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I get you Natas and Mike. I am one of those people that never pay for anything on credit; debit card/cash only. I also, when I had the money, paid extra every month to pay my mortgage down. I had friends call me crazy for that - and now that I am out of work, and could SO use the extra money, I could KICK myself.
Everything to do with real estate is a lesson for me. That is why I asked. I find the way Natas handled her purchase VERY creative and gave me pause for thought. And Mike - you are SO right with your comment of "how they work their finances and budget after I get my proceeds is strictly their business". It definitely should not be my concern.
I guess that TV program worried me since I think that the way some of these young people look to purchase their homes concerns me. I think in large part it is the reason we (the country) got into the mess we are in now. People wanting to buy properties that in the "real" world of their actual budget they could not afford; mortgage brokers not doing proper due diligence on the financial safety of their borrowers; and big banks coming up with "creative" instruments to tempt people into the craze of "I must own my own home if I am to appear to be a success".
I was offered a lot of those instruments and terms. I could certainly have (at the time) gotten a bigger, more expensive place - but the old, careful (read: cheap!) me kicked in. And since I was dumb enough to buy at the height of the real estate craze, like so many, I am just glad that I did it within a range I could realistically afford. Even if it meant after the closing that I could not buy a gallon of milk for 1 1/2 weeks until my paycheck came in!
Thanks for all the good insight. It's a great learning experience for me and I appreciate it.
Truly, in the big picture, I think you are good to worry about people, young or not, who take on too much debt. It is amazing the burden people assume in their financial lives with little planning or forethought.
I sincerely commend you for that thought.
But, working the cash angle on a purchase helps a lot of responsible people.
Actually, I don't care for 100% financing of homes as I think it is a trap unless the buyer has solid cash reserves. But, it seems to be the way of the world.
A smart seller looks at a Net Sheet and negotiates for a Net amount at a price that an appraisal will support.
Sellers who need to control both sides of the transaction work a lot harder than they should to sell property.
I would not hesitate to offer closing costs assistance to buyers of my home, even as a marketing ploy, as long as I netted a satisfactory amount. How they work their finances and budget after I get my proceeds is strictly their business.
But, my goal would be to get my home sold and closed, and pick up my proceeds. Other folks have other goals, I guess.
100% agree.
Also, as a seller, if you want the property sold, you need to consider all aspects of a sale and even contributing closing costs.
If you aren't in a hurry to sell, and want to be picky about who buys your house, then I guess you could rule out most buyers and say no to closing help. But there really is no reason for that.
When I sold my home in Maryland last summer (took a huge blood bath in terms of cash lost). I gave the sellers $10K in closing assistence. I even advertised it in the MLS as part of my realtor's suggestion. I was able to unload the property in 47 days. Maryland has very high closing costs, especially when you are trying to sell a $600K and up home.
When you sell a home in this market, you have to see how "motivated" a seller is. In my case, I had already moved down to Florida and purchased another home in 2009.
Home was empty after my renters moved out. Mortgage/taxes/principal/interest/HOA etc was costing me almost $4K a month. The longer that home sits on the market, the more money I will lose. You cut your losses as a seller in this market and move on (if you have the financial means).
My neighbors home was on the market before mine and they had priced it $25K more than my listing (really $35K when I threw in the $10K in closing costs).
Guess what? They still can't sell after 11 months. Prices are still dropping on the higher end homes (because we live in a newer neighborhood with still new builder activity). I see they are now trying to list their home as a short sale (they are trying to sell it $25K less than I sold mine).
In this market, you have to be agressive as a seller (if you truly want to unload the home). Offering to pay closing costs will attract buyers. Less money needed at closing really helps with buyers.
My market is 85% VA loans and prices are stable. Young G.Is don't often have enough for closing costs but have no trouble making payments. It is customary in my area for sellers to pay some closing costs. As buyers agents we almost always get all closing costs paid for especially with new construction.
Most of the time, the houses being bought on those shows on HGTV are regular sales, therefore, when people are trying to sell their homes in this buyer's market, they cough up the 4%-5% in closing costs.
Now in an REO property, you almost never get the bank to help pay closing costs. And never in a short sale.
I wonder in the cases of homes being sold on HGTV get some kind of wiggle room in negotiating since it's on TV
Most of the time, the houses being bought on those shows on HGTV are regular sales, therefore, when people are trying to sell their homes in this buyer's market, they cough up the 4%-5% in closing costs.
Now in an REO property, you almost never get the bank to help pay closing costs. And never in a short sale.
I wonder in the cases of homes being sold on HGTV get some kind of wiggle room in negotiating since it's on TV
I have had banks pay closing costs on REO's and shortsales. Not common but it happens.
It should all about the Net amount. HUD is very good at this, agents can get up to 5% and closing cost up to 3%. you can play with all the numbers you want, highest net wins.
Now in an REO property, you almost never get the bank to help pay closing costs. And never in a short sale.
This use to be true a couple years ago. Now, most banks will pay closing costs as long as it's in the initial offer and still NETs what the bank "needs."
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