Is This Legal?
Hello, just a quick question. My wife and i recently placed a bid contract on a house while working through a realtor. It turns out that the seller had the house listed with another realtor within the same realtor agency. We had no problems with that, maybe a little concern, but really no problem since the agency handles alot of realty in the area. The bad thing is, that the realty agency works with my mortgage company alot apparently and it turns out my Mortgage broker and my agent have discussed how much my wife and I have been approved for. In fact, when we were rejected for the first bid amount, our realtor suggested we counter bid with $5k more and miracously the mortgage broker got our max mortgage limit raised another $5k. To make things worse, we were never even called by him about it, our realtor called us and informed us that she had spoken to our mortgage broker and he had "played with the figures" and got it for us. Now, I'm no fool, immediately told the realtor and the mortgage broker I'll no longer be dealing with them, but my question is. Is this illegal? I know it's very unethical, but is there any laws to protect me or others from this happening again? Can I sue? This is complete B.S. way of doing business with people. Even if this isn't illegal, I will NEVER buy/deal/trade/ even speak to any of the realtors, employees of the Realtor or mortgage company again. I"m sorry, but that's just the way I am. Screw them. Thx for all the info to the questions in advance.
I'm lender and I always ask my clients if they are ok with me discussing information with their realtor before I say anything. The main thing I see is that your broker has poor communication with his/her clients.
Having your broker be in direct contact with your realtor is not a bad thing though. it can really help the process move along smoothly.
As far as getting your loan amount raised by 5k that really isn't a big deal. When you consider that additional 5k is ammortized over 30 years it doesn't change your payment that much. A good broker will be creative and find ways to make the deal work for their clients.
Like I stated above the main thing I see is that your broker is having the realtor do their job. Your broker should be calling you and giving you this information not the realtor.
I hope this helps in anyway
Thx Dlove for your info and your quick response, however, doesn't it seem like since both realtors work so close together and my broker was just a phone call away that all they'd have to do to make a little more commission for all parties except me would be just to say that the seller just wants only $5k more? WOW! only $5k more? Sure, let's call your broker, wow, you're approved, let's do this!! NOPE, don't think so. it's more like, "Hey, bob, let's make a little more money since I know they're approved for it and they can get more approved!!" It just seems to convenient for everyone but me.
So, let me get this strait.
1)You bid on a house for less than advertised price and your bid got rejected.
2)Your realtor suggested you raise your bid by 5k, then got approval from your mortgage broker that you could follow through with the higher bid.
3)You get mad because you may be able to purchase the home you want.
4)TCI readers are confused. The mortgage broker got you approval for the money necessary for a realtor to bid on a house that you want.
Perhaps you can clarify how anyone here "did you wrong" other than the seller not accepting your initial offer.
-Chris
P.S. You should see a shrink. If you really think that the Realtor's are conspiring against you for a whole $150 in commission they could receive, you need help. In the greater scheme of things, they are more concerned with the bulk of the commission and closing the deal asap, than a few extra dollars.
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Live long and be profitable![ Edited by c-brainard on Date 06/15/2004 ]
I have to agree with c-brainard. It sounds like they were trying to get you into the house you wanted and you were upset about paying another 5 grand. What if they hadn't approved you for the other 5 grand? You wouldn't have been happy either way.
Since the name of the game is to buy houses, and you didn't buy one, it seems you may not be playing right.
What do you care how much money the broker/agents make? They're not out to rip you off. Real estate licensing boards make sure the rotten ones don't stay around. You "hired" the agent to help you find a house and that's exactly what they did. Your first offer was refused, but your second one, made possible by the people you hired, was. And you're angry?!
Your mistake. Eat crow and get over it!
Ok, well, I'll try to clarify things a bit more. This was probably the 12th house this realtor has shown us and with every house it seems she wanted us to "make an offer", even if we weren't happy with the house in one way or another. Houses are alot more of to worry about than a car that I"ll "trade in" next year or something. Once we found this house we did like it. However that doesn't mean we're going to pay full market value in this over inflated market we have right now, especially in the area where we live. People here in this area are all raising their house prices like someone local stuck gold.
Another thing too, my realtor shouldn't be chatting in the background "bid higher, bid higher" like I have money growing in my armpits either. That was always her answer to everything. The offer I orginally offered was for $3k lower than what they were asking for and they pay closing costs. Then they say sure, they'll pay closing costs, but then they raised the price of the house by $5k. Of course my realtor is shaking her head yes like a bobblehead doll and drool running down her mouth. SO, we counter-offer with we'll pay our own closing costs and they drop the price by $5k. Our realtor talks to their realtor (remember, they both work out of the same office) and then comes back with us paying our own closing costs and the listing price. WOW, that's back at the begining. Waste my time of 14 days and all. Not to mention, we had to call for 2 days after the pre-set date for a counter offer to find out what the counter offer, if any, was. And on top of all that, my realtor still just sits there like a court jester smiling and suggesting we go higher. All the while us not knowing we were approved for more. We didn't even find out we were approved for the $5k until 2 days after they counter-offered and we had to call a lot to find out. That's one reason why I think they set it up. They give me the run around and no answer, and they all of a sudden, they counter offer for $5k and magically timed, my realtor times us that that was the exact increased amount that the broker had called her and informed her we were approved for.
Oh and one more thing. I'll NEVER pay full price for ANYTHING!!!!!! not on a house, not on my cars, not even on my undershorts for that matter!!!!! I damn sure won't pay for more than what the seller is asking for. I went to the realtor to find us a house, not "sell" us one and that's exactly how we feel we were treated. Non of the houses she showed us was listed by her, yet she was most certainly trying to slide us into one. Correct me if I'm wrong, but shouldn't she be working in the best interest of me and not the sellers? Making suggestions on to approach the seller and such? Nah? hhmmm, I guess I"ll just do it on my own without a realtor, will just take me more time. I have almost perfect credit, I'll wait a bit more and buy from a FSBO.
BTW, we're buying the house for us to live in, not as a rental or investment.
THX.
How can you blame her for wanting you to make an offer? If you were wasting my time driving around town, I wouldn't be happy with you as a client either. We call your type "tire kickers".
On a side note, your counter offer wasn't bright. Why would the seller accept 5k less if you pay closing costs (when you offered 3k less to being with and closing costs are your responsibility anyhow)? If you want the seller to pay closing costs, it is fairly customary to raise the offer price slightly over initial list price. This happens EVERY DAY!
Oh, and about paying full price, that is your choice. However, you shouldn't take your "cheap" attitude out on your realtor and the mortgage broker. I personally feel bad for them, considering I'm sure they have spent hours working on deals for you which you weren't going to follow through since it was "full price".
-Chris
On second thought, maybe you're right. You should sue them for not finding you a nice 4/3/3 3100sq ft home for $1078.07
[addsig]
There are 2 side to every thing.
I find it very anoying when my broker "coaches" me to pay more for something w/o a good reason
By the same token I have kicked alot of tire, some for good reason, others not.
I think you have to feel comfortable or even stronger about these people that are your partners.
Sounds to me like you are nervous, afraid and not really ready to buy, you found a way to put off buying and blame it on someone else.
She suggested you bid higher...Gee, your bid wasn't accepted but you want the house, what should she have suggested? Not alot of options there, bid higher or forget it.
Wasted 14 days of your time...making a bid and a couple counter offers is hardly a full time job, that the event consumed you and was on your mind every waking second isn't anything you can blame on anyone else, not logically anyway. That after 14 days you weren't able to negotiate a deal again isn't something you can logically blame on anyone else. The seller nor the buyer was motivated, it happens. Blame it on yourself, it's pretty obvious when countered agreeing to pay the closing and raised the price accordingly he wasn't coming off his bottom line price, your realtor knew it, she told you to bid more, you should have listened or quit. Looked at from another point of view, it could be said you wasted a bunch of peoples time, and didn't act very mature about it from the sounds of it.
You're 5k from making a deal and your realtor knows you aren't approved to go any higher, she makes a call and gets you fixed up so you can make an acceptable offer. Sounds to me like she did you a favor, or at least her intentions were to help you. Yeah they set it up, of course they set it up, the seller won't come down, you can't go up, they made it so you could. Was it to get an extra 5k out of you? Of course not, that makes no sense at all, it was to try to get a deal made where one wasn't going to happen. If that meant you had to spend an extra 5k so be it, but the 5 k wasn't the goal, having a deal at all was the goal. Supposedly you wanted a deal right?
You will never pay full price for anything...I guess that depends on what you consider full price, there are alot of properties out there I wouldn't buy if they took 25% off the asking price, and I've paid the full asking price and bragged about the deal for years. Talking someone into taking less than asking price does not necessarily make it a good deal, and paying full asking doesn't mean it's not a good deal. If you're hot after a bargain stop wasting time playing offer counter offer with non motivated sellers, find an REO, a rehab, or a seller who is in in trouble.
Some very generic numbers just to make a point. 5k over 30 years is less than $30 a month, over $5 of which comes back to you on the principal. Assuming a property around 100k, on a 30 year note about $110 a month goes to the principal the first month and it goes higher from there. If you are currently renting, by refusing to pay the extra $30 a month you end up really loosing $80 a month and of course that number grows with time. Not saying this particular place is a deal, just that on a house I planned to live in, if 5k was all that was standing in my way I would have to think pretty hard about sucking it up and making the deal, particularly if the alternative was renting. On investment property math dictates, I won't go over what my math tells me to pay.
Bottom line, sounds to me like your realtor tried to help you and you not really being ready to buy over reacted and made alot of crazy paranoid accusations.
I see some faults on both sides of this situation...
Yes, your realtor shouldn't have tried to coach you, or done alot of things you say they did.
On the other hand, this is the real estate market, not a used car dealership. A house is worth what someone will pay for it, and there are alot of people willing to pay alot right now. If you're not willing to pay a good price, then you may find it difficult to get the house you want. Have you considered buying a new house, or having one built?
Geezz, this post really made me a little mad. Anyways what would you sue for? And why wouldn't talk with another Reatlor again? People are people, business is business. It's not personal. Keep a calm head, and find a home, before rate start rising. Good Luck!
Lance
hmmm, ok, thx all for the info and the comments. Maybe it's just me, but I don't get how someone can just so easily say, it's only $5k more and just accept it? You all buy your cars at a Saturn dealership? you just walk in and say, "wow, I like that, I'll take it!" Maybe it's just me and the way I was raised, but I was always told to never pay the asking cost for things like houses, cars, etc. My father-in-law even laughed about the situation. Said to move on, find another house. Maybe it's just the rapid housing price increase in this area. It's just incredible to see such inflated prices on houses that just 5 years ago would have sold for about 2/3 the price and now has additional years on it. OH well, I guess that's the way it goes.
BTW, yes, I do pay rent, but it's cheap, cheap, although I'd really don't want to rent anymore. We just couldn't find a house in this town as cheap as our rent unless we can see thru the walls. The house we were looking at was only 1200 sq ft 3 bd, 1bath., nothing special. It needed some work as it was.
well, thx guys.
Maybe you should concentrate your bargaining skills on buying a rehab property that needs some serious work, and then talk down some contractors, and make some money, way more than that 5k =)
No, I don't pay full price for cars, but cars aren't houses. There are way more buyers for houses than sellers right now, which isn't the case for cars, which makes it a completely different situation. Just because a house was worth 2/3rds what someone's asking for it right now 2 years ago, doesn't mean its not worth the asking price, or even more.
Otherwise, you could keep wasting money on rent, and enjoy your new double-wide in a few years.
It's a matter of how you do the math, a house costs 100k , at 5% interest x 30 years the loan would cost 536 a month. 4 years ago this month the FHA loan rate was 8.58% that same 536 a month would buy a house at just over 69k. So, if prices have risen by a third in your area, the cost per month to purchase them has barely gone up at all.
wow, maybe some of you need to come here, I think 9/10's of the people in the whole county have their house for sale.
I'd like to know how you get your undershorts for less than full price. I wish Wal-Mart would do that for me. I suppose I could get them at a yard sale. LOL.
Some things just are as they are. I'm afraid that in the big scheme of things, by the time you add up all the rent money you spend between now and when you finally close on a house, the tax write-offs you did not get, the higher interest rate you'll end up with spread over 30 years, you would see that it cost you much more than 5k.
Have you ever looked at a mortgage note and seen the actual amount you will have paid for the home if you pay on it for 30 years? 5000 then seems to be such a small number.
Suppose you drive by this house 5 years from now and see that it's listed for 30k more than it is now. If you can then get it for 5k less, will you think that's a good deal?
How do you think a fsbo comes up with their asking price? They base it on what their neighbor sold their house for with a Realtor's commission built in. Do you think they will pay you the same they could have paid a Realtor to handle all the dirty work for them?
This is an investors website full of men and women who try to purchase things for less than full price. I appreciate your principle. But sometimes you just have to look at the big picture and ask yourself "Am I making money or costing myself money?"
I'm "cheap" also. Its in the best interests of both agents and the broker to get the deal done, the $5k difference in purchase price means very little to any of them. Buyer agent is driving you all over town, seller agent is all loss untill it moves, broker want is done also. I don't think they are trying to push the price up... maybe its a good deal and the seller is really firm. That would be there only modivation for expecting an offer at list if its not typical for the market.[ Edited by c5hardtop on Date 07/02/2004 ]