I'm a newbie, who is closing on his first home (personal residence). I am using RedFin as a buyer's agent, as I was enticed by the money back (lower buyer's commission) towards my closing costs.
The property in question was a single family detached suburban as-is home in MD. The seller was asking $330k.
1) When I asked the agent about what price to bid, she came up with $310k, telling us that we should meet in the middle. When I asked her how she came up with that price, she told me that it was a sellers market so she arrived by working back from asking price. It was my mistake to not fire her at that point. Instead, I asked her to prepare comparative price analysis based on recently sold, recently under contract and current listings. Only at that point, she went and did the analysis, which lead us to the final contract price of $300k.
2) As we were newbie about the process, we initiated both home inspection and appraisal process at the same time. Home inspection led to some issue. When we tried to negotiate, we learned that our walk-away costs were both the cost of home inspection and home appraisal. If we had waited to order home appraisal after home inspection, our walk-away costs would have been lower.
3) After negotiation, when we removed the home inspection contingency, I realized that I had not seen the written termite inspection report. When I asked my agent, why did she let us negotiate, she tried to hide behind the fact that this is an as-is house. Luckily, termite report came clean.
I'm not sure if it is the agent-specific experience or RedFin experience, but I was quite disappointed with them. Am I being unreasonable? The first mistake would have cost us $20k, luckily, I did some homework which avoided that.
I'd like to get thoughts from experts on this. I keep getting the nagging feeling that, with a better agent, I could have saved another 10k.
My RedFin agent saw this update and contacted me. I am aware that all posts are public, but I think that I've a right to be concerned that I'm being cybertracked.
I bought my own homes a couple times and helped many friends, so not an expert, but here are my thoughts:
1- Bad move on removing the contingencies before the termite damage came through.
2- Redfin has a pricing tool to help estimate the cost of the home, she should have used it
3- RE agents are not good in general at negotiating down the price. Don't hold it over their head. Just assume you have to do that for your next house.
4- RE agents are really good into getting deals to close. They get paid when deals close. They will do anything to avoid you to go shopping for another house once you offer in one. In a sellers market the strategy is different, but in a buyers market, don't be afraid to say "Nah, I am not going to counter again.". You have to be OK not getting that specific house, but for sure cuts the crap of the counter counter counter madness. Meet in the middle is BS for pay more.
5- Losing home inspection and appraisal is OK. Better to loose a little instead of loosing a lot. Keep an eye on the big picture.
6- I always tell my RE agent and mortgage broker that I am doing FHA 3.5%, even when I know I will do 20%. Why? Because that puts the pressure on the appraiser to make their job of not letting me buy a house for the wrong price. Again, I incur the risk of not getting picked in a multiple offer situation, but I don't want to be in that spot anyways. You also have the risk of having the appraisal come low and loose the appraisal money. Once the appraisal is in, I switch to 20% down.
7- The two most important things:
If it is your own house, just get something you want to live in. Let me say it again.
If it is your own house, just get something you want to live in. For a while.
Also, be sure that you can rent it out to at least a little more than break even on the PITI (Principal + Interest + Property Tax + Insurance). A little more is about 50-100 bucks. That is your warranty that if the market turns south, or if you paid too much, you can wait it out and not have to take a loss on your property.
Also, be sure that you can rent it out to at least a little more than break even on the PITI (Principal + Interest + Property Tax + Insurance). A little more is about 50-100 bucks.
That statement is VERY BAD advice.
You need a lot more than $50-$100 after the PITI.
How about Maintenance, Vacancy, Cap-Ex, Lawyer, Accountant, Property Management, etc.?
Your advice is quite insightful. Regarding your question about whether this is a owner-occupied or rental property, it will be an owner-occupied property. However, as my long-term plan is to have some hard assets (real estate) to complement capital market holdings, I hope to learn from my first purchase experience.
Your point is quite valid. I keep reading about the 2% rule. Unless I venture into a war-zone in metro DC or metro Baltimore, it'll be tough to get to 2%. I keep reading about my people in this area acquiring properties around 1.5% or perhaps slightly lower. Thank you for your thoughts!
Ray, I agree that isn't the right formula to invest, but it might make sense to pay a bit more to get a home you love to live in.
But by all means, safer is better, not disagreeing there! :)