PreApproved FHA and Agent Questions

[Gardenhand]

Hello, so after almost a year of establishing a credit history I finally pulled the trigger and let the lender pull my credit reports. My middle score is 722. I'm very happy with that. At the beggining of the year I couldn't get a secured credit card and now I am preaproved!

I was preaproved for a house that cost 120,000 with 2800 in taxes per year and assuming 1200 per year for insurance(high estimate). This put my DTI at 47 percent. He ran me through the automated thingy and I got the green light, thumbs up for FHA. He said that's pretty much my max and I would likely only be able to do an FHA loan.

Now I am house hunting. There are only two houses in the town I want to be in that are in my price range that have three plus bedrooms. The one has such a tiny yard. It has a tiny parking space. I may be able to get creative and add a wrap around driveway but the driveway would be my entire yard. I'm not ruling it out but it's an issue. This new listing just popped up. It's four bedrooms and it has a huge fenced in yard. Also it has a two car garage. It's perfect. All the houses in my town are over 200,000. This one is listed at 125,000. I'm in love!

So this guy from work who is also an agent wants to be my "buyers agent". He's a real nice guy and everything. However I sort of feel like he could potentially slow me down. I want to go look at this house immediately and he might be available next weekend. I live right around the corner from the place for sale. I feel like I could call the listing agent and just swing by. I don't want to miss this opportunity. Besides keeping good relations with someone I work with is there any reason I should only go in with a buyers agent? I know the sellers agent splits the commission with the buyers agent so I would think the sellers agent would be interested in getting the full 100 percent if there were more then one potential buyer. I would think this could give me an edge.

Sorry for the long post. Thanks for any advice and insight.

[Anonymous]

I would definitely call and see if you can get in on your own because for that price it probably won't last long on the market.  Just know that there are some places that won't even talk to you without a realtor, stupid but it's the truth.  

[Anonymous]

You should really have your own agent. The seller's agent is required to look out for the best interest of the seller, so you would have no one working for you. The seller's agent would then become a dual agent and that can get tricky. Having your own agent in there doing what is best for you and working for you, is the most important thing. The seller's agent, representing you would get 100% of the commission but they would want the biggest commission possible, so they would want you to offer high, where a buyer's agent may get you a better deal on the home. I had a buyer's agent and we got the house for a pretty good deal, thanks to my agent.

[StartingOver10]

It is better if you have an agent that represents your interest.  I'm sure there are other agents in town not associated with the seller's agent's office that you can contact to see the property right away.

Having the friend in the office that has a license show you the property is not really a good idea anyway - unless they are actually working in the business they are learning at your expense.

Now to address the misconception of the agent getting 100% of the commission. When a listing is signed, the agreement is with the listing office/broker. The listing agent is paid a percentage of the listing BROKER's commission. If another agent sells the property, the selling BROKER gets a split (typically 50% of the commission, but not always) and then the selling agent has a percentage of the selling commission. So remember, the commission is split 4 ways when there are two agents involved (listing and selling). Sometimes there are additional splits for referral fees.  An agent never gets 100% of the commission unless s/he is the broker owner of the office and also the listing and selling agent which is unlikely. 

azriel is right about making sure your agent works for you and not for the seller. The way to do that is to have a buyer's agent to represent you and your interest in the deal. Get one right away, don't wait a week for your office worker friend.