Home Buying Issues (Keller, Pecan Grove, Howe: sale, real estate, insurance)

[jfg06001]

Maybe someone with some good real estate knowledge can help me understand what is going on because I am so confused right now.

I have been searching for homes in the Pecan Grove area with the help of a buying agent and I found one I loved. I made a bid at asking price and was told the sellers accepted. When a day went by with no paperwork signed, I found that someone came in at the last minute and bid asking plus closing costs. I was devastated of course because I am a first time buyer and this was exciting for me. Yet, weeks later this home remains active on the market. A friend of mine called in to ask about the home and they said it was available and scheduled a showing. I called and the listing agent who is at the same company as my buying agent said the sellers had some medical issues and may decide not to sell.

So a month later my buying agent calls and asks me to look at a house that is pre market. I look at that one and it was great. I loved it. I bid 3000 over asking plus closing costs to my buying agents suggestion. I am told this is an excellent offer and things look really good. Excited again. I hear the next day, someone came in and bid a mostly cash offer and that property is no longer available. Devastation again. Now it's not just the attachment I keep getting, but just the fact I can not get a house. I go to HAR today, and I see that exact home has a scheduled open house tomorrow.

I don't know what is going on. I don't want to jump to conclusions so I wanted to get some advice first. I am a well qualified buyer, married and in my early 30's with two steady household incomes. Why doesn't this agency want to sell me a house?

[cheryjohns]

I am confused, too. Are you saying that your offer on house #1 was asking PLUS you needed closing cost contribution? If so, you didn't really offer asking price - you offered asking price minus the closing costs amount. Is that what happened? Then got out-bid? Then it sounds like that one fell through, somehow. Was it during the option period because of inspections? Too many factors I can only guess, but your agent should be able to give you more of the back story, knowing which house.

Sounds like you were out-bid on second house, too. Was it vacant? If so, listing agent might have gone ahead (even under contract) and allowed a new agent to hold an open house there, to try and get buyers for other houses. I am sure that open houses might have resulted in a buyer for a particular house sometimes, but it's rare. Mostly a device to help new agents. If I were a seller, I would never allow an open house at my house, unless it was vacant. Horror stories out there about thieves working open houses vs. low probability of actual buyer walking in. However, that's another topic.

If you are requesting closing costs and you don't really need them, present an offer without it. Closing cost contribution from seller looks like a weak buyer, even if offer price is raised to accommodate it.

[dd1153]

what type of financing were you doing?

[dd1153]

the reason I ask is because I've heard of this. some buyers who are VA and FHA writing offers are not attractive to sellers.

Here is why. VA appraisals are much more thorough and FHA appraisals stick with the property (I believe 4 months). If a seller has a very high listing price and a buyer willing to pay it.. and it does not comp out with surrounding properties, then usually the buyer will need to come out of pocket for the difference, or the seller will need to come down.

On FHA loans, these buyers typically do not have the $$$ to do this. Also the appraisal will stick for X months hurting the sale for any other buyers.

On VA loans, they usually know up front it won't appraise on a VA appraisal.

I've had a few people tell me specifically that the sellers _ONLY_ accepted offers with conventional financing.

If this is the case for you, FHA or VA, I would suggest doing 5% down conventional if you can.. and your offers might be looked at differently (more attractive). However, you will get less closing cost contribution from the sellers.

[cheryjohns]

Originally Posted by dd1153

the reason I ask is because I've heard of this. some buyers who are VA and FHA writing offers are not attractive to sellers.

Here is why. VA appraisals are much more thorough and FHA appraisals stick with the property (I believe 4 months). If a seller has a very high listing price and a buyer willing to pay it.. and it does not comp out with surrounding properties, then usually the buyer will need to come out of pocket for the difference, or the seller will need to come down.

On FHA loans, these buyers typically do not have the $$$ to do this. Also the appraisal will stick for X months hurting the sale for any other buyers.

On VA loans, they usually know up front it won't appraise on a VA appraisal.

I've had a few people tell me specifically that the sellers _ONLY_ accepted offers with conventional financing.

If this is the case for you, FHA or VA, I would suggest doing 5% down conventional if you can.. and your offers might be looked at differently (more attractive). However, you will get less closing cost contribution from the sellers.

Yes. This!

To further make it less attractive, FHA and VA will often have issues about a property that conventional won't, necessitating work to be completed by seller on the house that really was not needed, in order to comply by their rules. Sellers see those buyers as a PITA and prefer an identical offer in conventional. Cash buyer most attractive, then conventional loan buyers. You can bid over but they may pick the cash buyer over you anyway. Same if the other buyer is conventional, and you are FHA or VA.

We are only guessing at your details, since they weren't included.

[jfg06001]

Well, the first offer was in fact asking minus the closing costs as my buying agent suggested. I was also getting an FHA loan per her suggestion. She said it was a great offer and the sellers agreed, but then they never signed. Later when my friend called Keller Williams, they said they had an offer, but the person backed out because of the closing date and then scheduled a showing with him. I asked my agent who works at the same company and she said that the family had health issues and might not sell, but they would let me know as soon as they hear something. Unfortunately, I heard today from another agent, that property signed a contract today. We suspect the selling agent had her own clients she shopped the house to.

However, I am not sure how lying to me benefitted them at all unless I am just not a worthy buyer to them. I know I am just a teacher (5 years now), but I have good credit and a good amount of money sitting in savings, more than the 3.5% FHA loan requires. I really felt like I was lied to a lot and not really treated like a person.

I will take the advice to not do an FHA loan to try to attract more buyers, however, I will not be working with this particular agency anymore.

Thank you all for your advice!

[diggity101]

In a competitive market, FHA can be the kiss of death, especially if your competition is going the conventional route.

If you can qualify for conventional, I would definitely recommend going that way.

[Bozydeaux]

Originally Posted by diggity101

In a competitive market, FHA can be the kiss of death, especially if your competition is going the conventional route.

If you can qualify for conventional, I would definitely recommend going that way.

I couldn't agree with this more! I sold my old home in Upstate NY to a couple using FHA. By the time I closed on that house, four weeks later than originally planned, I walked away knowing that I would never again accept an offer from someone using FHA as their financing. It was a total PITA for me as the seller.

[cheryjohns]

Never do FHA when you can do conventional, beyond looking better for a seller. With good credit, you can be creative on conventional if you do not have the full 20% down to escape PMI. Look at PMI as a monthly insurance premium for your lender, but you get the privilege of paying (?). You can do a 80% loan/15% loan/5% down. That 15% loan will be at a higher interest rate than the 80% - but there is no PMI, which comes out to be cheaper. On FHA, you pay PMI for the life of the loan. Depending on the price of the house, that amount is substantial. Never roll in closing costs if you don't have to do that.

You were set up to look like a weak buyer, when it was not even necessary. I doubt malevolence - more like dumbness.