When Lenders Give Real Estate Advise

This week I've had to have very difficult conversations with optimistic, but unrealistic home buyers that have had the misfortune of receiving what they interpreted as real estate advise from their Mortgage Lender.  I know a little about financing options, but I always "stay in my lane" and defer the difficult mortgage questions to my clients respective mortgage broker.  I can almost imagine how the conversation and/or suggestions from the mortgage lender somehow became misconstrued by these enthusiastic home buyers. 

What the Lender Said:  If you want your mortgage payment to be $XXX, you need to stay close to the $260,000 price point.

What my client heard:  You should offer $260,000, on a home that is listed at $275,000. 

My suggestions and clarification:  It's not going to happen in this market!  You are asking for closing costs, so at the end of the day, you are about $30,000 apart.  I know this home sold for about $125,000 a few months ago, it's investor owned; the investors paid cash and have invested a considerable amount in the property to make it move in ready.  The house has only been on the market 35 days,  although you feel that they may be wanting to get rid of the house....they aren't going to accept an offer that is significantly lower than the list price.  Why???? Because they don't have to, it's a SELLERS market.  If you want to stay close to the $260K price point, lets focus on homes listed at $250K, because you are asking for closing costs. 

My professional reflection (over a glass of wine)..... when giving options to enthusiastic first time buyers, it's important to temper the suggestions with a practical pulse of the current real estate market, every step of the way, with every conversation.  Writing offers that are not going to get accepted, or even countered.....is not a productive use of time or energy. 

Photo credit:  A friend of mine recently went on a African Safari (lucky dog)!  K. Kaiser