Questioning my Realtor
A mortgage lender will not usually lend more than they could get if they had to repossess the property and sell it to recover their investment (in the U.S. it is generally accepted that 80% of market value is the golden number that makes the mortgage work).  That's why an appraisal is required. Even with 50% down, the numbers might not add up if your property is appraised very low (extremely unlikely, though. It's more likely your realtor is inexperienced). My realtor told me that even though they're only asking for 1/2    the money and have excellent credit that the mortgage company may   not lend it to them if I'm over priced. Is this true? I've never heard of it before. It is a chance, but it is a red herring to the discussion. Having excellent credit has nothing to do with being eligible for a debt object of a specific size. Just because you have excellent credit, would you get approved for a property of $10,000,000 if you only made $35,000 a year (and had no other net worth)? But regarding your potential buyers, a chance vs a good chance is different. Your realtor just told you some basic always true lending fact that has nothing to do with your situation. "even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced Yes. If the house's value, as determined by the appraisal, is less than the sale price, the bank will not finance the loan. Appraisals and the appraisal process have become much tighter since the Frannie and Freddie debacle. This fact is true regardless of amounts or credit history. Though this is happens somewhat rarely; typically if a seller and buyer agree to a price, this price is a reasonable value -- after all, that is nearly the definition of ""market value"". So, yes, it is true (and always true, for any financed purchase), but that shouldn't really affect your decision. If you try to sell for more than the appraisal, you will just lower the price to the appraised amount."
From the apartment owners perspective what was the purpose of $300? They promised they wouldn't rent it to somebody before you had a chance to see it. But lets say you did see it, and decided you didn't like the view. Would they have to give the money back? if so, why would they promise not to rent it if somebody showed up first?  I would have made it clear, as the owner, what the money was for. It was a $300 fee to delay rental. You would have essentially bought x number of days of delay. You could view it as a mini-short-term rental. Of course there should have been paperwork involved. There should have been been a receipt that at least mentioned the amount of money involved. You may need to pay the amount owed, and may need to determine if you want to sue in small claims court. Of course your agent may have some liability based on your contract with them and any paperwork they signed when the money was sent to the owner. The fact that the bank sided with you doesn't mean the courts will. I still don't understand. What's your exact role in all this? Do you own a plot of land that you want to sell them? Or are you just a bystander with an idea that you'd like to share? Or do you want to open a hotel yourself but need their help? &gt; I don't think you are trying to understand my position  I'm trying to find out if we can agree on truth claims. We (probably) have numerous disagreements. Can we agree that some of the people who do not like the current job market have the option of trying to start a new business? Also, is seems the wife that's doing the taxes is very reluctant on giving me access to the statements. As an owner, I do have the legal right to those statements do I not? What power would a majority owner of a bar (40%) hold over the other two minority owners (each with 30%)? According to her, she's broken even on her investment, whereas I've collected not even half of my initial investment. The fact that you feel this is fishy reconfirms my belief that she not being truthful to some degree. I see your remarks regarding Zillow, but would add a question. Why not look only for recent sales? If you find homes similar to yours with recent sales, that's similar to how the appraisers do it. I've refinanced many times and each time, I looked at sales within three miles of my house. I hit the appraised price very close in my estimate, high or low compared to Zillow, but used transaction data from there.just my thought.  I chose a random neighborhood, and this was the first house I clicked. The main view shows last sale date, so I'd obviously suggest the OP look for more recent ones. If turnover is that low in his neighborhood, I understand, but the comment that transactions aren't listed is factually incorrect. I'd like my 2pts back. :) Same here. I work with realtors on a weekly basis and they all have given me this advice: if you have parents/grandparents/rich uncle, etc., that might be leaving you money when they pass, swallow your pride and kindly ask for it now. Get into the market as soon as possible because this catch 22 is not going to change anytime soon. First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent.  It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid.  The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer.  Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you. I asked my realtor, but she recommends to go with just one banker   (her friend), and not to do any rate shopping. You need a new realtor. Anyone who would offer such advice is explicitly stating they are not advocating on your behalf.  I'd do the rate shopping first. When you make an offer, once it's accepted, time becomes critical. The seller expects you to go to closing in so many days after signing the P&S. The realtor is specifically prohibited from pushing a particular lender on you. She should know better.  In response to comment - Rate Shopping can be as simple as making a phone call, and having a detailed conversation. Jasper's list can be conveyed verbally. Prequalification is the next step, where a bank actually writes a letter indicating they have a high confidence you will qualify for the loan. "&gt;I think you mean: 60% of all mortgages on homes in Nevada are underwater. Not every home has a mortgage, so it's not 60% of the homes, it's 60% of the mortgages.  Spot on. In the US typically somewhere around 30% to 40% of homes have no mortgage at all (i.e. 100% equity by the owners).  So... *IF Nevada follows the US average* (which it may not, having a lot of new developments) then 60% of 60%/70% would be somewhere between 36% to 42% of homes.  That of course, is still HUGE -- if even 10% of homes in a locale are ""distressed"" sales, it is enough to drive prices down.  But another caveat is that just because a place is ""underwater"" does not mean that it has a HIGH negative equity -- point of fact is that ANY home bought with an LTV mortgage or a really low down payment (i.e. 0% to 10% down payment) is probably underwater from day one and remains pretty close to that for the first couple of years.   Why? Because typical realtor fees are around 6%, and closing costs are easily another couple of percent, add in that with a self-amortizing loan that very little equity is built up in the first few years, and any loss for aging and owner ""cash out"" equity can easily be near zero or negative.  (That's one of the reasons you shouldn't buy unless you are planning on living somewhere for at least 5 years, because it takes that long to ""recoup"" the realtor &amp; closing costs -- ergo the whole ""flipping"" phenom is in and of itself a sign that a market is in a speculative bubble.)" Sounds like the seminar is about using OPM (other people's money), which means you're going to have to find not just real estate, but investors.  Those investors are going to need a business plan, contracts, and a lot of work from you to provide as much equity as possible before the property is sold.  If you're serious about Real Estate, I suggest finding the most successful broker/agent you can, buying them a beer, glass of wine, or cup of coffee, and picking their brain about it. It'll be cheaper then a scam seminar. After a 6% commission to sell, you have $80K in equity. 20% down on a $400K house.  5% down will likely cost you PMI, and I don't know that you'll ever see a 3.14% rate.  The realtor may very well have knowledge of the cost to finish a basement, but I don't ask my doctor for tax advice, and I'd not ask a realtor for construction advice. My basement flooring was $20/sqft for a gym quality rubber tile. You can also get $2/sqft carpet. I'd take the $15K number with a grain of salt until I got real bids. What's there now? Poured cement? Is there clearance to put in a proper subfloor and still have adequate ceiling height? There are a lot of details that you need to research to do it right.  That said, the move to a bigger house impacts your ability to save to the extent that you are taking too large a risk. The basement finish, even if $20K, is just a bit more than the commission on your home. I like the idea of sticking it out. Once the nanny is gone, enjoy the extra income, and use the money to boost your savings and emergency funds.  As I read your question again, I suggest you cut the college funding in favor of the emergency fund. What good is a funded college account if you have no funds to sustain you through a period of unemployment?  There's a lot to be gained in holding tight for these 3 years. It seems that what's too small for 5 would be spacious once the nanny is gone and the basement added. The cost of a too-big house is enormous over the long run. It's going to rise in value with inflation, but no more, and has all the added costs that you've mentioned. On a personal note, I'm in a large house, with a dining room that's used 2 or 3 times a year, and a living room (different from family room) that is my dog's refuge, but we never go in there. In hindsight, a house 2/3 the size would have been ideal.   Finishing the basement doesn't just buy you time, it eliminates the need for the larger house. As a buyer you must realize they are doing everything they can to get the best deal for their client (the seller). They have made the first offer (the listing price), you made a counter offer, now they are trying to get you to see that your offer is too low.  How can they do this: show you comps that they have found to show that either their listing price was where it should be, or even that it could have been higher. If there are fresh comps that are showing an upward trend, they will be sure to show you those. Another approach is to show you what is happening in the neighborhood today.  If those sales have settled, then they are public record. If they haven't settled they are not public record. Your agent should be reminding you that they are worthless as a comp until they are settled. The only ethics issue is did the agent, by disclosing the contract, commit a violation against the rights of buyer and the seller of the other house. You have not been harmed, and the seller of the house you are interested in most likely approved the maneuver.  I would look at the documents you signed to see who owns the info on the form. Because that will tell you if your offer on the house is being used by another agent, or even your agent, as leverage in another deal. To the best of my knowledge, Los Angeles County does not require a lawyer to be involved in a real-estate transaction. I looked through the County Recorder site and found no evidence that a lawyer is required. I live in a different county in California where a lawyer is also not required for real-estate transactions. Some counties do require a lawyer to be involved. That said, a purchase contract - is a contract. A legal document which you sign. A realtor may be able to help you understand the housing market pricing trends, but cannot (not allowed by law) draft the contract for you or advise to you on the clauses of the contract you're signing. Only a lawyer licensed in your State (California) is allowed to do that. So if you want a legal advice about the contract you're going to sign - you need to talk to a lawyer. Especially if you want a contract drafted for your own special needs, or have some specific titling requirements (for a company, or a trust - for example). Same goes for the mortgage contract and any other piece of paper you'll be signing during the closing meeting (and there will be plenty of such signatures). So it is not a question of need, it's a question of should. There is a lot of your financial information that the selling agent handles in the course of a real estate transaction, including but not limited to your pre-approval letter which states what maximum purchase price might be. Closing costs and interest rate are not details they would know unless you shared that with them, given that that is done after you go binding.  I agree with xiaomy in that, while in absolute monetary terms the higher amount should always be more attractive, the selling agent wants to ensure the transaction goes as smoothly as possible. With contracts falling through due to first-time buyers not making it through mortgage underwriting, it is in the seller's interest - and thus the seller's agent's concern - that the buyer not present such hurdles. Insofar as a higher down payment is a signal for that, then I can understand why it would be more attractive. "Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one.  As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice.  Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart.  I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself.  ""Buy the biggest house you can""? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit."