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If you have a specific question don't hesitate to e-mail me and I'll post a response here (or I'll respond directly to you if you request). And don't worry – I'm not going to sell or give your e-mail address to spammers or start bugging you about doing business with me, that's not my style. I believe the best way for me to get business is to advertise what I have available and then work with you when you choose to contact me. The answers are my opinion based on my experience and I am solely responsible for the content.
Just e-mail your question to: dave@rodkey.com |
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SHOULD I CHECK WITH THE BANK BEFORE I LOOK AT HOUSES ? WHY ISN’T IT OKAY TO JUST SHOP FOR A HOUSE FIRST ? WHERE IS THE BEST PLACE TO GET MY LOAN ? SOMEBODY AT WORK TOLD ME TO GO TO THIS LOAN DUDE (OR DUDETTE) IN INDY (OR LAFAYETTE, OR SOMEWHERE). I GOT TURNED DOWN BY THE BANK, SHOULD I TRY ANOTHER BANK ? WHAT’S WRONG WITH MORTGAGE BROKERS ? WHY DOES IT TAKE SO LONG TO GET LOAN APPROVAL FOR A HOUSE ? WHO DOES MY AGENT REPRESENT ? DOESN’T THE AGENT REALLY JUST BRING TWO PARTIES TOGETHER ? SO YOU’RE SAYING THE AGENT REPRESENTS THE PARTY PAYING THE FEE ? THIS IS CONFUSING! DON’T I JUST CHOOSE WHO I WANT TO REPRESENT ME? BUT MY AGENT SAID THEY WOULD REPRESENT ME FOR FREE HOW MUCH LESS THAN ASKING PRICE SHOULD I OFFER ? WHAT IS A CMA ? WHAT IF THE HOUSE HAS BEEN ON THE MARKET FOR A LONG TIME ? DOES THE SELLER HAVE TO SELL TO THE FIRST/BEST OFFER? WHAT IF THEY DON’T TAKE MY OFFER? WHAT IF THE SELLER DOESN’T MAKE ME A COUNTER-OFFER? WHAT IF SOMEONE ELSE MAKES AN OFFER BEFORE THE SELLER ACCEPTS MY OFFER? CAN SOMEONE ELSE BUY THE HOUSE WHILE I AM NEGOTIATING WITH THE SELLER? BUT THE HOUSE HAS BEEN FOR SALE FOR MONTHS AND NOBODY ELSE MADE AN OFFER UNTIL I WANTED TO BUY IT!! ARE YOU SAYING BUYERS JUST COME OUT OF NOWHERE ?? |
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SHOULD I CHECK WITH THE BANK BEFORE I LOOK AT HOUSES ? If you have never bought a house I highly recommend you talk with a lender first. Some people think they can work the financing out later. They apparently think that if they want the house it will magically happen. And some Realtors® tell you they can preapprove you for a loan. The only person that can approve you for a loan is someone authorized by the lender. Even most loan originators don't have loan approval authority!! I'll state that again: LOAN ORIGINATORS USUALLY DO NOT HAVE LOAN APPROVAL AUTHORITY !!! But the loan officer has the authorization from the lender to collect your application information, so my advice is to talk to a loan originator representing the lender. IMPORTANT NOTE: There is a BIG difference between a loan officer and a mortgage broker. |
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WHY ISN’T IT OKAY TO JUST SHOP FOR A HOUSE FIRST ? From my point of view I don't mind showing someone a vacant house if they are casually shopping "just to see what is available". In fact, I want the opportunity to meet with the prospective buyer. But if the house is occupied and people have to get the house ready to show, disrupt their routine and build up their hope and anticipation that the house is going to sell I think the looker should know what their capabilities are. A vacant property is a house. An occupied property is somebody's home. Would you want someone coming through your home if they had no clue whether or not they could get the money to buy it? The exception to this is an open house. Then the homeowner has invited you to come through. I say just apply the golden rule. |
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WHERE IS THE BEST PLACE TO GET MY LOAN ? The best bank is the one that will make you a loan!! I always recommend you start with the local banks right here in Frankfort. I SAID A BANK, not a mortgage broker !! If you already have an established banking relationship (checking, auto loan, etc.) start with that bank. I suggest you contact: The Farmers Bank; Regions Bank. |
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SOMEBODY AT WORK TOLD ME TO GO TO THIS LOAN DUDE (OR DUDETTE) IN INDY (OR LAFAYETTE, OR SOMEWHERE). Well, first off, if that somebody at work is so darned smart why are they still working?? Where you go to get the loan can makes a HUGE difference in how much you will have to pay to get the loan. If you have good credit, but you don't have a down payment you should still talk to a local bank. Even if you have some credit issues and no down payment you should talk to a local bank first. Don't go out of town just to search for a good deal!! Trying to compare mortgages is next to impossible. The local bank is looking for long term customers and they can only get long term customers by treating you right. GO TO A LOCAL BANK FIRST (not a mortgage broker). |
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I GOT TURNED DOWN BY THE BANK, SHOULD I TRY ANOTHER BANK ? Chances are good that if bank A turns you down so will bank B. Not always, but it's pretty likely. You see, most of the time the bank is turning you down because you don't conform to mortgage insurance company (known as MI, for Mortgage Insurance) or secondary market standards. Some banks have non-conforming programs. When two banks have turned you down - that is when you should consider a mortgage broker. |
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WHAT’S WRONG WITH MORTGAGE BROKERS ? Gosh Dave, you seem to be pretty harsh on mortgage brokers!! That's because I am. Mortgage brokers fill a niche. If you have credit issues or something that causes you to not be able to get a bank loan they can sometimes get you a loan, providing you are willing to pay enough. The problem is some mortgage brokers are not up-front about what you have to pay. Some don't tell you about all the fees until just before the closing, knowing that you probably won't back out at the last moment. Some make extra fees by getting you to pay a higher interest rate. Most mortgage brokers don't give you the option of choosing the rates that are available to you. They choose the rate and you don't know if that is the best rate you can get. And it seems they all tell you, you are approved. LOAN ORIGINATORS USUALLY DO NOT HAVE LOAN APPROVAL AUTHORITY !!! They tell you, you are approved so they can get you tangled into their web. I've spent way too much time arguing with mortgage brokers who insist you are approved, but they "need just a few more documents." The bottom line is this – IF THEY ARE STILL WAITING ON DOCUMENTS YOU ARE NOT APPROVED!!! |
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WHY DOES IT TAKE SO LONG TO GET LOAN APPROVAL FOR A HOUSE ? Why is it you can go into a car dealership, apply for a loan and drive away in the car you just picked out, but it takes weeks to get a loan approval for a house. Well, as easily as it is to get that car loan it's almost as easy for the lender to get that car back if you don't make the payments. With a house it's much, much harder for the lender to get you out of the house if you stop paying. The car lender can send "one of his goons" out to snatch the car right out of your driveway, even if the keys are not in it. In a house foreclosure there is notice, redemption period, Sheriff's sale and lots of time and money involved. In addition to that most lenders sell their loans. In order to sell the loan there has to be a huge packet of papers (the loans are sold by the number of papers in the packet – more pages means the bank gets more for the loan, ( just kidding about being paid by the number of pages!). Anyway, there must be inspections, verifications, consents, credit report, appraisal, title search, and on and on and on. All this takes time. By the way, this is the reason I tell you a mortgage broker CAN'T approve you BEFORE they get all these documents. |
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WHO DOES MY AGENT REPRESENT ? I don't think there is any greater confusion in the process than who represents whom. I suggest you do this. Ask the Realtor® who they represent and hold them to it! If they say they represent you, you should expect them to put your interest first – even ahead of themselves. If they say they represent both the seller and the buyer, I say – GET RID OF THAT AGENT. Why, you ask? Indiana law allows the agent to represent both parties, but I don't think it is possible to represent the seller in getting the highest price and best deal and for the same agent to also represent the buyer in getting the lowest price and best deal (really, I mean HOW can you do that?) If the agent is going to represent both parties they have to get signed consent from the seller and the agent can't give the buyer any information that would give the buyer a negotiating advantage over the seller without the seller's written consent. Additionally, the agent has to have signed consent from the buyer and the agent can't give any information that would give the seller a negotiating advantage over the buyer without the buyer's written consent. The basic question I have is: WHY WOULD A SELLER AND BUYER AGREE TO SUCH A THING? |
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DOESN’T THE AGENT REALLY JUST BRING TWO PARTIES TOGETHER ? Well, yes. But it makes a difference how you get to the goal. For example, let's say you have a goal to get your teeth whitened. Imagine going to the dentist and they take your teeth out (to make them easier to work on) and returned them to you all nice & white & bright in a beautiful display case. Same goal, but you had something different in mind. My point is the seller has a goal to sell the house and the buyer has a goal to buy the house, but they have different ideas about how to get there. IT IS MY OPINION that the agent has to represent someone. If the agent is being paid an incentive based commission the agent has a financial stake in seeing the deal gets done. So, when the agent is being paid an incentive based commission it is really, really difficult to act as a neutral player just trying to bring the two parties together. The agent being paid an incentive based fee always has the incentive to get the parties together to make the fee. In fact, sometimes the listing broker offers a bonus to the selling broker. If your broker says they are representing you be sure to ask them not only who is paying them, but how much they are getting paid to represent you. |
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SO YOU’RE SAYING THE AGENT REPRESENTS THE PARTY PAYING THE FEE ? No. It is possible represent party A while being paid by party B. BUT, if you're the buyer and you are not paying your agent AND your agent is being paid an incentive based fee that comes from the seller's money DOESN'T IT MAKE SENSE THAT YOUR AGENT HAS AN INCENTIVE TO GET THE DEAL DONE IN ORDER TO MAKE A FEE ?? Again, be sure to ask your broker who is paying them and how much they are getting paid to represent you. |
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THIS IS CONFUSING! DON’T I JUST CHOOSE WHO I WANT TO REPRESENT ME? No, the agent should choose who the agent will represent. The agent is licensed by the State of Indiana and is required to have training, knowledge and understanding of the laws of Agency. You should tell the agent what you expect and the agent will advise you if they will deliver what you request. |
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BUT MY AGENT SAID THEY WOULD REPRESENT ME FOR FREE Okay, if you're old enough to buy a house you're old enough to know NOTHING IN THE BUSINESS WORLD IS FREE !! Somebody pays. It may be with money or it may be with services, but somebody pays. With very few exceptions, the only reason to be in business is to make money. Once again, be sure to ask your broker who is paying them and how much they are getting paid to represent you. |
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HOW MUCH LESS THAN ASKING PRICE SHOULD I OFFER ? There is no standard answer to this question. You can ask your agent to provide you with the average of the selling to asking price for past sales. But the average is comprised of sales that were a little below the asking price, some that were way below the asking price and some that were above the asking price (yes, that does occur). You should be most concerned about whether the asking price is reasonable. A better approach is to ask your agent to provide you with a CMA. If your agent doesn't know what a CMA is or doesn't know how to prepare one – I say, GET YOURSELF ANOTHER AGENT. |
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WHAT IS A CMA ? CMA stands for Comparative Market Analysis (or sometimes called a Competitive Market Analysis). A CMA is similar to an appraisal, but it is does not meet the criteria required for an appraisal. An appraisal is an unbiased opinion of the value of the property, but a CMA is prepared by someone with a bias (the preparer is either representing the seller's interest or the buyer's interest). A well prepared CMA should give you information about similar properties on the market and guide you to a conclusion about whether or not the property is reasonably priced. |
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WHAT IF THE HOUSE HAS BEEN ON THE MARKET FOR A LONG TIME ? Yes, that is a factor. But many times buyers feel that since the house has been for sale for a long time it must be way overpriced or that the seller will take a lot less. The bottom line is that a house won't sell until someone buys it (really!!) Just because the house was not bought yesterday, or last month or 4 months ago doesn't really mean much about the value. It usually means it's not worth more than the asking price, but in the case of multiple offers on the property you may have to pay more than the asking price if you want the house. Sometimes a seller's loan payoff is very near the asking price and the price is not very negotiable regardless of how long the house has been for sale. Sometimes the seller has a mental goal of X-amount, is not forced to sell and is willing to wait for a buyer that will pay the price. Again, you should get a CMA to guide you. |
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DOES THE SELLER HAVE TO SELL TO THE FIRST/BEST OFFER? No. The seller doesn't have to sell until they have signed a binding contract with a buyer. A listing agreement is not a binding contact with a buyer. |
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WHAT IF THEY DON’T TAKE MY OFFER? WHAT IF THE SELLER DOESN’T MAKE ME A COUNTER-OFFER? Well, they don't have to take your offer and they don't have to negotiate with you. I've experienced situations where the seller has had a change of events and no longer wants to sell the property. I've experienced situations where the seller was upset or insulted with a very low offer and didn't want to negotiate with the buyer. There are a number of reasons that a seller may choose to not make a counter-offer. |
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WHAT IF SOMEONE ELSE MAKES AN OFFER BEFORE THE SELLER ACCEPTS MY OFFER? CAN SOMEONE ELSE BUY THE HOUSE WHILE I AM NEGOTIATING WITH THE SELLER? You betcha'!! The seller is not obligated to you until they sign a document that obligates them to you. So think about it – when you sign a offer to buy the seller can't be obligated to you unless they sign the offer and agree sell to what you for what you have offered. When you both have signed you are obligated to buy and they are obligated to sell. If you make an offer and someone else makes an offer BEFORE the seller signs your offer the seller may decide to sell to the other party. |
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BUT THE HOUSE HAS BEEN FOR SALE FOR MONTHS AND NOBODY ELSE MADE AN OFFER UNTIL I WANTED TO BUY IT!! Yes, that seems strange but that is simply the way it works sometimes. |
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ARE YOU SAYING BUYERS JUST COME OUT OF NOWHERE ?? Well, yes they do (sometimes). Sellers and buyers get this idea that since the house didn't sell yesterday it won't sell tomorrow. Sellers want to give up because it hasn't sold in several weeks or months. Buyers think no one else in the world wants it because it hasn't sold in weeks or months. The fact is this: every day buyers go out of the market and every day buyers come into the market – EVERY DAY !! If you can predict what will occur tomorrow I want to talk to you about my lottery numbers!!!! |
