Buying a FSBO home

[indian spirit]

What is the name of your state? LA

We have a RE agent, because of Katrina there are not a lot of homes that fit our criteria of what we wanted and what we wanted to pay for it. My husband and myself drive around looking for FSBO, as well as check the local paper when it is released. As well as look at houses our agent finds.

We found a house and its great. Since this is our first time, I wanted out RE agent there, as he is there to look out for our interests, as well, as I wanted him to get compensated, even though he didnt find us this house, doesnt mean he didn't work his rear off IN other aspects for us. (like this day he left his sons B-day party to meet us at this house to do a purhcase agreement)

Now, the FSBO listed the house at 86K and it is a small fixer upper, with only needing the floor under one toilet replaced, and the tile in the kitchen and master bathroom replaced. The rest of it is purely cosmetic. Removing very busy wallpaper.. lol

We asked that the seller pay closing, to which she said she would take 80K. And that we could apply the other 6K towards closing and broker fees.

This is where our Agent and the FSBO started talking and completly lost me. She was saying that she did not care what we offered on the house as LONG as she did not show it as profit as she did not want to pay capital gains taxes. Which I understaand.

But our mortage broker had told me once before when i asked about offering more, that the BUYER will never walk away from the table with money from the purchase of a home.

I am now concerned that the agent and the FSBO are confused and we will get screwed in the process.

How will this work. The FSBO wants 80K for the house, and we made an offer of 86k. with the intent that the 6k would go for closing and fees. Will the FSBO have to pay taxes on the extra6k if she is paying for these things and is not profiting it?

 

[PghREA]

The FSBO seller will need to report the entire $86,000 to the IRS. The $6,000 that she pays for your closing costs comes under "expenses of the sale" and is deducted from the $86,000 along with some items. The difference between the adjusted sale price and the basis of the property is what she will pay capital gains on IF she even needs to pay capital gains at all. If this was her primary residence and she lived in it 2 of the last 5 years, she probably will not have to pay capital gains tax.

 

[indian spirit]

She didnt live there as it was rental propery. But after speaking to our motgage broker she explained it to me and evertything with that is fine.

have a new problem now.

The RE agent was present when the FSBO and I were discussing price ( haggling) And when we agreed on the 6k to go toward closing and what was left over ( which we figured to be 1200, as the 4800 would fall under the 6% that the lender will grant for seller to pay towards closing actually a little more but we did the round down thing)

And we agreed that 4800 go to closing costs and 1200 to RE for fees. I know the NORMAL is 3% for Agent, but since we found this home on our own, and never actually signed anything with RE, we thought we were being nice in having him there so he could get SOMETHING, since technically he didnt have to be involved at all.

He called today saying he needed us to sign another paper, and when he came by, he went BEHIND our backs, to the FSBO, and had them sign a paper giving him 3% (2400) instead of the 1.5% that we agreed upon. This is NOT going to work for us.

From the onset we were looking for 100% financing (which we got) and for seller to pay closing (which we got). But now, since the FSBO and I agreed to only 6K and if the RE takes 2400 off the top the remaining, 3600 will not cover all closing costs, and we will have to come out of pocket for the remaining. Which we CAN NOT do because we will be using our savings for the repairs that need to be done to make the house move in ready.

So I refused to sign the paper work. But since he already got the seller to sign and agree, will he still get the 2400 off the top?

I put a call in to our broker, and explained everything to her, and she understood and thought our RE under stood as well. And stated that she was going to call the RE. And she was the one that explained the 3% thing to me, and that most likely that the RE was going on the advice of the Atty for the Agency he is employed by.

For a little background, the RE has shown us 7 houses. has sent about 15 listings that were CLOSE to what we wanted about 30 that were no where NEAR it. in 3 weeks.

On our own, we inquired on about 10, and looked at 4.

So will he be able to get the 2400 off the top?

 

[rcfran]

You're Getting Screwed!

Wow. I thought I'd seen it all, until now. Your mortgage broker is the one doing the screwing here. Six grand closing costs on an 80k purchase? Have you looked at your good faith estimate??? Sounds like the mtg. broker is the one you should be bitching at. Ask him/her about high cost loans????

 

[indian spirit]

No we are actually only getting 6% of the purchase price towards closing. And the remaining money is going to go to our RE agent. And because of insurance in LA, after katrina because I am in an affected area the insurance is quite high. Plus Flood insurance

And I have seen all the fees. And they pan out.