My home searching experience

Here is a perfect time to offer a personal story of how my house-hunting experience is going in this horrible market packed with foreclosed homes.

If you can find a way to buy a home, now is the time to do it. But this story I am going to tell you will boggle your mind because it has mine.

There is a house I am focusing on and although it needs a new roof soon, new carpet and some refurbished bathrooms, the profit margin is there when the housing market recovers—and I estimate that could be in five to seven years.

I am going to give hypothetical details here as to not to be too revealing.

House went on market for $200,000. Market analysis showed that most homes were selling 10 percent under asking price, so I offered below the 10 percent mark, and sent an offer for $170,000 and bank pays full closing costs. Yeah, I low-balled the offer, but so what. It was days after Congress passed the bail-out plan. 

Bank refused outright.

Price drops to 182,000.

I make offer of $172,000 and bank pays 6 percent of closing costs.

Bank countered $182,000 and 3 percent closing. Deal dies.

Price drops to 169,000, below what I originally offered.

I offer full price and bank pays 3 percent closing, but I increased the price to include the other 3 percent in closing. I am doing this because I have a specific amount saved and I would use every penny to close at the FHA-mandated 3 percent. I cannot pick more cash from the tree. By increasing the price to include the remaining closing costs, the bank’s bottom line does not change. They get full price of the house and still only pay 3 percent of the closing costs.

Bank refuses offer and says its policy is to only pay 3 percent of closing.

Does this make any sense at all?

I chatted with a business reporter today and we both assume that the tax treatment of a principal write off is better than the expense of paying the closing costs. But what is so frustrating is the bank is still only paying 3 percent of the closing costs and getting full price for the house. The other 3 percent is taken from the increase in the contract price, which I do not understand how it affects the bank’s bottom line.

With the bailout plan Congress passed, you would think any bank would accept a reasonable offer like this. Apparently banks in Texas are not reasonable.

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