E3only

Understood. And I hope the buyers agent is thinking if they ahve strong buyers, the buyers will be repeat business when it coems time to sell/upgrade.

Tarkak9

Keep in mind too -
Escrows & Prepaids... they're there for a reason - sometimes not avoidable... depends on state and banks. Escrows are primarily created to ensure funds are there to cover default scenarios. Train of thought for them, insurance is to cover/protect the bank's 'asset' (as its there to protect yours too) and to ensure continuous coverage on the property... they're not wanting to risk and suffer a collateral loss, and nor should you. Taxes are very senior liens and sometimes will come before bank's interest and position in a property. Some lenders even will have an HOA escrow to ensure HOA fees are paid etc. You lending money to someone buying a house... you really going to trust good faith on their part that they'll pay the taxes and insurance premiums etc etc?!? If you don't provide insurance or let it lapse, banks have the right to purchase their own on your behalf and charge you $$$ in the monthly for such premium. Do remember too that banks may charge NOT to have escrows too. Basically, they will penalize you heavily should they need to intervene to take care of matters of your responsibility and agreed in the deed of trust.

Commish % is always negotiable and never a fixed rate; otherwise its then, in the strictest sense, an Anti-trust violation. Realtors/Agents are independent contractors and charge what they deem fit, for their services... you get what you pay for. In essence, seller pays their agent, who in turn is responsible for paying an agent who brings the buyer. Since its agreed upon as part of listing agreement (separate agreement), its outside the realm of a sale because the actual sale and transaction of property is between a buyer and seller as 2 legal parties... agents etc aren't party to the contract; sorta like buying a TV from BestBuy... the money you agree to exchange between BB and yourself has nothing to do with the salesperson who assisted you.... then take out of the price their bonus and/or salary out of the equation. I will say tho, if you're selling your house, at the very least, have a variable rate so that you don't pay your listing agent 5.6-6-6.5..10%, or whatever, should they be the one who procures the buyer (aka double ending the deal)... but that is a rare occurance. BTW... Realtors can, and have, and are entitled to (by nature of existence of an agreed service agreement) put a lien on the property if they're not paid; again, that depends on the laws of the state you're in.

Yes, always compare and contrast GFE's of lenders... challenge them, esp with garbage fees. eg $750 for 'processing'... when the processor is getting $250-300 of that. Banks/lenders are not stupid... they're like Vega$ - the house never loses. If they don't ask, they won't get.... just like if you don't ask, you won't get.

Home warranties.... neither for nor against them. Read the fine print. They offer peace of mind during the 1st or 2nd year of you moving in... they've come handy and have been an utter waste of money. $50 deductable and service call is far cheaper than hindsight and out of your pocket to replace an item.

If you really are interested with sticking it to the bank and pulling the wool over the their eyes.... pay cash!!

Bomjeito

Best advice in a long time!

E3only

Thank you very much for the advice. I will be looking closely at the credit union too (currently have an auto loan so building history with them).

I am against all these fees that banks charge. The way I see it this is, it's enuf that I am going to pay them 30 year interest. I know how much money they make of that so all the upfront fees are useless to me......

Tarkak9

CU's have different lending criteria and guidelines than banks; they have different applicable federal regulations. Because so, they have more direct control over how/whom they lend to etc.

I, too, think many fees are excessive but what people lose scope is that the simple truth is that one is borrowing money and that comes with a price for the luxury & convenience (...or inconvenience depending on who you are!!). Unfortunately life isn't cheap and nothing is for free; the ones who hold the money hold the cards... money makes the world go around but greed is what exploits it. garbage fees are just added margin.

There are always 2 sides on a coin. An offer of 255k with 5k credit to the buyer for closing costs is the same as presenting 250k w/o any concession.... now, people will get knickers in a twist about financing closing costs over 30 years etc, but such rational applies to just about anything with real estate and property.... the washer/dryer... fridge.... drapes.... Bottom line one has to ask, how much money do you want to keep in your pocket or cough up for fees, appliances etc etc. With todays rates etc... it breaks down to what, an additional $5-7 per 1k per month... say $35/mo.. 420/yr.. 4200/decade and prob will equate to about 2-3x the original lump sum amount over the 30 years...

What I say to my buyers and sellers is to consult an accountant about what may be tax deductable (and by which party)... especially when it comes to closing costs. If one is talking wrapping costs in the form of a seller concession... is one giving a deduction to them since on paper they're paying for your loan?... I don't know and that's where an accountant comes in to say yes or no; then should such items be instructed to appear precisely on the relevant HUD column/line etc to be eligible for a deduction?

Someone mentioned about transfer tax and taxes on personal property being exchanged with the property... just another thought... look into if it matters having certain items (especially if something is being offered being sold fully furnished) being listed as exclusions in the contract BUT sold via a bill of sale as a separate transaction. Sometimes that makes lenders happy too.

shining light

As someone looking at an E2 visa and having no idea how the buying and selling of properties works in the USA (other than what i've seen on TV progs), I have a couple of questions and would be interested in any opinions/thoughts.

1. What charges would I have to pay and what costs (in general) would I be looking at if buying a property for say $225K (cash)?

2. Is a buying agent necessary? They always seem to use them on the TV progs, can I not negotiate for myself?

3. Would I be able to find the properties without one? In the UK you can simply register you requirements with selling agents and they will send you details accordingly....can this not be done in the USA?

Thanks

Michael

1. It varies from city to city and state to state. Generally these are title company/escrow fees, title insurance, inspection fees, and city transfer fees. I would expect that those fees would be less than $4,000 on a $225K property but could be significantly less.

2. No but it doesn't cost you anything if the home is listed on the MLS (vast majority of listings) and the agent handles all the details of the sale (many do not hire a real estate attorney to handle the sale since the buyer agent represents the buyer). If you purchase a "for sale by owner" home, you probably don't want to use a buyer agent since you will probably want to get part of the sellers savings since he is not using a agent and won't likely pay the fees for a buyer agent. However some "for sale by owners" do list on the MLS and will pay a buyer agent fee. If you sign an agreement (typically a 2-3 month agreement) with a real estate agent to find you a home, you could stipulate in the contract that if you find a home through a "for sale by owner", the agent will not be involved.

3. The vast majority of homes are on the MLS. You can normally find all the homes listed on the MLS (Multiple Listing Service) through web sites such as the following. Homes on the MLS are available to all brokers and individuals. In the US you do not go from broker to broker to purchase the home but all brokers use the MLS to find homes.

http://www.trulia.com/for_sale/Houston,TX/

Cape Blue

I'm not sure that the vast majority of buyers spend 30 years in the property though, I am sure I read that the average duration of ownership was in the 8-12 years range.

shining light

Michael, thanks for that. Would I need to use Escrow for a cash buy?

Also, what is "title insurance"?

Thanks in advance.

Michael

You need a title/escrow company to handle the paperwork, pay taxes (prorated property taxes and city transfer taxes), and transfer monies. A title/escrow company assures that all fees, taxes, money transfers, title is registered, and required insurances and inspections are paid by both the seller and buyer (accounts are settled). The basic fee charged by a title/escrow company is generally small but additional fees such as title insurance can be substantial. Some states may allow a transfer without a title/escrow company but I wouldn't recommend not going through a title/escrow company. Usually only people in rural areas may transfer a home without a title/escrow company between parties that have known each other for years and the price of the home is usually small.

Some states require title insurance which may be billed to either the seller or buyer (depends on state/city law). Although a title search is normally always done, it does not guarantee that the title is clear or even that the seller is the legitimate owner (scam artists sometimes sell homes that don't legally belong to them by renting a home, forge documents indicating that they own the home, and register the title in their name). Title insurance normally insures against missed liens, inacuracies in the title (inaccurate or invalid title transfer that could have occured hundreds of years ago), or fraud in the sale. Without title insurance you would likely be responsible for any problems in the title transfer and can probably only collect if you can find the correct person to sue, win a judgment, and be able to collect on that judgment. Check with the title company to determine exactly what is covered and the amount covered with title insurance since there could be several different types of title insurance policies.

Michael

Another time you may not want to use an agent is if you are buying a new home directly from a developer. Sometimes they will pay an agent fee and other times they will not. Normally when purchasing a new home from a developer, the contract is made by the developers agents and the transaction is handled by the title/escrow company.

I've purchased two new homes (condo and a townhouse) through a developer over the years and everything went smoothly without a buyer agent. However one home had problems (home was not bolted to the foundation which is required by California law and a few other problems) and the developer didn't want to fix the problems (developer was near bankruptcy) so the HOA had to sue the developer which we won and had the problems fixed. Although California has some of the toughest laws in the nation on new home warranties, there is not much you can do except sue the builder if he is not willing to fix defects. If you don't belong to a HOA (Home Owners Association) and there is a structural defect in your home that the builder won't fix, normally the builder has deep pockets to fight a lawsuit and can drive you broke so generally residents in a development have to join together to file a class action lawsuit against the builder.

My latest condo (I moved in 6 years after it was built) also had some developer defects and it took 8 years to settle the lawsuit ($25,000 per unit * 100 units = $2.5 million total). The lawsuit was settled 2 years ago and we are just getting around to making repairs (ex. cooking oders from other units in the unit, poor plumbing causing water leaks, poor constructions, etc.). However by the time we are through at the end of the year, a 10 year old building will look and feel like new.

Nickw_2308

[QUOTE=E3only;9345508]Thank you, great input.

3. I don't have a green card so I won't qualify for the Int. Division but I get your point. I will research multiple lenders. Not a problem even if I have to go through a credit union.


I just recently got a mortgage through the Wells Fargo Intl division. I'm on a L1 visa but they were happy enough. They did need all of my UK financial history and it took a few weeks to work through but was no problem, also got a decent low fixed interest rate.

On the subject of getting a buyers agent I would definitely recommend it. I can understand your reservations however I think the current market makes a difference. I really think they are so desparate for buyers they will not jeopodise the deal to squeeze an extra couple of thousand. My word of caution would be to independantly appoint any inpection agents etc. If your buyers agent recommends someone, somehow I feel they have a joint interest to make sure the deal goes through which can put a certain bias on things.

E3only

[QUOTE=Nickw_2308;9351746] Thank you for that!! I need to get cracking on getting the Australian Credit History and some bank statements on mortgage payments there (3 years +)

Thank you again.

Tarkak9

More typically, its the lender which will require Title insurance ... if one is doing cash, there isn't such a mandate but its certainly NOT advisable to 'waive' title insurance. As mentioned, it is to insure against claims on/to a property. Certainly review the policy...ie the requirements and the exceptions. There is a significant difference between Owners Basic Coverage and Owners Extended Coverage... This is especially important if purchasing a bankowned property or new construction.... because its typical for such transactions that the buyer is not provided sufficient coverage and buyers often go in blind; especially when they don't have representation!! Personally, I would never go with the company the bank, as seller, is 'proposing' to use. With a custom builder... its important to verify that the sub-contractors were paid; otherwise, et viola, a lien on your house when you move in. Not all title insurance companies are the same. You definitely want to go with a reputable one; especially since many have folded, don't pay or got hacked and stripped by the Russian mob (that did actually happen last year). BTW, some title companies aren't insuring bankowned properties because of the risk of it being involved with robosigning; even regular insurance companies have followed suit (mostly because of unknown damage to the property). Step further, pay attention and understand the type of deed used... huge difference and consequences between Special Warranty Deed and General Warranty Deed; for example, if a special warranty deed is used, definitely ensure you have adequate title insurance coverage... min of extended coverage, but if I were a buyer, ideally, I wouldn't want a special warranty deed.
There is no set rules about who pays for title insurance but in many states is 'customarily' its a seller driven responsibility... the premise I live by is 'stand behind what you're selling.'

Always remember that the contracts used by new home builders are written to the advantage and interest of the builder... it is important to try and level the playing field. What I see ALOT is that people pay for extra 'options' and 'upgrades'... and lot premiums etc b/c they didn't have someone looking out for them and nodded to what the builder were saying to them. In addition, had a situation where a (national) builder tried to act dumb and counter the price and some terms AFTER they had accepted and deposited the earnest money... OOPS. Their mistake costed them 100k. The builder was hoping that the buyer was none the wiser about their rights and were hoping that they'd go along with the 'counter' and thus getting them off the hook. So sometimes having representation does serve a purpose.
Property not bolted to the foundation?!?! Field day class action... but I'm stunned (but not too surprised) that the city/municipality isn't also being sued too because they would have signed off on inspections and CO's...

Shining Light, if you don't know what you're doing regarding purchasing property over here... don't do it alone is my advice. Due diligence is key.