01-28-2013 03:59 PM
I am having a really hard time buying a home, first time buyer by the way. My agent told me that no one wants to accept an FHA loan and that I need to go conventional (this is after making an offer on 1 home). So I get a preapproved for a conventional loan with 5% down and now I am being told that the competition is putting down 20-40%, which makes them stronger buyers. Also, when I see a short sale on the market and ask him to look into it he tells me he is not getting a response from the listing agent. On another short he said it has been sitting on the market for 3 months so there must be something wrong with the short sale (this is without even checking with the listing agent). I am starting to feel so defeated because from what I am told by my agent is that there are NUMEROUS buyers looking at the same houses in the same areas that I am, however they are putting way more down so I do not have a shot at all (his words not mine). Is the competition really that thick out in Granada Hills/Northridge/North Hills area in the $370k range, and if so do I have any chance in hell of getting someone to accept an offer if I am only putting 5% down? A standard sale come on the market 2 days ago and I was told there’s over 2 dozen offers on it already (it is now listed as back up offers accepted), again I was told I do not have a shot at all because others are putting down 20-40% and that the seller would not even look at my offer, therefore he didn’t write it up. Then I was brought to a house that I liked (again another standard sale), but was not happy with the location of the power tower (tower was right behind the backyard), I was told lets write an offer on it before it is taken. I expressed plenty of times that I did not like the tower in the backyard while he was showing me the house! I felt like I was being pushed to buy something I didn’t like. I really wanted to like it, but I just didn’t get that feeling. He keeps pulling homes in the same area of Northridge, that we have toured before and I didn’t like! He pulls houses on a busy main street, when I specifically told him I wanted a home on a quiet street in a neighborhood fit for a family. I do not have any kids yet, but my fiancé and I plan on starting a family after we are married. He is only showing me standard sales, and does not seem to be open to helping me get a short, foreclosure etc. I am patient and can wait for the bank to come back…which I told him! I am so frustrated, confused, and feeling a little depressed that I am looked at as a weak buyer (not in his words, but pretty much this is what he is telling me when he says people with 20-40% are stronger buyers). Is it normal for an agent to be like this or do I have a bad one? Am I being too sensitive?
01-28-2013 04:23 PM
i guess, agent may be a bit pushy to get any your contract accepted, but his view that you don't stand much chances for most listing may be just right.
i don't think your agent would be too disappointed if you fire him on the other hand, so feel free to try with another agent...you won't know for sure whether you stand a chance till you've tried more and your chances of trying with current agent do not seem high.
01-28-2013 05:42 PM - edited 01-28-2013 05:45 PM
you're not being too sensitive. all our better offers were turned down because agents didn't want to work with fha loans, but every agent got back to ours, and still does. that being said, we were offering on condos - houses aren't so difficult to work with on fha loans. lots of people on this very board have bought short sales, some with fha loans. we've never had an agent not respond to our two favorite agents ever.
short sales are a pain in the neck, but i wouldn't work with an agent who won't show them to you at all and only shows you stuff you don't want. we absolutely love our current agent, but none of the four we've worked with have been uncooperative or made us feel bad.
btw, we had several places willing to accept our 5% conventional offers, so i don't think you always need to have 20% or better down. i think part of the trick here is to be realistic about what you can afford. at your price range and the areas you want to live, you're going to need to make some compromises or have LOTS of patience and work with short sales. keep in mind that listing prices don't mean anything - my husband's favorite place listed at $249,000 and closed at $305,000.
and don't give up! you will find your house, and it'll be a much better process if you work with someone you feel good about!
01-28-2013 09:21 PM
HI First Timer,
Realize that FHA buyers cost sellers more closing costs. By law, the seller has to cover a part of your closing costs. Therefore, all else equal, a seller would always prefer a conventional offer for this reason. You will need to provide the highest bid by 1-2K to have a chance, or be the only bidder.
Your agent is worthless, please change immediately. Write down what you expect of an agent, discuss it with your next prospect and move forward. If the second one doesn't work out, try another, and another. Until you find someone you can work with. Also don't be afraid to offer on several properties at the same time. Some agents will tell you that you can offer only on one property at a time. But without other prospects lined up, you become emotionally attached to that one and are more liable to pay too much or make unnecessary concessions. Sellers are allowed to entertain multiple offers and negotiate with multiple buyers, why shouldn't you? Remember, you're the one with the $, so you drive the bus. Everyone who thinks otherwise just needs to get off.
01-28-2013 10:50 PM
I'm a real estate broker in Los Angeles and I personally buy and invest in real estate on the side - the majority of my investments have been short sales.
I won't comment on the capacity and competency of your current real estate agent, nor his sales tactics. However, as you see, there is fierce competition in this price range - more so than other markets. From my experience, homes under $500,000 in Southern California attract the biggest pool of buyers, between investors and owner occupants. As an investor, it's a no-brainer to submit an all cash offer, blow out the competition, and close the deal quick. Banks love this and, most importantly, I love this.
Although as an agent also brokering deals in a similar scenario, it is VERY difficult to represent a client getting a loan when we are competing with all cash offers. I do my best to educate my clients as to the best strategies to get our offer accepted - that's PRIORITY. Once you have an offer accepted, you can better control the deal. I tell my clients to submit an offer significantly HIGHER than the all cash offers. If a $500,000 listed property is getting all cash offers at $510,000 - I would recommend my client submit a highest best and final offer at a price point where they wouldn't be disappointed if they lost it if someone else paid $1000 more - for instance, submitting an offer at $550,000 with a loan. While banks obviously favor an all cash offer, if there is enough profit and potential in a loan offer (especially backed by a strong buyer) above asking, they would consider them equally and may even favor a higher offer with a loan.
In other words, when you're competiting with all cash offers, you must offer significantly higher than the all cash offers. Once you get an offer accepted, perform your inspections and re-negotiate with the bank to reduce the price. From there, you can better control the price in your favor.
I hope this helps, this has been my experience in the last few years.
01-29-2013 01:26 PM
If I were your buyer's agent, I would ask to be released from the Agency Agreement.
Trying to buy with 5% down in a hot neighborhood is nearly impossible.
I have CASH and I've been looking for a house in the SFV for three years.
In your same price range.
And I'm a REALTOR.
And with respect to houses on busy streets, that's what's in your price range.
Which is why most of the houses I've looked at are also on those busy streets.
Don't blame your agent. It's the market.
01-29-2013 01:38 PM
You have two separate issues - an agent you don't like/trust and a very competitive market.
Your buyer's agent sounds like my first agent - pushy, doesn't listen, and it's your fault you don't the like the houses he's showing you. I always felt bad around my first agent, not good and not necessary at all.
You should find another agent immediately. Reach out to friends and family and get referrals. I felt so much better once I had an agent who "got" me and what I wanted, and didn't make me feel bad that I didn't have $500,000 in cash laying around.
Regarding the market, a friend gave me a very valuable piece of advice for middle class buyers like myself - "if you want in, you must be willing to go where no one else is willling to go". For her, it was buying a real fixer upper. For me, it was dealing with a posionous seller-renter relationship.
My fantastic and practical agent guided me through a very unusual sale, and I now own a duplex that was delivered vacant for under $350,000 in one of the hottest neighborhoods in NELA.
My first agent would have said that was impossible. It's not, you just have be creative, patient, and also, of course, have some luck! But having an agent you like and who can guide you a painful process without making you feel bad is imperative.
01-29-2013 03:05 PM
I searched for a house for 3 years. Looked all over the metro area and slowly whitled it down to a few lesser noticed decent neighborhoods that fit my budget. I wanted to write offers on a handful of places- but numerous agents generally hemmed and hawed about making an offer unless I had "$30K down payment", no "FHA", no "fixers", you "don't want a short sale"... "call me when you have more money saved", bla bla bla. Today I must thank those agents who didn't want to work with me- because I would've bought something I didn't really like!
Finally I found a broker (not the agent) who was willing to work with what I had. I found my dream house myself. I got a turn of the century craftsman, fixer, short sale that was in escrow for nearly a year previously, FHA, no rehab loan, did some of the fixing myself before closing to qualify for FHA, accepted my first offer below asking at $280K. It took less than 2 months.
Don't believe anyone who says you can't buy FHA, or a fixer, or a short sale, or below asking. I did all four!
01-29-2013 04:05 PM
Get another agent. I've had agents who I felt did not work to my best interest. With that said, it is a tight market with very little inventory. Stop using an agent and restart your search around late Spring.
01-29-2013 09:26 PM
This is the moment where the Realtor looks bad. He is handling a newbie trying to buy a home but the market is indicating him that his client has "0" chances of getting an offer accepted if he goes FHA way. His fiduciary due is to get the most for less for his client and in this market this is a "forget it"!
So, definitely you need to rest and think about it. You need to cool down and put a $ limit in your offers. Don't let yourself be driven to "bid" on a property only because the other are putting 20-30% down and the only way to get that home is raising the ante. Be careful, any realtor can come to this forum and explain that's the only way and it is true, it's the only way but that doesn't mean you need to do it if to get that home you end up eating ramen every day 3 times a day.
There may be many investors and cash buyers out there. If you're willing to go their way beating them on a bidding war go ahead. I know the feeling, it's like an auction house, only that when you are to write that check you realize you may have bought something that wasn't that much worth.
If you can afford it, if you won't be living in that home with a buyers remorse keeping you awake for the rest of your life, go ahead, buy, bid, own it, but don't tell later you weren't advised.