Mortage Co and Real Estate Agents

[Deleted]

I have a question for someone who might be more recent home buyers. It's been a while for us and maybe we are being overly cautious. We are considering the purchase of a condo for investment purchases. Property values are very low in some areas and rents are still high. We contacted an agent to look at a condo. Good price, bad area so we are continuing to look and decided to get preapproved for the mortgage so we would have more leverage. She recommended a mortgage co, they've been around forever, so I figured, what the heck. We'll contact others as well and be aware. Broker ran credit and all appears good. Now, broker and agent have "decided" between themselves that we can afford more than we want to pay. I'm really ticked about it and ready to walk away from both of them. Are we wrong and is this how it's done now? Or are my feelings valid? Thanks!

[The J]

Your feelings are absolutely valid. First, your broker should not be providing information to your agent without your permission. Second, it doesn't matter what you can afford, it matters what you're willing to spend. I'd drop them both.

[Deleted]

The mortgage broker can tell your agent how much you can afford, but YOU decide how much you want to pay. I see this all the time of HGTV's First Time Homebuyers show. The buyers are preapproved for X amount, but Sandra asks them how much they really want to pay. It is always lower.

Don't get upset about this issue. But do compare stuff like origination fees, points, etc. The broker may not be your cheapest option. My son just did a refi (and I'm sure it would work for an original loan as well) and used something like LendingTree.

[TheOtherMe]

I purchased my current home about 18 months ago. I was preapproved for way more than I was comfortable paying. Yes, realtor was pushing me to look at houses in a higher price range. I told her I didn't have time to waste looking at those because I knew I could not afford them.

It isn't up to the lender or the realtor to determine how much you want to spend. You know what you are comfortable with--not them.

[bean29]

I am not so sure that you shouldn't look at other homes in the range your are pre approved for. When we got pre approved for our 2nd home I never divulged to our agent that we were pre approved for more $$ or that we had more $$ to put down on the house. There was a house for sale in our neighborhood I wanted to see but he would not show it to me because he thought it was out of our price range. I have always been sorry I did not go for more house on that second purchase. We only lived there a short time before we decided it did not meet our needs.

You can talk to more than one broker and more than one mortgage originator. I would ask Friends who holds their mortgage and if they are happy with them. To me who originates the mortgage is kind or irrelevant b/c so many mortgages are bought and sold nowadays.

[michelyn8]

You know what you can afford so stick to your guns. If you're unhappy with what you perceive as a collusion between the realtor and broker, then you are within your rights to drop both of them and take your business elsewhere.

Keep in mind that a lot of these calculators for what you can afford only look at fixed income and debts (ie: rent/mortgage, credit cards, loan payments). They do not take into consideration other payments a person has each month like utilitities, gas for your car (which is going up again ), etc. You know what you pay out each month for those things and how they can and do fluctuate - the broker/realtor don't. So you know what your actual oulay is, not them.

[pushingit]

You need to have a talk with your agent and tell them that you are looking to spend X, and that it's an investment and not about what you can afford, but what you're willing to invest. If they squawk, show them the door.

[kristi28]

I agree with others that you get to determine the amount that you are comfortable spending. However, there is no problem with the broker & agent deciding that you can afford more - just tell them that you are not interested in stretching that far. If your realtor won't show you things in the range that you are comfortable with, then feel free to drop him/her.

As a side note, here in MO at least, there are rules about dropping a realtor and then putting in an offer on a house that realtor showed you. If you have seen properties that you like, you may want to look into this for your state.

[whoisjohngalt]

I would drop them both. "They" shouldn't be DECIDING anything for you. And I know many would think that I am insane, but your realtor has no business knowing what you can afford at all. Her ONLY business is to show you houses and write up P&S.

I am very big on privacy and my realtor, who was working with us for 2 years!! didn't know anything about anything except the specs of the house we were looking for. She never asked any questions and I appreciated that.

No way I could work with people like that.

Lena

[2kids10horses]

I am a REALTOR, and I tell my Buyers not to spend more on the house than they are comfortable with spending.

That said, you might want to look at more expensive listings, especially if they are foreclosures. Then offer what you want. You would be amazed at how much the banks are willing to deal these days.

To give you an example, I bought a house (I'm a landlord) for $60,000 that was listed for $105,000 and the bank had fixed it up with new appliances, new carpet and fresh paint.

So, if I had only wanted to look at listings $65,000 and under (which is what I wanted to spend) I would have missed the deal!

[quotequeen]

When I went to get preapproval I told them the amount I wanted approval for and that's what they gave me, it wasn't open ended with them giving me an amount they decided I could afford. My agent also never pressured me to spend more than what I told him, and never said word one about what he thought I could afford. He originally didn't show me places that were in the next tier below the ones in my price range, but when I told him I wanted to look at those too, he immediately showed them to me.

[Deleted]

Back when I was a licensee I prequalified the buyer before I referred them to a mortgage broker! I sure didn't want to waste my time working with someone who couldn't afford to buy what they wanted to look at. I did sell some investment property but mostly higher end residential houses. The main problem I ran into was folks said they only wanted to spend X but they really wanted Y. I always thought my job was to demonstrate value. So I might preview 50 properties, show them the 5 best representative of their price range and we'd go from there. I never tried talking anyone into spending more. They could see for themselves the price points along the way and decide what was a "deal" for them.

Business folks in the business for the long run understand that you make your living on referrals, not squeezing an extra 1.5% (typical net to an agent) when you get someone to spend 10K extra.

That said, there are plenty of bad agents out there. If you otherwise like your agent, be firm that you want to stay in X price range but would look at something exceptional. If s/he doesn't get the message then it's time to find someone new. Good luck!