I have been attending open houses and looking at the market, as, despite the current turmoil, I'm ready to make the jump to own my home. I hadn't yet decided on a broker. I fell into a FSBO in a prime neighborhood, at what I feel is a good deal (currently anyway). I sent an offer over to the seller by email, and he accepted. I'm about $50/sq ft below avg rates for the neighborhood - prime... [more]
I have been attending open houses and looking at the market, as, despite the current turmoil, I'm ready to make the jump to own my home. I hadn't yet decided on a broker. I fell into a FSBO in a prime neighborhood, at what I feel is a good deal (currently anyway). I sent an offer over to the seller by email, and he accepted. I'm about $50/sq ft below avg rates for the neighborhood - prime neighborhood, prime building. My pre-approval rate is fine, doesn't reflect the media hype going on as I'm a prime borrower and this purchase will enable me to come in below a jumbo loan.
Of course, with the continued media frenzy, I'm getting early 'buyer's remorse'. I still think the apt is a good buy, and plan to be there *at least* 5 years. My question, however, is - if I feel differently, at what point can I still pull out? Was my email considered an offer in writing and does that bind me to continue? If I do pull out, will that register anywhere (other than possibly this particular building) and impact my opportunity to get an offer accepted in the near future?
To all the naysayers who will warn me away - I would appreciate any and all constructive advice on both sides, but I've done the math, and compared rent payments over the next 5 years with mortgage+interest payments+closing costs on both ends, assuming the market is flat, then accounted for the equity I'll have at the end of those 5 years (minimal to be sure, but it will be there), and I end up pretty close to equal. So in my estimation, I have nothing to lose unless the market really tanks. And despite the financial situation, I don't see demand lessening in the NY market - people are going to continue to want to be here, and these will include people who are at the entry level of the market and who, like me, are looking for the emotional stability of owning their own place. I've just realized my calculations didn't account for any rise in rent, either, which gives me some wiggle room. Of course, I'll probably put some money into the apartment, but I consider that a sunk cost and out of this equation, because I'm basing that spend more on an emotional desire to improve my surroundings than a need for a financial return on investment.
Thoughts?Comments?
[less]
Response by WaxPoetic
over 18 years ago
Posts: 60
Member since: Apr 2007
Hi, congratulations on your accepted offer, but fear not, you are a loooong way from owning this apartment.
If emails were binding, I would have bought a couple of apartments this summer instead of just one. :)
Where is your attorney???? Forget the broker and find an experienced attorney for $1200-$2000 flat fee.
Also, check out urbandigs.com and read up so you know more about how buying and selling works.
Until you pay the down payment and sign the contract, which will be provided by the seller's atty, the seller is free to sign with somebody else, which may well happen, and you are free to say you changed your mind and sign with somebody else. And unless you're in some kind of rarified pocket of the Manhattan or Brooklyn market, I just cannot imagine this having any effect whatsoever on your future prospects. This is a rather large city, you know.
The larger problem here may be that you don't know your own mind well. How about getting out a sheet of paper, drawing a line down the middle, and listing all the advantages of owning and the advantages of renting and the disadvantages of both. Write it down, it will make it clearer to you. Maybe you're not ready emotionally to tie yourself down so much?? Stuff like that is far more important than the latest article in Business Week.
All the best to you!
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Response by Newtomarket
over 18 years ago
Posts: 3
Member since: Aug 2007
Thanks, Wax. Appreciate the detailed comment.
Re: the attorney, it's coming Monday. This has all happened more quickly than I anticipated. I don't plan to navigate the whole road alone - as you can see, I'm quite the novice!
I have been reading urbandigs, as well as these boards and a few other sites, and am learning a lot.
Lastly, re: my mind, I made the list before I made the offer. Just need to keep pulling it out ;-)
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Response by ChumpSpotter
over 18 years ago
Posts: 33
Member since: Jul 2007
"I have been reading urbandigs, as well as these boards and a few other sites, and am learning a lot."
Ahahahaha, then there is no hope for you. Ahahahaahahahahahaha.
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Response by Techman
over 18 years ago
Posts: 14
Member since: Jun 2007
Techman says listen to Wax, his advice is sound. If you like the apt and plan to live there at least 5 years and have about as much job security as is possible these days, then don't look back. I also think Urbandigs is a great site, both in terms of content as well as esthetics, user interface, etc.
BTW: I still don't understand why there are so few FSBO's in Manhattan. I've bought and sold that way in the burb's and it was just as easy a using a realtor. I certainly plan on doing it again when I sell in Manhattan.
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Response by inoeverything
over 18 years ago
Posts: 159
Member since: Jan 2007
Real Estate Agents/Brokers are for the retarded only.
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Response by Bidlow
over 18 years ago
Posts: 3
Member since: Aug 2007
Bid Low, Bid Low, Bid Low......
REPEAT
Bid Low, Bid Low, Bid Low......
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Response by Stella
over 18 years ago
Posts: 7
Member since: Jun 2007
Newtomarket,
We have the same issue. A bit of a buyer's remorse after we got our offer accepted. But you have to do a pro/con analysis and figure out how the cash flow looks in terms of rent vs buy and not get too carried out with the headlines. In our case, we found that what we would pay for mortgage/maint wouldn't get us same quality apartment in similar locations if we were to rent. Then there is an unquantifiable value of being a first time owner added plus. So we decided to go ahead with the purchase. Regarding the market tanking when it is time to sell, there is always that risk, but we are not paying a premium now our offer was similar to what the similar apartments sold about a year ago.
Regarding the headlines, we have been hearing about market tanking for about a year now even though actual data doesn't confirm that. What is different about now is that if you are looking to get a jumbo mortgage then it seems like rate is high. Of course there is always a limit on how much of a rate your can afford, but if you are waiting to buy because you think because of jumbo rate price may come down, that's not a complete picture. In terms of cash flow every month (i.e. how much this is going to cost you), you will not see much difference since lower price you may get from decline in market will be canceled by higher interest you will be paying each month. However, i would caution about getting a jumbo mortgage right now partly because the volatility in the rate in these last few weeks is unprecedented. You want to see where the chips will fall and make a decision after finding out if the jumbo rate is going stay this high or change. If your mortgage is less than jumbo and have a decent rate locked in, then don't think the recent headlines are much of a concern.
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Response by brokerbabe
over 18 years ago
Posts: 6
Member since: Aug 2007
Newtomarket:
*a pre-approval is not the same as a mortgage committment; rates change on a weekly, sometimes daily, basis, so the rate expressed as a response to a pre-approval can/will change. (Also, unless you provided hard documents, it is somewhat useless).
*why do you worry about the media frenzy? the media lags behind the real market (whatever that market may be, by 6 to 18 mos.) You have done your research; you have been diligent; What's the problem?
*are you buying in a co-op or a condo? If it is a co-op then you need to ask the seller, about the liquid asset requirements for the bldg. The seller will have to approach the board for guidance. There is no co-op board that wants a buyer to be 'tapped out' after closing.
*do you know all the extra costs? Your lawyer, mortgage fees, transfer taxes, moving-in costs; application fees? Check it out before you sign a contract.
*as to lawyers---do you have one Who Was Recommended By Someone You Know and Trust (and they have had a personal relationship?) It is usually best to use an atty. who actively works on Manhattan real estate (as opposed to your cousin's boyfriend who is a litigation lawyer)
*you said you are potentially buying in a prime neighborhood. If it is prime to you that is all that counts. But how do you know the bldg is prime? Your atty., doing his/her due diligence and looking at the past financials will help you determine that.
*once you sign a contract and issue the 10% you cannot pull out, unless you have a mortgage contingency, and you cannot get a mortgage. (And I mean, you cannot get a mortgage, not get a mortgage at a rate that favors you).
*I believe that e-mail correspondence is the same as a paper document sent via snail mail; however, once you make a bid you are not bound to continue negotiations. That is why it is called 'negotiation' as opposed to a 'contract'.
*if you decide to pull out of this 'potential' deal (before a signed contract), there is no one who will know; just you and the FSBO/seller. Really, think about it...who the hell would know? LOL, do you think mortgage brokers & FSBOS have the time to blog about Buyer #100,285 who had a change of heart... "Let's BLACK LIST HIM"...1984 has come and gone. (Caveat Emptor: real estate brokers have a HUGH memory about such things, BUT, ONLY, if you were really a creep...and then you are only in 'trouble' if you make another offer with THAT broker.)
*so, why are doubting yourself? You are not an idiot, or you would not be able to attend open houses, and make a written bid. My best advice to you: 1) trust yourself; 2) know what you want; 3) know what you can truly afford; 4) get off the internet, it is, at this point, diluting the knowledge you have attained---decide for yourself. You will be OKAY :)
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Response by JuiceMan
over 18 years ago
Posts: 3578
Member since: Aug 2007
Agree with Techman. If you 1) love the apartment 2) can afford it & 3) want to live in the city, than don't worry about the market. I closed two months ago on a condo in a prime location (FSBO by the way) and love it. The financial benefits will be there if you are patient but the enjoyment you will get from owning will be immediate.
Hi, congratulations on your accepted offer, but fear not, you are a loooong way from owning this apartment.
If emails were binding, I would have bought a couple of apartments this summer instead of just one. :)
Where is your attorney???? Forget the broker and find an experienced attorney for $1200-$2000 flat fee.
Also, check out urbandigs.com and read up so you know more about how buying and selling works.
Until you pay the down payment and sign the contract, which will be provided by the seller's atty, the seller is free to sign with somebody else, which may well happen, and you are free to say you changed your mind and sign with somebody else. And unless you're in some kind of rarified pocket of the Manhattan or Brooklyn market, I just cannot imagine this having any effect whatsoever on your future prospects. This is a rather large city, you know.
The larger problem here may be that you don't know your own mind well. How about getting out a sheet of paper, drawing a line down the middle, and listing all the advantages of owning and the advantages of renting and the disadvantages of both. Write it down, it will make it clearer to you. Maybe you're not ready emotionally to tie yourself down so much?? Stuff like that is far more important than the latest article in Business Week.
All the best to you!
Thanks, Wax. Appreciate the detailed comment.
Re: the attorney, it's coming Monday. This has all happened more quickly than I anticipated. I don't plan to navigate the whole road alone - as you can see, I'm quite the novice!
I have been reading urbandigs, as well as these boards and a few other sites, and am learning a lot.
Lastly, re: my mind, I made the list before I made the offer. Just need to keep pulling it out ;-)
"I have been reading urbandigs, as well as these boards and a few other sites, and am learning a lot."
Ahahahaha, then there is no hope for you. Ahahahaahahahahahaha.
Techman says listen to Wax, his advice is sound. If you like the apt and plan to live there at least 5 years and have about as much job security as is possible these days, then don't look back. I also think Urbandigs is a great site, both in terms of content as well as esthetics, user interface, etc.
BTW: I still don't understand why there are so few FSBO's in Manhattan. I've bought and sold that way in the burb's and it was just as easy a using a realtor. I certainly plan on doing it again when I sell in Manhattan.
Real Estate Agents/Brokers are for the retarded only.
Bid Low, Bid Low, Bid Low......
REPEAT
Bid Low, Bid Low, Bid Low......
Newtomarket,
We have the same issue. A bit of a buyer's remorse after we got our offer accepted. But you have to do a pro/con analysis and figure out how the cash flow looks in terms of rent vs buy and not get too carried out with the headlines. In our case, we found that what we would pay for mortgage/maint wouldn't get us same quality apartment in similar locations if we were to rent. Then there is an unquantifiable value of being a first time owner added plus. So we decided to go ahead with the purchase. Regarding the market tanking when it is time to sell, there is always that risk, but we are not paying a premium now our offer was similar to what the similar apartments sold about a year ago.
Regarding the headlines, we have been hearing about market tanking for about a year now even though actual data doesn't confirm that. What is different about now is that if you are looking to get a jumbo mortgage then it seems like rate is high. Of course there is always a limit on how much of a rate your can afford, but if you are waiting to buy because you think because of jumbo rate price may come down, that's not a complete picture. In terms of cash flow every month (i.e. how much this is going to cost you), you will not see much difference since lower price you may get from decline in market will be canceled by higher interest you will be paying each month. However, i would caution about getting a jumbo mortgage right now partly because the volatility in the rate in these last few weeks is unprecedented. You want to see where the chips will fall and make a decision after finding out if the jumbo rate is going stay this high or change. If your mortgage is less than jumbo and have a decent rate locked in, then don't think the recent headlines are much of a concern.
Newtomarket:
*a pre-approval is not the same as a mortgage committment; rates change on a weekly, sometimes daily, basis, so the rate expressed as a response to a pre-approval can/will change. (Also, unless you provided hard documents, it is somewhat useless).
*why do you worry about the media frenzy? the media lags behind the real market (whatever that market may be, by 6 to 18 mos.) You have done your research; you have been diligent; What's the problem?
*are you buying in a co-op or a condo? If it is a co-op then you need to ask the seller, about the liquid asset requirements for the bldg. The seller will have to approach the board for guidance. There is no co-op board that wants a buyer to be 'tapped out' after closing.
*do you know all the extra costs? Your lawyer, mortgage fees, transfer taxes, moving-in costs; application fees? Check it out before you sign a contract.
*as to lawyers---do you have one Who Was Recommended By Someone You Know and Trust (and they have had a personal relationship?) It is usually best to use an atty. who actively works on Manhattan real estate (as opposed to your cousin's boyfriend who is a litigation lawyer)
*you said you are potentially buying in a prime neighborhood. If it is prime to you that is all that counts. But how do you know the bldg is prime? Your atty., doing his/her due diligence and looking at the past financials will help you determine that.
*once you sign a contract and issue the 10% you cannot pull out, unless you have a mortgage contingency, and you cannot get a mortgage. (And I mean, you cannot get a mortgage, not get a mortgage at a rate that favors you).
*I believe that e-mail correspondence is the same as a paper document sent via snail mail; however, once you make a bid you are not bound to continue negotiations. That is why it is called 'negotiation' as opposed to a 'contract'.
*if you decide to pull out of this 'potential' deal (before a signed contract), there is no one who will know; just you and the FSBO/seller. Really, think about it...who the hell would know? LOL, do you think mortgage brokers & FSBOS have the time to blog about Buyer #100,285 who had a change of heart... "Let's BLACK LIST HIM"...1984 has come and gone. (Caveat Emptor: real estate brokers have a HUGH memory about such things, BUT, ONLY, if you were really a creep...and then you are only in 'trouble' if you make another offer with THAT broker.)
*so, why are doubting yourself? You are not an idiot, or you would not be able to attend open houses, and make a written bid. My best advice to you: 1) trust yourself; 2) know what you want; 3) know what you can truly afford; 4) get off the internet, it is, at this point, diluting the knowledge you have attained---decide for yourself. You will be OKAY :)
Agree with Techman. If you 1) love the apartment 2) can afford it & 3) want to live in the city, than don't worry about the market. I closed two months ago on a condo in a prime location (FSBO by the way) and love it. The financial benefits will be there if you are patient but the enjoyment you will get from owning will be immediate.