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Having just closed on a house today, I can confirm that the lending requirements have made a complete 180 degree turn from being too lax to monumentally ridicul

by ozi 12y ago

Having just closed on a house today, I can confirm that the lending requirements have made a complete 180 degree turn from being too lax to monumentally ridiculous. What was annoying is the attitude the lenders seem to have when you give them shit for each hoop they make you jump through... it's their own fault the market is in the condition its in - not the home buyer's. That being said, this article is accurate for cities in Texas where the market is experiencing insane growth. I had to offer 5% over list and 40% down to get a winning offer out of more than 20 on a property that was active on the market for less than 48 hours.

GrinningFool 12y ago
" it's their own fault the market is in the condition its in - not the home buyer's." There's a fair bit of blame to around here. Lenders should not have been lending to unqualified individuals or pushing unreasonable loans. How come nobody ever mentions the Realtors in this process of looking for fault? They were generally most intimately familiar with their clients' finanacial states - working with them for weeks and months at a time, as opposed to a few hours that a finance company spends making a decision. Realtors abrogated their responsibility to their clients' best interests in the name of getting bigger & bettter commissions - because whether their clients could actually afford to keep the overpriced properties they were selling wasn't their problem. Finally, would-be home owners could have applied a healthy dose of common sense. It just took a little bit of research to see that houses were overpriced, and that there was zero logic in a 5 year ARM with a balloon payment under which you spend the first five years paying only a portion of the interest. That a $3000/mo mortgage when living from paycheck to paycheck is not a good idea. Yet millions did these things anyway, hand-waving at the future in order to get that extra square footage or in order to gamble something they didn't have on the hope that the unreasonable prices would continue for another five years. It may be that it's only luck and timing that stopped me from being one of those people - I don't know what I would have done had I been looking for a house in the mid-2000s (I bought mine in 2000 when prices were relatively sane). But I like to think I'd be taking responsibility for my own bad decision if I made it. No matter who was pushing me towards it.
- malandrew 12y ago
  My mother is a real estate agent and having observed that industry first hand for most of my life and seeing how backwards it is, I like to criticize it as much as the next person. That being said, I don't see how the holding the real estate agent accountable is the right solution. Their job is to find and show houses buyers may want to purchase, not handle the details of counter-party risk. Responsibility here lies with all the counter-parties to the transaction with contractual obligations, i.e. the buyer and the lender. At best, you could maybe set up a simple framework that requires real estate agents a way to calculate the range of homes that they should be showing their buyers. This would be used just to make sure the real estate agent doesn't push people into homes someone should not being considering. However, with that said, if a buyer insists in looking outside the price range that is affordable for them, that isn't the real estate agents fault.
  - GrinningFool 12y ago
    I agree re: it not being the agent's fault if the buyer insists. But I've seen all too many cases where it's the agent doing the 'gentle push' to higher prices. "Well don't forget this will give you a tax break over renting, and that will add up to a couple hundred a month..." Etc, etc. I'm shopping for a house again now, and even now I've had to tell my agent that the top end of what I provided as a limit is actually a limit, and I want to see properties under it as well.

by ozi 12y ago

GrinningFool 12y ago

" it's their own fault the market is in the condition its in - not the home buyer's." There's a fair bit of blame to around here. Lenders should not have been lending to unqualified individuals or pushing unreasonable loans. How come nobody ever mentions the Realtors in this process of looking for fault? They were generally most intimately familiar with their clients' finanacial states - working with them for weeks and months at a time, as opposed to a few hours that a finance company spends making a decision. Realtors abrogated their responsibility to their clients' best interests in the name of getting bigger & bettter commissions - because whether their clients could actually afford to keep the overpriced properties they were selling wasn't their problem. Finally, would-be home owners could have applied a healthy dose of common sense. It just took a little bit of research to see that houses were overpriced, and that there was zero logic in a 5 year ARM with a balloon payment under which you spend the first five years paying only a portion of the interest. That a $3000/mo mortgage when living from paycheck to paycheck is not a good idea. Yet millions did these things anyway, hand-waving at the future in order to get that extra square footage or in order to gamble something they didn't have on the hope that the unreasonable prices would continue for another five years. It may be that it's only luck and timing that stopped me from being one of those people - I don't know what I would have done had I been looking for a house in the mid-2000s (I bought mine in 2000 when prices were relatively sane). But I like to think I'd be taking responsibility for my own bad decision if I made it. No matter who was pushing me towards it.

malandrew 12y ago
My mother is a real estate agent and having observed that industry first hand for most of my life and seeing how backwards it is, I like to criticize it as much as the next person. That being said, I don't see how the holding the real estate agent accountable is the right solution. Their job is to find and show houses buyers may want to purchase, not handle the details of counter-party risk. Responsibility here lies with all the counter-parties to the transaction with contractual obligations, i.e. the buyer and the lender. At best, you could maybe set up a simple framework that requires real estate agents a way to calculate the range of homes that they should be showing their buyers. This would be used just to make sure the real estate agent doesn't push people into homes someone should not being considering. However, with that said, if a buyer insists in looking outside the price range that is affordable for them, that isn't the real estate agents fault.
- GrinningFool 12y ago
  I agree re: it not being the agent's fault if the buyer insists. But I've seen all too many cases where it's the agent doing the 'gentle push' to higher prices. "Well don't forget this will give you a tax break over renting, and that will add up to a couple hundred a month..." Etc, etc. I'm shopping for a house again now, and even now I've had to tell my agent that the top end of what I provided as a limit is actually a limit, and I want to see properties under it as well.