Barry Shapiro

Karen,

I recommend you do NOT ask your lender to IMPOUND your account for property taxes. This is because of three (3) primary reasons:
1) The lender usually will take about one-third more than is necessary to pay yor taxes. It keeps growing and growing in an escrow account that you do not have access to, until, usually, you refinance your mortgage.
2) You lose the use of your money for a temporary emergency.
3) You lose INTEREST on your own money, because you can probably make that money grow through other investments, such as a 3-month money market account or CD.

Unless you are irresponsible with your finances, and can't come up with a larger payment when the taxes are due, you should avoid escrow accounts and maintain CONTROL of YOUR money. - Tue Jul 22 2008, 20:50

Karen,
The answer depends on several factors, including but not limited to the following:
1) How much is the Buyer putting down on the property? This is a primary factor.
2) Does the Buyer still want to buy the home and does the seller still want to sell it to them?
3) Do the Real Estate agents involved in the transaction feel the appraisal is accurate, and would another lender possibly appraise the property for a higher amount? Getting another appraisal may help.
4) How much is the disparity in the contract price and the appraisal? Is it $5,000 or $50,000?
5) Is the home so unique (or special) that true comparables are hard to find?

... We will start seeing this trend occur more frequently, as more and more buyers are finding homes to be "affordable" again and multiple offers are being submitted. There is a box on the appraisal form that is regularly checked off, indicating the home is located in a "declining market" (i.e. Ventura County) -- and values are bumped down 5% as a result. This gives the lender a little extra cushion to weather the anticipated future decline, if any, in area-wide home prices, Ask to see the appraisal. Since real estate is all negotiable, either the seller can reduce their sales price, or the buyer can kick in more money or there is another option. If the lender on the first mortgage will allow it, the seller can ask the buyer to sign a secured note (second mortgage) at either 0% interest or "maket rate" interest or somewhere in between. This, to me, is the best win-win situation. The seller eventually gets their contracted price and the buyer gets their home of choice. Since the buyer was planning to pay the higher price (offered) anyway, they should be willing to incorporate a private-party second mortgage.

I am actually representing a seller on a home that had 7 offers, and 2 were over asking price. The appraisal came in under the contract price, so both parties agreed on a new compromised sales price. A seller in today's market should be happy to get at least the appraised valued for their home. Far too many have listed their homes beyond the current appraised value. It's still a buyer's market, so you that as leverage in negotiating the final price you pay. Good luck in getting the deal to close escrow! - Sat Jul 19 2008, 06:25

Eric,
After the foreclosure process, there is no longer a "first lien"... The Bank-owned (REO) property has a current value determined by a new buyer and what the asset manager deems to be acceptable. The first lien CAN be settled prior to the property becoming Real Estate Owned (REO). Excellent question, i might add. - Fri Jul 18 2008, 20:09

Sabine,
I recommend you go (yourself) to the city where the property is located and speak to the Planning and Permits Department. Ask them if their city does an inspection as part of the escrow process, and ask the Qs you sited above. You will certainly have even more questions while you are at City Hall, so you can save a trip by writing them all down first. Also, ask this question specifically to your lender. Good luck in doinf your up-front due diligence. - Wed Jul 16 2008, 15:39

Sabine,

You are welcome to use the free "Market Snapshot" on my website to get a better idea of what is listed and SOLD in the surrounding area. Simply put in your name and email address, along with the property address, Bdrms, Baths, and square footage. You will receive back a Market Snapshot which will enable you to make an informed decision. You say it's a fixer: Better add up how much it will be to renovate the home. I hope you have funds set aside to make this house your home! Keep in mind, it's always gonna cost you more $$ than you thought! Good luck! - Mon Jul 14 2008, 14:40

Sabine,
We are all very pleased with your prudent decision to not go it alone. Don't be so easily swayed to write an offer through the listing agent. It's not of concern (or shouldn't be) how much commissions are or what the financial arrangements are with her seller. If the seller gets a break in the fee, as you described, but you end up paying at or slightly above today's market value, how do you win in the deal? You need a strong buyer's agent that is familiar with the area and has substantial negotiating skills to REPRESENT YOU and your best interests, not that of the seller or listing agent. If you are not able to buy a home at least 5%, if not 10-15% off of today's market value, you may regret your purchase six months from now. There are exceptions, of course, for unique homes or unique situations. Better get a second opinion before signing that contract. The money you save will be your own. - Sun Jul 13 2008, 23:17

Sabine,

We are not really sure what your question is here, specifically. In the case of a FSBO (For Sale By Owner) the seller is hoping to SAVE money by representing themselves and not paying a listing side commission. Sometimes, the FSBO seller will "cooperate", that is, pay a Buyer's Agent a commission to bring them a ready, willing and able buyer (terms negotiable).

Your question is asking if a listing agent will "allow" a buyer to represent themselves in the transaction? The seller has already agreed to pay the listing brokerage -- so you would not receive all the benefits of agency relationships, plus you will not necessarily save any money on the purchase. I recommend you find a competent real estate agent to guide you through the most important invetment in your life. I don't know of any REALTORs that would not concur. I have posted Home Buying information on my website to assist you, and others in their journey. Good luck in your home search. - Sat Jul 12 2008, 15:23