Should you over pay for a home? Should you ever pay more than the house appraises for? Should you ever pay more than the house is listed for?
Should you over pay for a home, possibly! Should you ever pay more than the house is listed for, a house No! A home possibly. There is a difference between a house and a home. A home, a place for your family, a place of your own is often worth more than the sum of it's parts! A house, one that's not intended to be your home is rarely worth more than it's list price and almost never more than it's appraisal.
It's an interesting contradiction, isn't it?
You can never get into trouble with classic conservative advice is never pay more than appraisal, but some times it's hard to successfully excel with such constraints.
With out questioning the validity of the appraisal there are few reasons to you over pay for a home. We are in the people business and homes should be bought from the heart when the buyers can afford the luxury of choice.
Should you over pay for a home? One very experience agent Renee Burrows says: "As a buyer's agent I would work on a price reduction first... If that doesn't go through, the buyer would then have to consider whether to pay the difference between the sales price and contract price in addition to their down payment and closing costs."
Should you over pay for a home? Don't over pay, remains good advice in all markets. If this is an investment it should be absolutely don't! If this is a HOME and the buy can afford it we have to consider the people factor and consider the emotional factor and Renee did say "Consider!" every thing is relative. There is always more than one way!
Should you over pay for a home? The question is two fold should you over pay based on the appraisal or should you over pay the list price? The list price is the amount the seller is willing to settler for, not necessarily even relevant to the value!
Should you over pay for a home? People say don't for many reasons, the most common are:
It's the right advice!
They don't want you taking any risk.
They don't want you succeeding where they don't.
There is no down side, to saying don't! (If they say "Do" and you fail they feel libel, but if you succeed they can simply add "you got lucky!")
Don't is always safe advice, what we forget is man has never had great success with out risking great failure!
Should you over pay for a home? Maybe!
Extra, Extra read all about it!
Housing Prices Hit New Low!
Interest Rates Lower Than 1947!
Obama Spends Trillions On Pork And Stimulus!
Obama Spends Trillions On Bail Outs!
Obama To Spend Trillions Nationalizing Health Care!
Obama Increases National Debt More In 60 Days Than All Former Presidents Combined!
Russia Wants To Replace Our Dollar!
European Union Wants To Replace Our Dollar!
China Wants To Replace Our Dollar!
Fed' Prepares To Print More Money!
Banks Have More REO's To Sell Than Ever Before!
Inflation Is Coming!
Tax Cut Just A Reduction In Withholdings!
Tax Cut To End In 2010!
Inflation May Rival Itallian WW II Levels!
Inflation May Exceed Mexico's Of The Eighties!
Stop The Presses! Today is the time to buy!
Never in our history has there ever been a more compelling time to own or buy your own home! Despite still falling home values it's hard to believe that homes can go much lower. Increasing demands for rentals by former home owners is making the supply of affordable, desirable, most importantly available rentals smaller and their cost higher. Rents will increase each year with inflation and market pressures. People have to live some where!
Today's artificially low 30 year fixed rates can not last! You may have already missed your opportunity for a fixed 4% rate. The very Governmental interference that created today's great rates insures that inflation is coming! The trillion dollars pledged to make such gifts possible guarantees inflation will soon follow!
You're buying more house for less money than in anyone's personal memory!
You're buying at a lower fixed rate than will ever, in our life times, be available again.
You're Principal and Interest payments will be fixed for the next 15 to 30 years, at which time they'll stop!
You're going to make your mortgage payments with cheaper inflated dollars!
You're going to prosper greatly compared to renters who's monthly rents are adjusted each year to compensate for inflation, ever increasing taxes, and insurance.
You're going to be a home owner before restrictions tighten any more.
You're going to be a home owner before approval of the Parties Select Committee On Home Ownership is required.
Now go buy a home. Go save a client's future.
Bill
William J Archambault Jr
The Real Estate investment Institute
I've just read a blog where the clients are fighting over a $250.00 earnest deposit. Can you believe it $250.00!
With no mention of what the financing contingency clause said commentary is coming down strongly on both sides of the issue and several non-issues. One person even ranted illogically against mortgage brokers, it turns out that the lender was one of our largest banks.
As I said: "Who gets the money depends entirely on the contract." Unfortunately no one seems interested in the contract.
There was a great deal of concern over the amount of the deposit. Opinions ranged from it should have been $500.00 to $1,000.00 again with no reference to the contract or sale price. It turns out it was a small (under $60,000.00) short sale contingent on the seller's lenders approval. Which means the $250.00 may have been entirely reasonable, especially from the buyers point of view.
What is reasonable? Just how much should a earnest money deposit be? I'd say it depends! When I was new the recommended deposit on a home was 3%. 3% was a good deposit in most cases, but way to low in some and extremely to high in others.
The main purpose of an earnest deposit was to provided security for the seller incase of bad faith by the buyer. The REALTORS didn't mind that if the buyer backed out they split the deposit with the seller. So the deposit should be large enough to compensate the seller and agent if the buyer should default. That sounds so simple, but it's not! There are other contingencies.
A deposit, a large deposit impresses the seller and may make even a weak offer acceptable even over competitive offers! After an Earl Knightengale seminar suggested it, I once took a very large cash deposit with me to present a low offer, before showing the contract to the seller and his agent I made a big show of counting out a huge stack of hundred dollar bills and spreading them in front of me. It worked, but the seller cried when I picked them up and put them back in my case. His agent explained that the money had to be placed in escrow just like we'd told him before he signed. My broker nearly fired me for taking cash, I never told him I'd flashed it at the seller, but the listing broker, the other agent, did a few months later.
On the other hand. Who's taking the risk? I've used very small deposits when the seller might be the one to default.
When I sold my own condo not to long ago, I learned that the buyer had backed out of two previous offers, so while her offer was acceptable and she was pre-approved, I demanded a non-refundable $10,000.00 deposit! To her agents surprise she paid it.
(For the record: I required that the buyer deposit the $10,000.00 to the escrow company with in 24 hours. Then gave the buyer 10 full days to make any and all inspections she or her lender wanted. When she didn't object to the findings the money was released to me unconditionally on the morning of the 11th day. The contract expired with her lender failing to get her financed. I could have moved on but instead I got her lender a source and we closed a week late.)
The point is earnest money is just a tool! Like all real estate tools if you understand it can be extremely useful, but it can be abused. If the seller demands and receives the deposit normally he waives all other remedies, like specific performance or specific damages, in most cases I recommend you seek legal advice before demanding the deposit, the buyer's assets are known you may have options.
I wouldn't tie up a lot of my buyers money in a long term or opened ended short sale offer. But I might suggest a huge deposit to be returned on a date certain if the offer is not approved by the sellers bank! There is always more than one way! A large withdrawable deposit could motivate the seller's bank!
Who do you represent? What do you want to accomplish for your principal? The deposit is possibly the least considered iteam on the sales agreement!
Bill
William J Archambault Jr
The real estate Investment Institute
I've been playing with You Tube learning as I go. Well I also want video phone capability My daughter recommended Skype. All it took was a quick free down load from: tthp://www.skype.com/download/skype/windows/ The same little video camera that I've been using for years and my headset.
Now all I need is some one to talk to so I/we can learn to use Skype.
I'm listed as William J archambault Jr
If I'm not on line you can reach me at 832-259-7078
Bill
I continue to experiment with You Tube. I'm using the little Logitech web camera that I bought to go with my first laptop several years ago. Camera placement is limited by the very short cord on the camera, I can focus it, but not while recording. It may be time for a better camera.
For sound I've tried the built in microphone, I've tried my headset the one I use for pod casting, and I've tried a hand held microphone there doesn't seem to be much difference.
I'm open to suggestions about software that would let me edit the videos, any one have an inexpensive suggestion?
Bill
William J Archambault Jr
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E-Mail Me at wja@reii.org The Real Estate Investment Institute, publishers, speakers, teachers, hands on & long distance consulting. 39 years expe
I've been in lending and real estate going on 39 years. My fourth book, Get The Money / A Consumers Guide To A Successful Mortgage Application" is to share that experience with the consumer. By understanding the mortgage loan application, and process, hopefully they won't feel like an innocent prisoner standing before a Judge.
There are things in this text that you are not going to agree with! Things that you're going to shout: "That's not right!" "Not fair!" "That makes no sense!" If you're into social reform great, but this a book for people that want/need a mortgage! You can either be a social reformer or a home owner! Take your choice! In real estate and lending we have our own Golden Rule.
"He with the gold rules!" To Get The Money, give them what they ask for!
I've been in lending and real estate since 1969, but lately I mostly write and teach real estate investment..
Mortgage lending and borrowing, real estate, financing, sales, investing,, SFR, and Apartments.. "Get The Money / A Consumers Guide To a Successful Mortgage Application" is a guide for consumers helping take the mystery out of applying for a mortgage. "Get The Money / A Consumers Guide To a Successful Mortgage Application" dispels that feeling of standing in judgement. "Flipping For Fun and Profit" The art of buying low and selling hig quickly! "A Bakers Dozen / A Real Estate Anthology" I, III, II, IV. 
Do you have any good testimonials that clients have provided you in the past? Be sure to add them here.
Mortgage lending and borrowing, real estate, financing, sales, investing,, SFR, and Apartments..
I'm the author of "One House At A Time / Finding And Buying Single Family Rentals" a book for new real estate investors and burnt out victims of TV Real Estate Gurus. "One House At A Time / Finding And Buying Single Family Rentals" is also ideal for people who though they couldn't own their own home, everyone can own a home.
"Get The Money / A Consumers Guide To a Successful Mortgage Application" is a guide for consumers helping take the mystery out of applying for a mortgage. "Get The Money / A Consumers Guide To a Successful Mortgage Application" dispels that feeling of standing in judgement.
"Flipping For Fun and Profit" The art of buying low and selling hig quickly!
"A Bakers Dozen / A Real Estate Anthology" I, III, II, IV. I met Bill Archambault in 2002, which was three years too late (more on that later). I was just hired as Operations Manager at a new mortgage broker, called Custom Home Loans. I had no Mortgage Industry experience. My background included similar positions at start-ups and nearly start-ups in the Semiconductor Brokerage and Design Automation oftware Industries. Because I was so new to the Mortgage Industry, I read books and periodicals, but mostly I asked questions. One of my favorite sources of information was Bill Archambault (this book's author). I liked speaking with him because he had worked in this industry for decades and was still enthusiastic about it. He was excited to talk and I was happy to listen about HUD subsidized home developments he had built in the Midwest and about how we can help clients build wealth through Real Estate and so forth. His stories were
easier to understand than books with Nevada Revised Statutes, legal
definitions and case law. And it was even more interesting when
contrasting it with HUD periodicals and rulings.
I met Bill Archambault in 2002, which was three years late. On February 22, 1996, I met my wife, Ana Maria, while visiting Las Vegas. I instantly fell head over heals for her and dated her for a few months back and forth while I lived in Orange County, CA. In June, I moved to Las Vegas to be with her (everyone say, "ah"). We were married the following June and our son, Hunter, was born in February of 1999. We were living in a nice, but small home that my wife had purchased before
we were married. With my income added to the family budget, I felt we could afford and upgrade. I also wanted to have a house that I felt was "our" house, plus we wanted a house with a pool. So, we started looking for a new home. One night, my wife put our baby, Hunter, in the car to try to get him to sleep. When she was driving around, she saw a home with a "For Sale by Owner" sign in the yard. My wife knocked on
the door and the owners showed her the house. She instantly liked it and we made an offer for the home. Our existing home was listed with a Realtor and we asked a friend for a referral to a Loan Officer. Here is where our beautiful story turns into a financial nightmare.
It should be noted that in 1999 all I "knew" about the Mortgage Industry was that you put 20%, so you don't pay PMI and you do a 15 year fixed mortgage, if possible, so you can save on interest. The home we sold had a payment (including principal, interest, taxes and insurance or
PITI) of $888 fixed for 30 years as a primary residence loan at about 7% interest and she had lived in it for about 3 years. Rents for home like this were about $1,100 per month, so it would have been a great rental, but I thought we needed 20% down for the new home. Our Realtor didn't tell us, don't sell the home. That would have meant she would have missed out on $9,000 commission for selling it. Our Loan Officer didn't
advise us how we could finance the new home with zero down and still have an affordable payment. We asked for a 30 year fixed loan with 20% down and that's what he gave us. Looking back, we should still own that home. Had we kept it, we would now owe $100,000 on a home worth nearly $400,000. A $300,000 mistake that I could have avoided, had I met Bill
Archambault 3 years earlier. Timing is everything and knowledge is powerful, I am a living example.
Best regards,
Brent A. Wood
Chief Operating Officer
Custom Home Loans
"You are the Harvey Mackay of foreclosure real estate...now I fell....well...kind of...shark-proof " Brian Brady
Billl - awesome... That is one of the best blog posts that I have seen on the Rain - thanks!! there should be a Hall Of FAME board - that would be on it.
Kate Bourland 8-3-07
"Hello Jason, Bill Archambault here."
It may not seem like a big deal to you folks, but when I heard that, I cringed. You see, to me, that guy is to Mortgage Lending as Babe Ruth is to baseball.
by Jason Sardi on 08/07/2007
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