouldn't) get a straight answer.
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Jan 13, 2013 23:29
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Situation and questions: We have about 4300 per month coming in takehome, and quite a bit (over 100k) in savings built up. We've been looking in the 300-450k range for houses and are now a bit worried about the idea of a 400k+ house, so I'd like to get a bit of advice or other opinions. Rough numbers looked like if we were going to try to do a 15 year mortgage, with 100k down, the mortgage + taxes + insurance would be in the 2700 range which seems...way too high. Way way too high. Are the numbers I'm using correct, and this is definitely too much house? I will note that a lot of the fact that takehome is there is that I'm socking away a lot into 401k, IRA, etc.
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Jan 13, 2013 23:50
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silvergoose posted:Situation and questions: Those numbers sound right. We have more than that in takehome (after 401k/IRA) and savings, and we're pretty firm on not going over 220k. Are houses in your area exceptionally expensive, or do you have a large family? If you really want 400k+, have you thought about going with 30 yr? I know the loan life sounds scary long and it does raise your mortgage rate slightly, but in the end, you do come out ahead (given that you have the support to weather bad situations and you invest the money you're not paying on the mortgage). Rurutia fucked around with this message at 00:37 on Jan 14, 2013 |
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Jan 14, 2013 00:35
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silvergoose posted:Situation and questions: Your takehome pay is $51k. I'd say a $400k house is too much house, even at a 30 year loan, although it's mitigated (a lot) by that large down payment. You could afford it if you reduced your retirement savings (but I don't think that's especially wise). Without knowing more about your financial situation it's hard for me to guess about what you can comfortably afford, but it sounds to me like you either need a 30 year loan, or a cheaper house, or both. If you buy a $300k house and put down $100k, your payments on a 30 year note will be more like something under ~$1500/mo, give or take, depending on your tax rate and how much insurance costs you and so forth.
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Jan 14, 2013 01:01
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