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I am a first time home buyer. My wife and I are currently looking. I have been dealing with a broker. Here is the scenario:
We found a house that we like, it is listed at $335,000. We were approved for a $315,000 mortgage. We offered $305,000 for the house. Our agent told us that we need a letter from our mortgage company showing that we were approved. I provided a letter. My agent then told me that we do not want to show the seller the maximum that we can afford, so a new letter was drafted to show a $290,000 mortgage( this is minus our 5% down). When the offer was presented, our agent used the letter that shows $315,000. The sellers agent then used this information to make a counter offer of $322,000. I was very angry because our agent told me numerous times that we should not show all of our cards, and yet they did. Now I feel that we have lost the small edge we had in the house. I also found that a house which is bigger in size sold for $297,000 on the same street and my agent had no idea about it.
My questions are: Is this normal? Am I being misrepresented? Can I file a complaint with the real estate commission?
I could have sworn that this was a buyers market!!!! Help.
It shouldn't matter what you qualify for on paper. Your offer is your offer. The sellers agent or sellers themselves would be crazy to try and use a prequalification letter as leverage.
If you and your agent discussed not using the letter reflecting $315K and they went ahead and did so against your wishes then yes that was wrong of them to do. If you feel compelled to do so and feel misrepresented why not discuss it with them first? If nothing comes up call their broker in charge at the office.
Your agent has to abide by your wishes. That is his responsibility too. Not that it changes things, but did he present the wrong letter mistakenly?
Correct. You don't want to show all of your cards and you really didn't. The prequalification letter has nothing to do with what the comps show the house is worth. Your agent can help correct the error by negotiating, according to your wishes, for you.
As far as the house that sold for $297,000 was it a FSBO and not listed? Are you certain about the condition of that house as compared to the one you are interested in. Bigger does not make it better if there are other issues with it. The price of that one is not the tell-all. If it was on the MLS, your agent should have known about it and used it as a comp if it sold within the time frame your area warrants (your agent will know if that is 6 mos. or less) and if it was truly a comp.
Is this standard practice? Doesn't this put the buyer at a disadvantage?
The agent screwed up. It happens. Go in again and offer $300K. Cite the $297 house. Nothing wrong with biting the apple again if you are not yet bound to a contract.
You may be able to do this even if you signed at $322. You will annoy the seller. Talk to your agent. If inside the due diligence period it can generally be done.
Your prequal letter shows that you are well qualified for the loan that you are choosing. Don't mistake the sellers greed-i-ness for anything other than what it is.
Be firm. I am willing to buy this place for this much based on what else is on the market, and what other buyers have paid other sellers.
I am getting it more that the agent screwed up and I have accepted that it is what it is. I guess it is just difficult to see how a buyer can have leverage if the seller has all of the information. If there were 2 buyers then the selling agency could always give the person with more of an approval preferential treatment. Just seems weird. (just venting)
In light of that, I have made a new offer of $310,000. I will keep everyone posted. I really appreciate the responses.
I am getting it more that the agent screwed up and I have accepted that it is what it is. I guess it is just difficult to see how a buyer can have leverage if the seller has all of the information. If there were 2 buyers then the selling agency could always give the person with more of an approval preferential treatment. Just seems weird. (just venting)
In light of that, I have made a new offer of $310,000. I will keep everyone posted. I really appreciate the responses.
Thanks again to everyone.
He may have screwed up but I doubt that was all of your cards. Your scenario doesn't have another buyer involved so that is not your situation. The seller has one offer in hand and that is yours. They would be foolish to play your prequalification against you since if you walk away, they are left with nothing. There are many buyers who qualify for more than what they want to spend. Keep up the negotiations if you want the house but don't be afraid to stand firm. And by all means, communicate with your agent. He is representing you and your wishes. Best of luck.
I am getting it more that the agent screwed up and I have accepted that it is what it is. I guess it is just difficult to see how a buyer can have leverage if the seller has all of the information. If there were 2 buyers then the selling agency could always give the person with more of an approval preferential treatment. Just seems weird. (just venting)
In light of that, I have made a new offer of $310,000. I will keep everyone posted. I really appreciate the responses.
Thanks again to everyone.
Stop...you have all sorts of leverage. You can buy any house...they have only the one to sell.
My wife and I are still looking so we have not been discouraged by the events of the last few days. It is still a buyers market and I intend to find something soon.
I have still not heard from the sellers regarding my last offer. Hopefully I will know by the end of the day.
Thanks everyone. The advice and kind words help.
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Thanks
Best of luck.
