Buying a House

[LETSGOBROWNIES]

5 minutes ago, MWil23 said:

I'm REALLY betting on it not flipping in the next 6-12 months.

I'll be honest, I felt TERRIBLE for the buyers until the last 48 hours. They were begging the appraiser to reconsider and honor the original agreement. That said, giving us 2 ultimatums and the real kicker, that we need to be out of our house at closing (April 26) instead of the original agreed upon date (a full week later, giving us another weekend to move) was the straw that broke it as well. Finding a place to live, having to move on Easter weekend and not being given another weekend, lining up housing in under 2 weeks...all of that was just not feasible, to go with taking a $3,500 bath. I realize that for most people, $3,500 isn't a lot, but for us, that's a decent chunk of change and would go a long way with our future home.

That’s certainly enough money to make a difference, especially with the moving situation.

[TENINCH]

My house is for sale in Georgia. No traffic yet but I think that when schools let out it'll go quick. 5 bedroom and 3 full baths for a family under 300k is hard to find. 

[MKnight82]

2 hours ago, MWil23 said:

Well, our pending situation fell through.

Long story short, the appraisal on our house that we are selling came back $9,000 under what the agreed upon amount was. After doing some digging, I found out that the buyers were FHA loan approved, and the appraisal was based upon their FHA status, which is apparently very rigid and strict. Through a series of counters that fell short of the original agreement by $3,500, they then decided to give us a series of deadlines and ultimatums, including being out of our own house a full week earlier than originally agreed. We stood firm and walked away. Our realtor communicated to us that they were "devastated". We said when we put our house up that we had a bottom line figure and if we didn't get it that we'd go next year. We put $5,500-$7,000 towards the principle/equity in our home each year since we have under 10 years left on our mortgage, so if the appraisal is the same in a year and the market is still good (let alone white hot like it is now), we will make out better or at worst break even. If the appraisal comes back better (it probably will), then we make out MUCH better. We don't "HAVE" to sell and can delay building our new home for a bit, so we have the bargaining power.

We can get another appraisal done, but that won't impact THESE buyers' appraisal. Also, this FHA appraisal is stuck with our house for any and all FHA buyers for the next SIX MONTHS. So, we can get a different appraisal for a different loan (conventional, VA, etc.) and go through this process again, or demand that another FHA buyer bring cash at closing (unlikely if they are going the FHA route to begin with), or pull our house from the market and try again in 6 months to a year. For us, I'm not taking 90 cents on the dollar in the greatest market our country has seen...maybe ever.

They still haven't sent over the official termination paperwork, which I find interesting.

Any thoughts at all @theJ or @ramssuperbowl99? Others who have been through this a bunch feel free to respond as well. @LETSGOBROWNIES

That's all on the buyer, I wouldn't feel bad at all if I were you.  Honestly if they couldn't come up with $9,000 to get the deal done they shouldn't be buying a house.  

[LETSGOBROWNIES]

11 minutes ago, MKnight82 said:

That's all on the buyer, I wouldn't feel bad at all if I were you.  Honestly if they couldn't come up with $9,000 to get the deal done they shouldn't be buying a house.  

It would have been an additional 9k to the agreement, not 9k total.

[MKnight82]

1 minute ago, LETSGOBROWNIES said:

It would have been an additional 9k to the agreement, not 9k total.

I know that.  He said the appraisal came in 9k under the contract amount, so the buyer in order to close would have had to pay an additional 9k in cash to buy the house.  

[LETSGOBROWNIES]

14 minutes ago, MKnight82 said:

I know that.  He said the appraisal came in 9k under the contract amount, so the buyer in order to close would have had to pay an additional 9k in cash to buy the house.  

I mean, 9k is potentially a lot to come up with in addition to the down payment when trying to maintain cash reserves for emergencies, moving, new home needs, etc.  Hell that could be more than their down payment if it’s an FHA loan.

To say that unless they should just cut that check (or be able to) to buy a home seems to be a pretty high standard for home ownership.

[MWil23]

57 minutes ago, LETSGOBROWNIES said:

I mean, 9k is potentially a lot to come up with in addition to the down payment when trying to maintain cash reserves for emergencies, moving, new home needs, etc.  Hell that could be more than their down payment if it’s an FHA loan.

To say that unless they should just cut that check (or be able to) to buy a home seems to be a pretty high standard for home ownership.

Yeah, @MKnight82

What we did is say that the money has to come from SOMEWHERE. Basically, it could mean:

1. Cash at closing

2. Paying $9,000 worth of realtor's fees and tying that into the mortgage

3. Eating some of the cost of things like title, home warranty, etc. and bringing some cash

Really ANY combination to make up the difference. Their lender is going to cut us a check after everything is subtracted/deducted, so I don't care where that comes from.

[theJ]

@MWil23 You got some real good information since your last post.  If someone comes forward with a conventional loan, does the appraiser have access to the FHA appraisal too?

Unless your realtor thinks differently, i don't see why you wouldn't put the property back on the market now, and see what happens over the next few months.  You can just decline any FHA offers.  If no fish bite, then you take it off the market until next year.

I don't see the market changing much either from now until next year.  There just hasn't been enough new construction to keep up, and so we're seeing low inventory in most areas.  Even if it does, you shouldn't kick yourself for taking your time and not making snap decisions on probably the largest asset you own.

Also, it's ok to feel bad for the buyers.  They're people too.  But this is a business transaction, and you made the right call.  That's a lot of money to eat in this housing market.

[theJ]

5 hours ago, LETSGOBROWNIES said:

I mean, 9k is potentially a lot to come up with in addition to the down payment when trying to maintain cash reserves for emergencies, moving, new home needs, etc.  Hell that could be more than their down payment if it’s an FHA loan.

To say that unless they should just cut that check (or be able to) to buy a home seems to be a pretty high standard for home ownership.

Tough situation all around.

Personally i set my own standards that high.  But i can understand others might not.

[milanb]

On 12/04/2019 at 10:03 AM, skywindO2 said:

I don't know how it is in other markets but I keep seeing reports about how their's low inventory in the Twin Cities. It's really frustrating but it's nice that there's some reports out there letting me know that it's not just me feeling like there's nothing out there. 

I don't know what it's like in the US, but here in Canada we have unscrupulous real estate agents who feast on hot markets. They will create bidding wars artificially by purposely setting the list price well below market value, then accepting bids only in a specified time period.

It sometimes gets crazy, especially if the property is in a trendy neighbourhood. You get bully offers, escalator clauses and and idiot buyers waiving home inspection conditions. It is all horribly unfair to the buyers, as the seller is under no legal obligation to disclose any of the other offers and can simply reject all offers if he doesn't get the price he wants, even if some of them are over list.

Edited April 16, 2019 by milanb
clarity

[Daniel]

58 minutes ago, milanb said:

I don't know what it's like in the US, but here in Canada we have unscrupulous real estate agents who feast on hot markets. They will create bidding wars artificially by purposely setting the list price well below market value, then accepting bids only in a specified time period.

Did you really just assume that Canada, nice, polite Canada, has predatory agents, but the US doesn't?  This is America, dangit!  No one out-predatory-markets America!

On an unrelated note, finally hearing back from my seller tomorrow.  At least I should finally know whether this deal is going through or not.  I will say that, even though we're saving a lot of money buying directly from a seller, I imagine there would have been way less headache and this deal would have been already done if an agent was involved on either side.

[Shanedorf]

17 hours ago, theJ said:

Tough situation all around.

After the housing bubble, one of the things that happened is that the new appraisal rules were designed to make sure there wasn't a cozy relationship between mortgage brokers/banks and their preferred Appraisers. On the surface, there's some value in doing that - it makes it harder to cheat the system.

On the other side of the coin, what happens is that you get "random" appraisers assigned that don't really know the specific neighborhoods. We saw that during a couple of re-fi's we did over the years. The appraiser was uninformed about the specifics of our area and the comps he pulled were a poor fit.
I'd want somebody else to look at that appraisal and offer an opinion. Large banks/mortgage brokers often use a Review Appraiser who reviews a certain number of appraisals to see if they match up with reality. Not sure what's possible as a home owner - but even if you lose the current buyer, at least you'd know how this appraisal stacks up.

Each appraiser sees things differently and may have missed that you have a city view or forgot that the remodeled kitchen had re-faced cabinets vs completely new cabinets. Or they missed that you're in a superb school district or a crappy school district etc. There's many many line items in an appraisal, if they miss on a couple of those line items, $ 9k can happen pretty easily and the value pendulum swings back and forth over time

[milanb]

36 minutes ago, Daniel said:

Did you really just assume that Canada, nice, polite Canada, has predatory agents, but the US doesn't?  This is America, dangit!  No one out-predatory-markets America!

On an unrelated note, finally hearing back from my seller tomorrow.  At least I should finally know whether this deal is going through or not.  I will say that, even though we're saving a lot of money buying directly from a seller, I imagine there would have been way less headache and this deal would have been already done if an agent was involved on either side.

I wasn't assuming anything.

It was simply a case where I really don't know what the real estate laws are like in the US. I would imagine that they vary by state?

[theJ]

3 hours ago, Daniel said:

On an unrelated note, finally hearing back from my seller tomorrow.  At least I should finally know whether this deal is going through or not.  I will say that, even though we're saving a lot of money buying directly from a seller, I imagine there would have been way less headache and this deal would have been already done if an agent was involved on either side.

Yeah one the selling points of an agent are that they manage the whole process.  There are obviously parts they can't do, but they know the timing of the whole thing and will push all parties when necessary.

[theJ]

Just got the appraisal back on the house we're purchasing.  Came in 3k higher than our renegotiated price (after inspection), but 9k lower than our original purchase price.  And while they used comps to come up with the appraised value, they weighed one particular property out of the 5 very heavily (one of the lower priced homes).  1/5 of the five they didn't even use at all.

Oh well, all that matters is that it was just high enough.  Now we can set a closing date.