Okay so I've come to the conclusion that most (not all, but close) of the real estate agents writing these home listings have a BS in bullshit!!! We have gone to look at several houses that were Grade A crap or below! The picture for one home was really really nice--flowers, landscaping, 2 brick koi ponds and even a hot tub! The reality was so much worse! Granted it's winter so there are no flowers, one koi pond is a big mud hole in the ground and the other is filled in with cement!! The hot tub? A biological warfare experiment gone bad. So on Saturday we are releived to find a house that is indeed BETTER than the ad!!! We love it. And the rollercoaster begins. Our real estate agent said she would scope out area homes and let us know what an apporpriate offer would be. She called just now and said--yep--there is a contract on the house already! grrrrrr BUT we MIGHT have a chance. The offer was for less than the asking price. So, IF we can get in an offer for the asking price, then the selling agent will cancel the first contract. But she won't cancel unless the contract is in her hot little hands! The selling agent isn't too keen to cut any slack because our agent works for a different real estate firm so the selling agent would be cut out of a bunch of commission money. Of course there is a twist, we were not approved for the full asking price. We're about $20k short. Our agent is going to look into things like getting us a fast equity loan on our property etc. We have to meet in 2 hours to write up the contract and figure stuff out.... It's odd that I'm willing to undergo all this crap...I hate moving!!!
My gut isn't reacting too well on this choice for a couple of reasons: 1) the seller already has a contract on the home. If she/he decided to cancel the contract they would have to refund the potential buyer the entire security deposit. 2) You're 20K short (2K I would say no problem), but $20,000 is alot to try to come up with. I would suggest go with your first instinct. If you feel this will be all right go for it. It took me a depressing 2 years to find the home I wanted. I went through 30+ homes before I found the one that I loved. Dani
If the seller has already accepted the first contract...no matter what the price...getting your contract in the realtor's hot little hands no matter what the offer is... is irrealevant. The seller has agreed to a binding RE contact and will be held accountable. You can't just dump the first contact for a better one with out penalty...You can put a back-up in that is better and hope the first guy can't get approved!
I agree with Dani and Boss. Furthermore, I have seen through the years, believe me, that lenders approve you for more than you can actually afford in alot of cases. Being 20K short of what you were approved for is asking for BIG BIG trouble financially. Finding the right home is very hard, but whatever you do DON'T go for more than you can afford. Your realtor even suggesting this, I would find another one.
Just got off the phone with our agent. The selling agent hasn't presented the contract to the homeowner or it hasn't been accepted, something like that. (BTW he was there in the house when we looked at it, I thought they were supposed to hide). So, our agent says we should be okay with getting them our offer this afternoon. The other good news is that she talked to our mortgage guy (the mortgage company is affiliated with the realtor company). He told her getting the extra $20k should not be a problem since we are putting down a large amount from an insurance settlement. Also, there are funds that we can use from a retirement account but that would take 48-72 hours to get.
I think the general consensus that was presented to you is right on. First you're 20K short. Sure, it's no problem for the lender; either way, they get their money. But the fact that your next source for backup money is a retirement account indicates this house is out of your price range. If you leave/lose your job, the 401(k) loan becomes due immediately, or in a relatively short time frame. What will you tap into next if the house needs unanticipated repairs, your car breaks down, etc?
I agree with Rina. Is this house really worth you dipping into your retirement???? Again you should buy a house you can afford and are qualified for, the agent and lenders only want to get paid, they don't care if this could take you to the poor house or not. They are only it in for the money Don't mean to sound so blunt, but I think this would be the worst decision you could ever make. I don't know if this is your first home, but so many unforseen things can happen when you buy your first home.
ditto, don't use you 401k...I invest in RE for a living and my best source of houses...preforeclosures...divorce...and death and no matter how bad you credit was or is NEVER, NEVER, NEVER, srcew up you your house if you can avoid it ....my derogs are a mile long ...BUT... ALL MY MORTAGAGES...have never even been once 30 days late. They can and will take you house in most states. Then you have no place to live and you owe your 401 K. You make you money in RE when you buy not when you sell. 20K=$200 a month think about it
And the rollercoaster hurtles through the 5G left turn corkscrew.... A little about the retirement account: it's not our account. These were funds that were going to be disbursed anyway. It's difficult to explain but we were going to get a check in about 3 weeks. We were planning on using a small part of it for the house assuming settlement was in 30-60 days. Now insofar as our approval, the mortgage guy said the amount he gave us is what we easily qualified for based on our stated income and downpayment. He also assumed we did not want PMI. By boosting us the extra $20k we'd have to have PMI. But here's the thing...we were so concentrating on asking price that we forgot one thing--our downpayment was going to make the *actual* loan amount LESS that our pre-approved loan amount! So [a] we don't need to use the funds that are coming anyway and we won't need PMI. We met with our buyer's agent who helped us go through all the paperwork. She writes up our offer (that's when it clicked that we didn't need our approved amount increased). She already had the disclosures from the selling agent and said she was going to drop the paperwork off after we had dinner. It turns out the house is under relo contract and so the homeowner isn't the one actually selling per se, it's his company's relocation agency. That's why the other contract hasn't gone through just yet, the relo people have to give final approval. To make our offer more attractive, our agent included our preapproval info, $8k personal check and our bank letter verifying funds for the balance of our downpayment (to be paid to the homeowner). I figured what the heck, let's stop by Lowe's and check out paint colors. I've been given free reign to redo the kitchen because she is going to do the bathrooms! 45 minutes later we get home and there are 3 messages waiting--all from our agent. While playing the first message, she calls us again. We're in! She went over to the selling agency to drop off the papers and the selling agent was there!!! She looked over our stuff and was so excited she called the homeowner. She told him that we were flexible with closing (we're renting month to month) and we're offering asking price. He sped up to her office, looked over our paperwork and sign it all on the spot! He didn't sign the other offer before sending it to his relo company for their review. They called the relo people but they were gone already. So the owner is excited because the previous offer was for much less--the buyer refuses to offer more and would settle no earlier than May 1. Since we're month to month, we planned on 4/4 or earlier. But the owner has to be out by March 20 to get to his new position!!! That's why he took our offer on the spot. So, as our agent said, we're 98% in! All the seller has to do is present our contract to the relo people and get their okay. And here I was wanting to wait another 18 months or so to clear our files up and get our scores higher.
Well I do hope so...although there's a LOT more grass than I'm used to! I've always preferred to rent because I'm lazy and don't want to shovel snow, fix my own heating etc. But I guess this will be nice since there's more elbow room. Maybe by the end of the year I'll qualify for my "holy grail" credit card: MBNA Quantum and/or Amex Delta SkyMiles.
