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Hello Everyone, I was approved for a $200,000 loan and requested max seller concessions which came up $10,000 to cover closing costs. The lender then gave me a letter for a $210,000 approved mortage, with the condition that the seller covers the closing costs.
I was reading elsewhere that such condition is not very attractive to the seller when making offers. But my question is, If I will eventually end up paying for the closing costs through the loan, which the lender will pay to the seller for the home, why wouldn't the seller consider my offer as a good one?
The advice I was given was to make a higher offer to make it seem attractive, if the home is being sold for less than my approved loan amount.
Any suggestions or opinions will be greatly appreciated.
Hello Everyone, I was approved for a $200,000 loan and requested max seller concessions which came up $10,000 to cover closing costs. The lender then gave me a letter for a $210,000 approved mortage, with the condition that the seller covers the closing costs.
I was reading elsewhere that such condition is not very attractive to the seller when making offers. But my question is, If I will eventually end up paying for the closing costs through the loan, which the lender will pay to the seller for the home, why wouldn't the seller consider my offer as a good one?
The advice I was given was to make a higher offer to make it seem attractive, if the home is being sold for less than my approved loan amount.
Any suggestions or opinions will be greatly appreciated.
Some sellers have strong superstitions about paying buyer closing costs.
They want to work both sides of the table and socially engineer the terms they respect.
So, yes, for some, asking for closing costs is a disqualifier.
Also, inflating the contract price increases the risk of the house not appraising at contract price. The seller won't want to be haggled to reduce the price to meet appraisal when you have built your costs into the contract.
If there is another "clean" and acceptable offer, you probably lose.
Some sellers have strong superstitions about paying buyer closing costs.
They want to work both sides of the table and socially engineer the terms they respect.
So, yes, for some, asking for closing costs is a disqualifier.
Also, inflating the contract price increases the risk of the house not appraising at contract price. The seller won't want to be haggled to reduce the price to meet appraisal when you have built your costs into the contract.
If there is another "clean" and acceptable offer, you probably lose.
Thank you for that information. I dont understand the part of the appraisal from what I looked up. Does the appraisal come after a contract has been formed by the buyer and seller? If so, then whats the point of putting up an offer in the beginning before an appraisal has been done?
Do buyers start their offers lower than the listing price? Im thinking buy low, sell high.
I'm also thinking what if the offer is lower than the appraised value and the seller accepts before its appraised. Does the buyer lock in that amount, no matter if its appraised at a higher value?
What do you think could get me into a good position to have my offer accepted? I know its not much to work with, but I do need to move as soon as I can from where I am currently at.
I can put the closing costs, but that would leave me with vitually nothing. I dont think thats the best idea either. I have looked up different ways to get the closing costs, I have tried to get information on closing grants to no avail, althouth seller concessions keeps coming up.
Thank you for that information. I dont understand the part of the appraisal from what I looked up. Does the appraisal come after a contract has been formed by the buyer and seller? If so, then whats the point of putting up an offer in the beginning before an appraisal has been done?
Do buyers start their offers lower than the listing price? Im thinking buy low, sell high.
I'm also thinking what if the offer is lower than the appraised value and the seller accepts before its appraised. Does the buyer lock in that amount, no matter if its appraised at a higher value?
What do you think could get me into a good position to have my offer accepted? I know its not much to work with, but I do need to move as soon as I can from where I am currently at.
I can put the closing costs, but that would leave me with vitually nothing. I dont think thats the best idea either. I have looked up different ways to get the closing costs, I have tried to get information on closing grants to no avail, althouth seller concessions keeps coming up.
Thanks again.
What has your lender told you about appraisal? What has your agent told you?
What strategies has your agent explored with you?
Your appraisal has ONE purpose:
It enables your lender to determine how much they will lend you, based on your loan application parameters.
Sellers don't care about the appraisal at all until you pester them to lower the price because you cannot get the loan you want.
Prior to contract, your agent should do a pricing analysis, a comparative market analysis to help you arrive at an offer price that will concur with an appraisal opinion for your loan.
These are great questions for your lender and agent.
OP: I suspect your agent is gambling with YOUR MONEY. He is gambling the home is going to appraise for 10K more so the seller can net the same as you paying full price. So what happens when the appraisal is low? You will be expected to put down the difference between appraised value and the sales price, plus the down payment based on appraisal. If this is the way he is working, under no circumstances waive any appraisal contingencies.
What has your lender told you about appraisal? What has your agent told you?
What strategies has your agent explored with you?
Your appraisal has ONE purpose:
It enables your lender to determine how much they will lend you, based on your loan application parameters.
Sellers don't care about the appraisal at all until you pester them to lower the price because you cannot get the loan you want.
Prior to contract, your agent should do a pricing analysis, a comparative market analysis to help you arrive at an offer price that will concur with an appraisal opinion for your loan.
These are great questions for your lender and agent.
Thank you for the insight. I just started working with a real estate agent and will soon look at houses. I havent had a good chance to talk more about my options to the agent. As far as the lender goes, He answers my questions, but thats about it, doesnt go about a definitive strategy or anything too indepth.
I was looking online to see if there was a first time homebuyer adviser, someone that can coach me through the process, but it seems not that many exists and alot of them are tied to programs which may take a while to complete, more time than I have to look for a house.
In the meantime Ive started making a list of more questions and added the ones you mentioned as well, to ask both the agent and the lender during the process. To make sure I dont put myself in a position that favors everyone, but me.
OP: I suspect your agent is gambling with YOUR MONEY. He is gambling the home is going to appraise for 10K more so the seller can net the same as you paying full price. So what happens when the appraisal is low? You will be expected to put down the difference between appraised value and the sales price, plus the down payment based on appraisal. If this is the way he is working, under no circumstances waive any appraisal contingencies.
I dont have an exact home Im working with now. But this is good to keep in mind, just in case I see something like this come up.
Thank you for the insight. I just started working with a real estate agent and will soon look at houses. I havent had a good chance to talk more about my options to the agent. As far as the lender goes, He answers my questions, but thats about it, doesnt go about a definitive strategy or anything too indepth.
I was looking online to see if there was a first time homebuyer adviser, someone that can coach me through the process, but it seems not that many exists and alot of them are tied to programs which may take a while to complete, more time than I have to look for a house.
In the meantime Ive started making a list of more questions and added the ones you mentioned as well, to ask both the agent and the lender during the process. To make sure I dont put myself in a position that favors everyone, but me.
You need a new lender, one who has patience and time for a first timer. You deserve guidance.
OP: I suspect your agent is gambling with YOUR MONEY. He is gambling the home is going to appraise for 10K more so the seller can net the same as you paying full price. So what happens when the appraisal is low? You will be expected to put down the difference between appraised value and the sales price, plus the down payment based on appraisal. If this is the way he is working, under no circumstances waive any appraisal contingencies.
Possibly.
If the OP cannot get clarity from agent and lender, it might be just fine to clean house and start over.
Possibly.
If the OP cannot get clarity from agent and lender, it might be just fine to clean house and start over.
Agreed. We are seeing some crazy stuff being written out there. One of my buyers last weekend was one of 22 offers. I think we only won because we had a full written loan commitment in hand, subject to the price not going over 515K. But in that offer, they agreed (in addition to their escalation clause) to pay up to 10K over the appraised value.
Other contracts in our office, include the appraisal contingency completely struck from the contract, right along with the finance contingency. What about home inspections? Some are not even review the offers until the buyer has completed a home inspection.
Crazy times for certain.
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