MaggieD
DP Veteran
- Joined
- Jul 9, 2010
- Messages
- 43,244
- Reaction score
- 44,664
- Location
- Chicago Area
- Gender
- Female
- Political Leaning
- Moderate
At least you are doing relatively well...
That said, the enticement is that you see the house you can't afford, you walk through the house and you think 'this could be mine'... and that you have a lender that is willing to give you the loan knowing that you are just scraping by to afford it.
The enticement for the agent is the increased commissions, similarly for the banks, the lawyers, etc... but only the institutions get bailed out when the scheme falls apart.
Just a slight tweek: the agent is not enticed by your buying more house than you can afford. The agent is glad for his buyer to find a house he loves and buy it. Regardless of price. Buyer's Agent (at least in the Chicago area) usually gets 2.5% commission....most of the time split with "the house." If you buy a $200,000 house today, I'll make $2,500. If you buy a $250,000 house today, I'll make $3,625. If you don't buy a house, I won't make anything. A real estate agent never pushes a client to spend more for a home than they tell the agent they can afford. Oh, there may be a few....but not professionals. That's a common misconception. And why Realtors are compared to used car salesmen. ;-)
The loan officer who gets you your mortgage? That's a different story. He doesn't want you to get a 30-year-fixed loan. You're a "deadbeat" to him, if you do. Very little commission. He likes those ARMs that you have to refinance every three years. A loan officer makes as much or more than a real estate agent on any given transaction. And it is undisclosed to the Buyer. (The Realtor commission is right on the closing statement.)
In Chicago, a real estate attorney makes about $550 on the closing of a home. Regardless of price. He doesn't give a tinker's dam what you pay for it.