how do realtors & distressed properties work?

billwagnon · 08-20-2009, 11:09 AM

I am currently renting a house, and I need to stay in the same school district. My lease is up end of February.

Financially I am just okay - barely. My son starts college next year and will be depending on scholarships / loans, and my daughter just started high school. My ex is heading towards a full time job maybe this year.

My landlord is a big company and they say they want to get out of the single home market. Zillow shows the house I am in sold for $120k in 2006, and they want $150k for it. They have this angle that with the tax deduction for interest paid on a mortgage, my annual outlay would be the same. However I would have the risk of owning the property and I would have a much higher monthly payment. I feel like they are making their problem (the house is in a great location but has a lousy layout) my problem. They said they can move interior walls or whatever to make the deal happen.

I found a property a couple streets over for $85k and the realtor on the phone was asking if I already have a realtor and if I am pre-approved for a mortgage (no and no). My credit rating is very good. I am going to look at the property tomorrow - it is a short sale and is not in foreclosure yet. The house right now cannot get an occupancy permit, but I can do some work myself. I don't know the nature of the problems.

How does this work with realtors so I can find something feasible? Do I have to sign on with a realtor? I am interested in this kind of property (disclosure or distressed property) with the idea of staying in the school district, and selling after 4 years.

m21sniper · 08-20-2009, 11:46 AM

Houses all over America have depreciated since 2006. HTF do they figure theirs is worth more?

rammstein · 08-20-2009, 11:47 AM

Was the realtor you spoke to representing the seller? If you don't know, ask.

TheMentat · TheMentat's Garage

Quote:

Originally Posted by billwagnon

How does this work with realtors so I can find something feasible? Do I have to sign on with a realtor? I am interested in this kind of property (disclosure or distressed property) with the idea of staying in the school district, and selling after 4 years.

I'm not positive how it works where you are, but up here, the buyer's agent (the realtor working for you in this case) gets paid by the seller. When somebody sells a house they negotiate a commission with their listing agent. That listing agent will then advertise the house to other realtors, promising a commission split if they bring a buyer (you).

Some buyers' agents will want you to sign something to make sure that you don't cut them out of the deal after they spend a bunch of time showing you properties.

Working with a buyer's agent is a very good idea for people that don't have the ability or desire to search out a home.

billwagnon · 08-20-2009, 11:53 AM

Snipe, the owner says the big swings didn't really occur in St. Louis (as a way of minimizing my expectation that the price would at least have stayed the same).

I don't think they did much to improve the property. They are in the business of making money and apparently they are pretty good at it.

***

I think the realtor I talked to is representing the seller, but I will have to ask. What does it mean "to search out a home"? Does that just mean I need the Multi-Listing Service?

How do you find out about foreclosures? I can't make it a full time job so maybe I do need someone.

I think median price in the school district is around $180k.

stomachmonkey · 08-20-2009, 11:54 AM

The realtor wants to know if you already have a realtor because he may feel it's not be worth the time for him to split commission on $85k. Ditto on the pre approval, they won't spend their time or a sellers time on it to have it go no where because you don't end up getting a mortgage.

Permit problems can be a HUGE problem depending on your local ordinances/town hall and greed of the inspectors.

Sold a house in NY that I bought as a new build but everyone missed that the second floor was not permitted properly. In the 12 years I lived there local code changed so now I not only had to get the proper permits but I had to do additional work to meet current code.

Hired an expeditor who does this for a living and knows all the shortcuts and who to grease, took 11 months.

You need advice from locals familiar with your area and it's particulars. What we can offer here will get you covered mostly but do not make decisions based on it. Use it to educate yourself to the possible gotchas and that's it.

greglepore · 08-20-2009, 12:30 PM

Who is the mortgage with?

Short sales are a giant hassle. Not that they're not worth doing, but I had an offer on my dream farm for a bargain for 60 days and the bank never decided whether to approve or not. Ended up going to sherriff's sale during the process, and Countrywide (the lender) doesn't even list a house for months after. So, I let it go.

an important note-If you can't get a u and o on the house, you won't get a loan for it, unless its a construction loan which you'll then need to pay off or convert to a mtg within a specified timeframe and after you've made the repairs.

You don't need to sign a buyer's agency agreement, but the rub is that on short sales there is often little to no commission payable or the realtor has to wrestle for it, so they don't want a split commission deal.

billwagnon · 08-20-2009, 12:36 PM

I don't know who holds the mortgage.

What is a "u and o"?

Realtor said it is eligible for FHA 203k for rehab.

stomachmonkey · 08-20-2009, 12:39 PM

Quote:

Originally Posted by greglepore

.....

an important note-If you can't get a u and o on the house, you won't get a loan for it, unless its a construction loan which you'll then need to pay off or convert to a mtg within a specified timeframe and after you've made the repairs....

u and o, I assume Use and Occupancy?

In NY they call it a CO, Certificate of Occupancy.

You can get a mortgage without one. Depends on the lender.

That's how my issue was missed, WAMU did not ask for or require proof of CO so everyone accepted what the builder presented.

When I sold the house the buyer was able to close. My remedy was in process but still took 10 months after close to complete.

gr8fl4porsche · gr8fl4porsche's Garage

PM me and I can set you up with a local realtor that will be able to answer all your questions.

notfarnow · 03:13 PM

Quote:

Originally Posted by stomachmonkey

The realtor wants to know if you already have a realtor because he may feel it's not be worth the time for him to split commission on $85k.

Hard to imagine he'd avoid teh sale if it wasn't double ended. Probably just doesn't want to spend a bunch of time talking about the property and showing it if the offer is going to come through another agent. When someone calls me, I always ask if they are already working with a realtor.

Quote:

Originally Posted by stomachmonkey

Ditto on the pre approval, they won't spend their time or a sellers time on it to have it go no where because you don't end up getting a mortgage.

Yep. I always ask <100k buyers if they've been to a bank yet. Lots of newbies, dreamers ands schemers. Very easy to spend a LOT of time on a deal that has no $$ behind it.

Downside to dealing with the listing agent is you never really know who's interest he has in mind... the buyers, the sellers or his.

Upside is that because he is getting both ends, he may be able to cut commission to bring a deal together if it's a squeaker

Rick Lee · Rick Lee's Garage

I'm trying to buy a short sale right now and my realtor is a Pelicanhead. We made our offer on June 29th and there is still no end in sight. Plan on a good four mos., best case scenario, from offer to closing on a short sale. I've read that only 5% of short sales in Phoenix actually close and I'm starting to believe it.

The fact that your kid is headed to college is of no interest to a mortgage company. They don't consider the college expenses in your debt/income ratio. FHA 203k can be a good deal, but it's a long process. How in the world does your landlord figure a 25% appreciation since 2006? What are they smoking? Don't be snowed by their BS about the after-tax costs of paying their asking price. Total BS. Might be true, but that's like going into a car dealership and having the sales guy immediately ask you what kind of monthly payment you want. Just insulting. Now, if they totally redo the place on their dime and bring it up to value, then maybe it's worth that price. But no property in the US has appreciated 25% since 2006. The benefit of going FHA is that their appraisals are pretty tough, so they won't be over-appriaising the place to get the deal done. And if it doesn't appraise for asking price, IIRC, the appraised value sticks to that property like glue for the next six mos.