Advice for first time home buying? {primary residence}

[LightHouse]

Do any of you real estate folks have any advice for first time home buyers in this new market?

Are there any creative ways to find homes for sale(unlisted foreclosures/short sales) or are you pretty much stuck with what is in the MLS and doing the back and forth with realtors?

What about lending? tips on finding the best rates, cheapest money, etc? Does getting pre-qualified from multiple lenders effect your credit and/or score?

 

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[kwerner]

Does getting pre-qualified from multiple lenders effect your credit and/or score?

I believe you have something like a 30 day period where you can pull multiple credit inquiries for mortgage pre-approvals and it only counts as / has the same effect as 1 inquiry on your credit report.

 

[Runum]

No you are not limited to just the MLS listings. Many realtors hold their best listings away from public eye(pocket listings). If you are sure what your parameters are you can contact an agent and get started. They can put the word out that they have a buyer and other listings will appear. You could also check Zillow, Realtrac, Craigslist, and Trulia for listings. An agents fee is usually 6% paid by seller. If you enlist a buyers representative(realtor) the commission is split 50/50 paid by seller.

Prequalifying rules have changed in the last 2 years. Not many lenders will write the prequal letter you need because of potential mortgage fraud. You will have to follow your lenders/mortgage brokers lead.

In terms of financing... you can go to your neighborhood bank, big bank, or a mortgage broker. The local bank will probably sell your mortgage on the market. The big bank may hold or sell the note. The mortgage broker will shop your loan around for the best rates. Be prepared for the documentation dance. You will have to provide documents for everything.

 

[Runum]

My suggestions...

1) Go to open houses with your wife. Decide what is important to each of you. Decide where you can compromise.

2) Contact a mortgage broker and learn what you will need for financing and how much house you can buy.

3) Find a good realtor in the area you want to buy in. Get referrals for the realtor from friends.

4) Spend a Saturday looking at several houses with your realtor. Decide which one you want and make an offer.

Good luck Chris.

 

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[Runum]

Oops, forgot about HUD foreclosure listings. You can check the HUD foreclosure listings online. Many of these houses have some problems that need to be corrected. Those problems may keep the house from qualifying for financing(FHA). However, HUD will sell to owner occupied buyers before investors. Many of those houses are a bargain and a way to capture equity at the buy. HUD will typically accept offers of around 87% of listed price.

Happy hunting.

 

[Runum]

I got so excited that I saw a RE question that I keep forgetting stuff.

Concerning a enlisting a buyers agent.... If you sign with a buyers agent, some seller agents don't like splitting the commission so they won't show their best listings. More experienced agents will work with each other. One way around this is for you to agree to pay your buyer's agent commission so that the seller's agent gets full commission. It may be worth it to get a killer deal. You have to make decisions, take your chances, and adjust along the way. It is all negotiable unless you get to a point where you are forced to make a bad decision.

 

[LightHouse]

I believe you have something like a 30 day period where you can pull multiple credit inquiries for mortgage pre-approvals and it only counts as / has the same effect as 1 inquiry on your credit report.

Very good to know, I was worried that if you hit too many it would look bad on your credit. But to tie this in with what Greg is saying about pre-qualification letters, do they expire? what if you dont find something in a few months??

No you are not limited to just the MLS listings. Many realtors hold their best listings away from public eye(pocket listings). If you are sure what your parameters are you can contact an agent and get started. They can put the word out that they have a buyer and other listings will appear. You could also check Zillow, Realtrac, Craigslist, and Trulia for listings. An agents fee is usually 6% paid by seller. If you enlist a buyers representative(realtor) the commission is split 50/50 paid by seller.

Prequalifying rules have changed in the last 2 years. Not many lenders will write the prequal letter you need because of potential mortgage fraud. You will have to follow your lenders/mortgage brokers lead.

In terms of financing... you can go to your neighborhood bank, big bank, or a mortgage broker. The local bank will probably sell your mortgage on the market. The big bank may hold or sell the note. The mortgage broker will shop your loan around for the best rates. Be prepared for the documentation dance. You will have to provide documents for everything.

The pocket listings and bank owned stuff was what i was trying to figure out. seems like the MLS is like autotrader, everything priced high to nego down to what they actually want. I want to get a deal(who doesnt) and hopefully get equity at the buy.

My suggestions...

1) Go to open houses with your wife. Decide what is important to each of you. Decide where you can compromise.

2) Contact a mortgage broker and learn what you will need for financing and how much house you can buy.

3) Find a good realtor in the area you want to buy in. Get referrals for the realtor from friends.

4) Spend a Saturday looking at several houses with your realtor. Decide which one you want and make an offer.

Good luck Chris.

Gotcha, this was pretty much or plan this far but i figured i would rather go in educated and do a creative buy for a better deal then do the normal these are the houses on the mls, settle for one and go with that, ya know.

Oops, forgot about HUD foreclosure listings. You can check the HUD foreclosure listings online. Many of these houses have some problems that need to be corrected. Those problems may keep the house from qualifying for financing(FHA). However, HUD will sell to owner occupied buyers before investors. Many of those houses are a bargain and a way to capture equity at the buy. HUD will typically accept offers of around 87% of listed price.

Happy hunting.

How do you get these listings? are they typically in worse shape then bank owned foreclosures? To me I wouldn't mind a foreclosure/shortsale if the damage was all appearance related stuff like paint and landscaping. But unless there was some sort of equity in the house that could be drawn on for some repair there is no way i could dump 20k into the house that is missing a kitchen or really torn up to make it nice again to live in.

I got so excited that I saw a RE question that I keep forgetting stuff.

Concerning a enlisting a buyers agent.... If you sign with a buyers agent, some seller agents don't like splitting the commission so they won't show their best listings. More experienced agents will work with each other. One way around this is for you to agree to pay your buyer's agent commission so that the seller's agent gets full commission. It may be worth it to get a killer deal. You have to make decisions, take your chances, and adjust along the way. It is all negotiable unless you get to a point where you are forced to make a bad decision.

You typically pay the buyer agent in cash? I've never even thought about this. would they keep their nicer homes because they know they will sell without a buyer agent and they could get the full 6%?

 

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[Runum]

HUDHomestore.com

Homes for Sale/U.S. Department of Housing and Urban Development (HUD)

Yeah, not all agents are the same. There are a lot of behind the scenes catty games. Red is a RE broker, she could give you better advice about RE agent/client relationships than I could.

There are other people here that know some tricks about getting around financing problems due to needed repairs.

 

[kwerner]

Very good to know, I was worried that if you hit too many it would look bad on your credit. But to tie this in with what Greg is saying about pre-qualification letters, do they expire? what if you dont find something in a few months??

Not sure if pre-qualification letters expire or not, but I believe if you have to have another mortgage related credit inquiry after the 30 days, it will just show up as an additional inquiry. That may or may not effect your credit score; which I tend to think it would.

 

[Rickson9]

I don't have a credit score and it hasn't impacted my ability for acquiring RE in Canada and the U.S.

It would probably make it problematic if I was seeking to borrow money.

To purchase RE I use the MLS and an agent. Nothing fancy there either.

As a disclaimer I am currently buying cash flow rental properties in Phoenix, AZ.

Best regards.

 

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[andviv]

In today's market I'd hit 4 or 5 banks and brokers to see what I can qualify for and see what terms they have. I'd also check pretty closely the rates and terms. It is very important to know how much house you can buy, and still has some reserves. It is pretty normal to go wild with fixes and furniture and stuff like that, especially with a new house.

After you get an idea on what you can afford and get the loan terms up front, I'd start making offers on houses I like.

I am constantly going to open houses, even if I don't have any intention to buy, I like to be aware of what's going on with the market and what nice features are there for properties. Kitchens and bathrooms are great selling points.

Call me, we can talk more about it...

 

[Red]

Hey Lighthouse- feel free to give me a ring as well, too much to type here (and every state is different)... I teach classes about how to protect yourself from Realtors, lol...

Runum is right, there can be a lot of shady sh*t behind the scenes... just make sure you know who you're working with, as a good Realtor is worth many times their commission.

My contact info is on FB, feel free to call if you like.

 

[LightHouse]

Not sure if pre-qualification letters expire or not, but I believe if you have to have another mortgage related credit inquiry after the 30 days, it will just show up as an additional inquiry. That may or may not effect your credit score; which I tend to think it would.

I'll have to dig around on it more. Thanks!

I don't have a credit score and it hasn't impacted my ability for acquiring RE in Canada and the U.S.

It would probably make it problematic if I was seeking to borrow money.

To purchase RE I use the MLS and an agent. Nothing fancy there either.

As a disclaimer I am currently buying cash flow rental properties in Phoenix, AZ.

Best regards.

Yeah, unfortunately i don't have 250k+ to buy property for cash so I will be looking to borrow money. $250k is entry level here.

In today's market I'd hit 4 or 5 banks and brokers to see what I can qualify for and see what terms they have. I'd also check pretty closely the rates and terms. It is very important to know how much house you can buy, and still has some reserves. It is pretty normal to go wild with fixes and furniture and stuff like that, especially with a new house.

After you get an idea on what you can afford and get the loan terms up front, I'd start making offers on houses I like.

I am constantly going to open houses, even if I don't have any intention to buy, I like to be aware of what's going on with the market and what nice features are there for properties. Kitchens and bathrooms are great selling points.

Call me, we can talk more about it...

I'll call you sometime this week!

Hey Lighthouse- feel free to give me a ring as well, too much to type here (and every state is different)... I teach classes about how to protect yourself from Realtors, lol...

Runum is right, there can be a lot of shady sh*t behind the scenes... just make sure you know who you're working with, as a good Realtor is worth many times their commission.

My contact info is on FB, feel free to call if you like.

Awesome! I'll give you a call sometime this week or so. Thank you! I'll take all the advice and learning I can get, the less i look like a noobie the better.

 

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[TMac]

LightHouse

I am a realtor and active investor. In fact I am working on finding a developer to design my website because of people like you. I have sellers call me everyday wanting to sell their house to me (my investment company) and I just can't keep up. They are very motivated sellers in foreclosure, house needs work, inherited, vacant, landlors ect and they want out. Realtors always tell them they need to put XXXX.00 dollars into the home in order to sell it. Most sellers just want out and don't want to put in any more money, plus if you purchase directly from the seller you can sometimes be very creative as in taking over payments, seller finance, ect.

So watch my website it will be a mostly free classifieds site for sales of foreclosures, motivated sellers and buyers contact them directly.

So how can you find a great deal now? My recommendation if you want to purchase an REO (bank owned home) then you will have to contact a Realtor. I would contact one that has listings of bank owned homes and tell them you want tem to represent you. That way they keep the full commision. If you are going to live in the home and it needs some repairs look for lenders offering a 203k loan. It is a govt backed loan that will hold repair money in escrow and also cover the purchase. Call a lender and get an idea of what you will qualify for before looking at homes, some bank owned homes require the buyer be prequalified the the bank that is selling the home ( however they cannot force you to use that lender) but they will pull your credit. If you are looking to purchase a shortsale (lender agrees to take less than is owed) be prepared to wait. Some banks take as long as 3-6 months to review all the information.

Overall the best deals out there are buying directly from the motivated owner/seller. First you have to find them and that is the hard part.
The next best thing is to contact an REO listing agent. Tell them you do not have an agent. Either they will represent you or they may prefer to have another agent in their office work with you. Let them know you are serious and may buy "multiple homes from them" even if you do not intend to.

good luck

(also I am looking for information on updating my website to make it user generated content/classifieds if anyone has advice for someone web illiterate)

Tracy

 

[TMac]

Looking over my post I forgot to mention the best deals to be had on MLS are homes that have been on the market for over 100 days. Have your realtor send you houses with this criteria

your price range
area desired
beds/bath if you have a minimum
as-is or bank owned
# of days on market
you can also ask for new on market if you intend to reside in the home. Most new fannie/freddie/hud listings are only offered to owner occupants for first few weeks.

If you visit Homesteps.com
Fannie maes site and Hud.gov you will see homes for sale owned by that entity. You can find a Realtor through their websites

 

[Red]

I would contact one that has listings of bank owned homes and tell them you want tem to represent you. That way they keep the full commision.

This is like getting a divorce and asking for the same attorney.

Overall the best deals out there are buying directly from the motivated owner/seller.

It depends on your state. Our best deals here in AZ are bought at the court house steps.

Let them know you are serious and may buy "multiple homes from them" even if you do not intend to.

I do not suggest starting off a business relationship with lying. But that's just me.

 

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[TMac]

Red

I must defend my post

Me:"I would contact one that has listings of bank owned homes and tell them you want tem to represent you." That way they keep the full commision."

You"This is like getting a divorce and asking for the same attorney"

I know amny top REO agents in my area. Most of them will prefer that the listing/buyer are in the same office. Some save the best deals for their own clients. Right or wrong (which I think is wrong) it's just reality.


I agree where you are located depends on how to find the best deals. However I didn't even consider that option for Lighthouse as he stated he is not a cash buyer and most foreclosure sheriff sales require cash or at least the full amount due within 24 hours or so.At least that is how it is here.

I never said lie. I said tell them you "may" purchase more. I have a client who just wanted to purchase 1 foreclosure to live in 3 years ago. He never intended to purchase more but now he has bought 3 houses and we are working on 4. It''s a cut throat game. All agents would like a long term relationship with any client. To get the best deals you have to have cash or connections or time. Everyone is looking for a steal. I work mainly with investors and they have very specific financial criteria-it's all business. Lighthouse if you are looking for a primary residence you probably care more about the area, repairs, price, layout ect. Depending on where you are there are opporunites out there for sure.

 

[Red]

I know amny top REO agents in my area. Most of them will prefer that the listing/buyer are in the same office. Some save the best deals for their own clients. Right or wrong (which I think is wrong) it's just reality.

If the agents in your neck of the woods operate like this, they are doing their clients and our industry a grave disservice. To place one's own convenience or preference ahead of what's best for a client is a gross ethical violation and, quite frankly, pisses me off. "Reality" is not playing the game, it's finding an ethical agent that will put your best interest as a client before their own endeavors to earn an easy paycheck.

Let them know you are serious and may buy "multiple homes from them" even if you do not intend to.

I'm not sure what your definition of lying is, but your quote above sure fits my definition. Maybe you prefer the term "intentional misrepresentation"? Because that's what the plaintiff's lawyer would come after you with in any court of law. It's also known as fraud.

 

[hatterasguy]

Most of the best listings are either not really for sale and word of mouth or pocket listings.

IMHO with a primary residence just find a place you like that's an OK deal. I may be off but I break my life up into business and personal, personal real estate to me is like buying a car I like it, I want it, I get the best deal possible and I buy it. If I overpay a bit from a business sense, oh well I'll get over it. Get a fixed rate mortgage, or pay cash and HELOC your cash back out.

When it comes to business I couldn't care less its strictly numbers, most of the stuff I buy I would never went to live in, and its bought in a way that wouldn't let me sleep at night if I did.

As for financing, don't overlook credit unions and smaller local banks. I have seen some screaming mortgage deals come out of credit unions.

 

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[phlgirl]

Lots of good advice here.

If it were me, I would spend some time hitting different real estate offices, asking for a 'Bank Owned' list. More and more, this is something realtors are prepared to give. We were out in NV this week and stopped by a Century 21 office because they had a sign on the door that read, "Ask us about our Bank Owned properties'. Upon entry, we were greeted with a stapled, multi-page, packet of bank owned properties. The realtor was able to give us an estimate as to what type of discounts the banks had been accepting, locally. Try to find agents who are also investors - these folks should know where to find the best deals.

I would not commit to a single agent.

Whether you like it or not, there will always be pocket listings. In our experience, these dont come easily - i.e., until you prove you are a serious, repeat buyer.

Financing - apologies to the mortgage brokers but I would recommend bank direct, unless you simply do not have time to shop around.

Have fun and good luck!