I'm new to real estate, I just graduated from college a month ago but started a well-paying job right away. I want to invest in real estate but want to cut as many costs as possible and do the work myself.
I was wondering if anyone had the answers to the following questions:
1. What bank or lender provides the best interest rate in California?
2. What's the best app or website to find tax deed sales and foreclosures?
3. How do I buy a home found on, for example, Redfin without a real estate agent?
I hope I can find sincere answers here, I greatly appreciate your help.
Hi @Pedro Salcedo - congrats on the graduation!
1) Short Answer: I've found Bank of America to always be one of the most competitive - when they're not the lowest, they'll often match the lowest if you have it in writing. Long Answer: when buying in a competitive market, there's more to it than just a low interest rate! My experience with BofA (and a number of other large national lenders) is that they tell you they can close the purchase loan in 30 days, but, in reality, it's going to be closer to 45+. If you're going up against cash buyers or other lenders that are closing in 10-14 days, your 30+ day offer is immediately at a disadvantage. Also, understand that not all loan officers are created equal - BofA might offer you the best rate, but you can have vastly different experiences depending on which BofA rep you're working with. For me personally, I'd rather work with a local lender who's capable of closing in 14 days or less and that has a reputation for closing on time (or early) even if it costs me a fractionally higher rate. If the listing agent you're submitting your offer to is any good, your lender's reputation is being factored in alongside your price and other terms. The BofA and Quickens of the world are not making your offer look more attractive.
2) Foreclosures have been pretty much non-existent for the last few years in the markets that I work in, so it's been awhile since I've done much research on this ... however, when I did, RealtyTrac and ForeclosureRadar were the main players.
3) Full disclosure - I'm an agent, so my response to this will be biased ... I'll let somebody else handle this part :)
@Pedro Salcedo -- Regarding #3, keep in mind that realtor fees are paid by the seller. If you buy a house for $300k through an agent, you don't pay any fees on top of that $300k.
Now, the smart thing to do if you're browsing Redfin for property is to reach out directly to the selling agent and, after discussing the property and demonstrating that you're a serious lead, offer to let the selling agent also represent you as the buyer. This'll allow the agent to collect a double commission if you do purchase the house, which'll incentivize the agent to get your offer through.
Also, I've found Wells Fargo has the best residential rates in CA.
@Pedro Salcedo , also, since you just graduated college I'm going to assume this'll be your first purchase. Research FHA loans!
Thank you so much for the info, makes total sense. I greatly appreacite it.
3) I agree haha, I am starting from the bottom so I really want to save as much on costs as possible.
Thank you so much for the info, I greatly appreciate it.
I've done some extensive research but have found the answers to those three questions unclear for the obvious reasons that there's a lot of advertising regarding those questions, or in terms of Q#3, it's not profitable for agents for people to know how to buy a home without an agent, which I understand.
@Pedro Salcedo regarding number 3 it has nothing to do with what is profitable or not. If the property is "listed" for sale, that means the seller has signed an agreement through which they will pay the commission. And if you buy that house while it is listed, the seller is going to pay the commission no matter what (there are technically some exceptions depending on the type of listing agreement, but they are rare, and aren't a likely opportunity for you to save money). So the point is that there is NO REASON, and really NO WAY to buy a listed property without an agent (at least the sellers agent).
One thing that may help you negotiate a SLIGHTLY better deal on listed properties is to contact the sellers agent directly, rather than using your own agent. Two reasons: 1) the sellers agent will likely work a little harder to make sure you get the house as they will get the full commission, and 2) the seller may have negotiated a smaller fee if their agent also represents the buyer, leaving a little bit more money on the table. For example it is not uncommon for the agreed commission to be 6% (3% to sellers agent, 3% to buyers agent) if each represented separate, and for it to be only 4% if the selling agent represents both parties.
That said, for a maximum savings of 2%, I'd venture you'd be better off with your own agent. You may save more by leveraging their market knowledge and their time to be constantly on the lookout for deals. The seller is paying their fee anyway, might as well get the help.
If you really want a shot at saving money on the purchase price, then you should be looking for off-market properties. Yes foreclosures and tax sales are a possibility, but there are lots of other possibilities as well.
@Brian Sparr thanks for the mention!
Thank you for the info, greatly appreciate it. It's clicking more and more every time, I love it.
The idea of using the listing agent to represent you as a buyer sounds appealing - maybe a better chance of getting your offer accepted and possibly a cost savings if they reduce their commission; however, keep in mind the type of relationship you've created with that agent. You're not married to them ... you're not even dating them ... you're having a one night stand - and they know it. If they can't keep you in this deal, they know you're gone and off to the next listing agent. So, what happens when the inspections come back ugly? Do they downplay it? Or, the appraisal is $20k below the purchase price? Are they going to negotiate on your behalf or the sellers? Remember, they're married to the sellers...
If you've got an agent that you're committed to, there'll be no doubt as to which party they are fighting for. They'll know that if this isn't the right property for you, that's ok because, together, you'll find a better one.
The really good agents will talk you out of way more properties than they ever recommend for you. You're not going to get that kind of guidance, though, if all you do is bounce from one listing agent to the next.
That is so true! Quality relationships are super important, being cheap can be more expensive at times. I will definitely try to balance things out by taking the pros and cons in consideration. Good eye opening comments everyone. You guys are awesome (:
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