I know nobody here is an attorney or real estate agent, so no need for disclaimers.

I realize this is not a real estate forum, but I know we have some homeowners here. I'm looking for input from anyone who has recently bought a house (in the USA) or has really good memory about how the process went.

I found a house I want to buy with a VA loan. I saw the Seller's Disclosure before I ever made an offer, and it says that the septic system doesn't work; this will not be acceptable for a VA loan and the seller must fix it. I believe all involved parties understand that.

My realtor prepared an offer letter ("contract") which makes no mention of the septic issue, and had me sign it. Then she sent it to the seller's agent, who hand-wrote into it "Seller retains all mineral rights to the property" and had his seller sign it. Then my agent sends it back to me with this hand-written amendment, signed by all parties, and calls it "executed."

At this point I have not provided any earnest money or had any property inspections performed.

I reply to my agent saying [paraphrased] "whoa, whoa, hold your horses. Is there now a legally binding contract with my signature on it, that was modified AFTER I signed it? That doesn't smell ethical. I'm having a bad feeling about this deal."

She replied that [paraphrased] "this isn't the finished contract. We haven't even seen the inspection reports yet. after the inspection reports come back, we will make amendments to the contract and send it to them, they will amend our amendments, which we will review and re-amend, and back and forth (the actual negotiation). During this time we will negotiate the septic repair and the mineral rights. THEN we will have a contract and move forward with the purchase."

I see her (my agent's) point, but there is still a whiff of bad smell in my nose. I googled a little about it and from what I can tell, the contract usually gets signed at the end of the deal, at closing time. I feel all of these amendments probably should be made to the original document and then signed on the bottom line once all parties agree on the terms.

Also something I turned up in google is that a real estate contract isn't binding unless there is some "consideration" given (earnest money), which I haven't done yet. So I'm reluctant to write that check until I get this figured out.

Any insight is appreciated.
Thanks,
Strantor

 

I would be skeptical about this. First, if you are buying the property and land YOU should retain all/any of the water and mineral rights of the property. Usually if there is an issue with what the seller discloses and a repair is required to complete the sale, then the sellers would have to pay for that to complete the sale. If the realtor hand wrote that on the agreement after you signed it, it is no longer valid and illegal to submit it without your knowledge of a change. I would not write any checks for earnest money until you clear this up. Also, if you find that she did alter that contract without your knowledge and submitted it I would immediately contact the Federal Trade Commission and file a complaint......

http://www.consumer.ftc.gov/topics/home-loans

Good luck to you sir and thank you for your service!

 

I think you're being railroaded. Watch for things like, "It's just policy". The other party, in turn, should watch for phrases like, "This is the price I will charge for forfeiting my mineral rights."

I smell a rat!

 

A handwritten amendment added to the printed contract is WORTHLESS in court and IF it is allowed for some reason it will have to be witnessed by a notary with both buyer and seller and agents present.
He is stupid to try it. You would beat him in court should oil be discovered on that land.

 

Run, don't walk. Get an agent that represents your interests. The whole real estate business is a racket.

 

First, I agree with Kermit, the hand written amendments are worthless. MikeML gave good advise about getting an agent that will work for/protect you.

Did you choose this agent or is it the sellers agent?

 

First, RUN as fast as you can from this place and the realtor. Chances are the owner doesn't have water and mineral rights anyway. It's very rare for the home owner to own the water or mineral rights these days. I ended up in on a house with shady shit like this going down... it hasn't been fun. I think I'll survive, but it hasn't been fun.

Second, I have a friend in Friendswood that will work to represent you... or he will know someone in your area. He has been a realtor as long as I've known him - about 15 years. His wife is VP of ReMax Southwest. They are very good people and VERY VERY good at their jobs - if you'd like more info IM me.

Third, no offense, and this is certainly my humble opinion - typically if the buyer is getting a VA or FHA loan - chances are the buyer doesn't have 10% down - and that the buyer shouldn't be buying a house. It's a painful way to live - I know - I've lived that too. House poor. Not fun... especially when my first and third point collide!

My 0.02

 

Did you choose this agent or is it the sellers agent?

I chose her. She is a friend of my sister.

 

One of the realities that slapped me in the face was: The lawyer you pay to work for you isn't working for you, he's still working for himself.

I wonder how many real estate agents are working to maximize their income instead of minimizing your outflow.

 

Chances are the owner doesn't have water and mineral rights anyway. It's very rare for the home owner to own the water or mineral rights these days.

Yeah good point. It did seem odd that they would have the mineral rights considering most mineral rights have been sold off a hundred years ago or more. I didn't stop to think that maybe they're just using that as some kind of tactic.

no offense, and this is certainly my humble opinion - typically if the buyer is getting a VA or FHA loan - chances are the buyer doesn't have 10% down - and that the buyer shouldn't be buying a house. It's a painful way to live - I know - I've lived that too. House poor. Not fun...

In my humble opinion, anyone who doesn't have 100% of the cash needed to buy a house, shouldn't be buying a house. It's people like me, and every other American, who takes out a loan worth several years of their salary, and contributes to the problem of inflation via fractional reserve.

It's people like me, and every other American, who are the reason why a house that 20 years ago was worth $50K is now valued closer to a quarter million.

It's people like me, and every other American, who are the reason why the price tag of every house in a livable area represents life-long debt bondage.

It's the banks and the Federal Reserve who greedily usher me and every other American like me into this bondage with low-or-no down payment loans.

But I humbly ask, what do you propose I do if not buy a home I can't afford? Buy a more affordable home in the ghetto where my kids will get a shitty education (assuming they don't get shot first)? RENT a home (AKA pissing away almost as much as a mortgage payment into the trash every month with no equity to show for it)? What's the answer?

 

I'll respond when I get home. I bought my house in March.

The only reason people want to keep mineral rights is if they are receiving royalties or are still under contract with a company.

Don't sign anything you disagree with.

 

In the 80s I bought 5 arces near China Lake, California and Los Angeles owned the water rights.

 

Water rights in Texas are a non-issue. You own the land, you own the subterranean water beneath it.

http://texaswater.tamu.edu/water-law

Mineral rights are different. Truthfully i didn't/don't care about the mineral rights. I never expected to have any. As i mentioned it is extremely uncommon for the land owner and the mineral rights owner to be the same.

What i care about is having a signed contract modified after i signed it.

After doing some more reading i think my realtor isn't really that far off base.
http://michaelbluejay.com/house/contract.html

I maintain that the hand-written amendment was not legit, but as i see it now, that contract is a totally pointless and will be completely revisited several times before we agree on a final price and repairs.

 

You will have to sign every modifier to the contract.... Both parties do.

Yes, in tx the mineral rights follow the land unless the were previously conveyed. You know that when you sign the contract.

In most developments, the mineral royalities don't amount to much .... However, if you have multiple wells, then you could be doing well. I know someone whose family gets over 250k for their mineral rights and the are expecting more wells to be dug.

Your realtor for should know the Va's requirements. Good luck

 

In my humble opinion, anyone who doesn't have 100% of the cash needed to buy a house, shouldn't be buying a house. It's people like me, and every other American, who takes out a loan worth several years of their salary, and contributes to the problem of inflation via fractional reserve.

It's people like me, and every other American, who are the reason why a house that 20 years ago was worth $50K is now valued closer to a quarter million.

It's people like me, and every other American, who are the reason why the price tag of every house in a livable area represents life-long debt bondage.

It's the banks and the Federal Reserve who greedily usher me and every other American like me into this bondage with low-or-no down payment loans.

But I humbly ask, what do you propose I do if not buy a home I can't afford? Buy a more affordable home in the ghetto where my kids will get a shitty education (assuming they don't get shot first)? RENT a home (AKA pissing away almost as much as a mortgage payment into the trash every month with no equity to show for it)? What's the answer?

I agree with most of your points... in fact - you make my case stronger! Years of bondage await. I've been there, I know. There are tough decisions to make, especially when you're the man of a young family - which you have alluded to that I can't answer for you. You have to make those decisions... but there are alternatives to buying a house that is upwards of 50% of your income. Thankfully I have been lucky and have had well timed raises and made well timed decisions. Some of those decisions had to be made. I was getting phone calls from the hospital where my daughter was born when I realized I had $40k in debt and a house to pay off and a collection agency calling me trying to get another $10 a month out of me. Once I realized the hole I was in it took me 3.5 years to dig myself out. Lots of beans and rice during that time.

Honestly, if you can't save 20% (I mistakenly said 10% before), then you don't have the cash flow to own a house and save for the problems that eventually creep up with home ownership. If you can't save %20 to pay for a house without PMI/MIP (talk about pissing money away!) then where is the money going to come from to fix the sewer or stain the house, buy a new garbage disposal, pay the kid next door to mow the grass, or pave the driveway, or fix the retaining walls, pay for deductible on the insurance for a house fire, etc.

I don't post here a ton, but I have kept an eye on you over the years (being from Houston, and buying some gear from you) and have truly enjoyed your posts and anonymous friendship. I think many of us feel the same. It pains me to see someone about to enter the same life I've had for the last 12 years. I submit to you that there is a life that doesn't involve multiple decades of servanthood to the banks. Not every American falls into the life-long debt trap. Make money, save money, make more money, save more money, repeat. The choice to save 20% is harder than just buying the house you want with much less initial equity, but the reward is discipline and lifelong financial security.

Anyway - I've stirred the pot enough for one night - just trying to give you some friendly advise from the heart.

Good luck to you strantor - whatever you decide.

Happy Father's Day!

 

The VA benefit allows veterans a no money down on the purchase of a new home as well as a maximum interest rate. I think it was 3.5 percent max the last time I looked. It also allows for some expenses to be rolled into the loan that normally aren't. Your money people should know all about that.

Another thing ... You can set your payments to every two weeks vice monthly and this allows two monthly payments to be applied to the principle per year and reduces a 30 year to about 20 years. Adding a couple of hundred more per month will reduce it further.

I opted to pay every two weeks any will apply additional at my discretion. We will once we replenish the money we spent back into the savings. Typically I use my income tax return for things like additional cash on the principle. We bought a new car five years ago and paid it off in about 20 months of the 60 month loan by double payments. So when you can do it, by all means reduce your principle.

I also had it setup where the mortgage is a direct debit. I would have loved for it to be on my credit card as that is paid in full monthly and I earn those points ... which pay for Christmas every year.

Good luck Stantor ... happy fathers day.

 

In my humble opinion, anyone who doesn't have 100% of the cash needed to buy a house, shouldn't be buying a house.

Then why are you buying a house if you think you shouldn't? Clearly you think you should, or you wouldn't be doing it.

It's people like me, and every other American, who takes out a loan worth several years of their salary, and contributes to the problem of inflation via fractional reserve.

I couldn't disagree more. Home ownership builds wealth. In many cases, it's simply not possible to save enough money to buy a home outright. Very, very few people will ever be able to do that. Instead, a mortgage system was established so that hard working people can buy a home for his/her family, and by practicing fiscal discipline and responsibility, he can own his home and the wealth it represents. He can pass this wealth to his children or live in it after his working years. In this way, the home owner puts a little distance between himself and poverty as he grows older. It's a responsible thing to do, and you don't hurt the economy at all, nor do you cause inflation. In fact, you make the economy stronger because you are securing your future (hopefully, if nothing ever happens to cause you to lose you home) It's not really servitude to the banks. It's a financial arrangement that is win-win.

Now, if you ever tell me you took out a loan to go on vacation, well that would be another story.

 

Then why are you buying a house if you think you shouldn't? Clearly you think you should, or you wouldn't be doing it.



I couldn't disagree more. Home ownership builds wealth. In many cases, it's simply not possible to save enough money to buy a home outright. Very, very few people will ever be able to do that.

My comment that I shouldn't be buying a house was in jest. What i really meant was that I feel like i shouldn't have to go into unfathomable debt in order to be able to buy a house.

The reason why i must pay such an ungodly amount for a house and why I must go into such unfathomable debt to do so, is because i am competing against hordes of buyers with artificially inflated pockets.

There is no shortage of people who are eligible to go to the bank and have a decade worth of their salary generated out of thin air, to put down on a house. With all these phony dollars poised to purchase the house i want, I'll never get it unless I sell my soul to the devil and use his phony dollars just like the rest.

Every time one of us takes out one of these bogus loans we water down the power of the dollar and make the next house cost even more.

(Also addressing @tindel here)
Consider if I were to try and save up for a house to buy in full. The houses I am looking at currently cost 150k to 250k, call it $200k. Every month i save the same amount as a mortgage payment. It won't take me 30 years since there's no interest, maybe 20. Oh wait, but I'll be paying rent that whole time, so actually it will take me 30-40 years, call it 30. So 30 years from now i finally have my $200k in the bank, ready to pull the trigger. I enter the market and find that the houses i want now cost over $2M, and nobody in the market is having trouble getting approved for that $2M amount even if it represents 10yrs of their salary. I still don't even have a 20% down payment.

That was the extreme example, but i think i made the point. The longer you save, the more the houses cost, the more you end up losing. The price of houses goes up not only with inflation but with the market which is governed by phony money. The inflation of house prices exceeds the general inflation.

So at what point does it make sense to stop saving and start enslaving yourself to the fractional reserve banking system? I think the answer is 0% down payment. Buy immediately and save yourself a lot of money in the end.

For the sake of of trivia, i will disclose that i did actually have a 20% down payment in the bank when i entered the market. Last time i was in the market for a house (2009) these houses that i am interested in, were going for about $100K. I have $20K in the bank. But now they cost $250k, and i have much less than 20%. The value of the dollars i saved has been stolen. Stolen by a bunch of unqualified buyers artificially driving up the cost of home ownership. How much more of that should i endure before i just join the swarm?

P.S. A VA loan has no penalty or PMI for financing less than 20%. No PMI all the way down to 0% down. Really I see no positive to saving up 20%.

 

The VA benefit allows veterans a no money down on the purchase of a new home as well as a maximum interest rate. I think it was 3.5 percent max the last time I looked. It also allows for some expenses to be rolled into the loan that normally aren't. Your money people should know all about that.

Another thing ... You can set your payments to every two weeks vice monthly and this allows two monthly payments to be applied to the principle per year and reduces a 30 year to about 20 years. Adding a couple of hundred more per month will reduce it further.

I opted to pay every two weeks any will apply additional at my discretion. We will once we replenish the money we spent back into the savings. Typically I use my income tax return for things like additional cash on the principle. We bought a new car five years ago and paid it off in about 20 months of the 60 month loan by double payments. So when you can do it, by all means reduce your principle.

I also had it setup where the mortgage is a direct debit. I would have loved for it to be on my credit card as that is paid in full monthly and I earn those points ... which pay for Christmas every year.

Good luck Stantor ... happy fathers day.

good ideas! I'll look into them. Thanks for the tips.

 

@strantor The great thing about buying a house is that for the next 30 years, your 'rent' will not change (except property tax increases). It seems like a lot now, but 10 years from now, after your salary has doubled, then your housing costs will seem small. 15 years from now, very small. Good thing they seem small then because that is about when you will need to start paying for your kid's college (unless you recommend some time in the military).

Also, hire a real estate attorney to review your contracts. A year from now, you won't miss the $500 you spent on the review. On the other hand, if you don't get someone on your side to review it, you could be kicking yourself for years to come. Note that I said, "get someone on your side to review it". That is because real estate agents all know the same thing - closing a deal fast is best! Any deal, no matter who gets screwed (buyer or seller), just get the deal closed because that is when their check gets cut and that is why they are working. Any delays means someone might change their mind, they have to work longer to make the sale and the commission.

Also, when (if) you hire a home inspector or attorney, hire one on your own. Done take the guy the agent recommends. The recommended inspector will never find an issue that will slow/stop the deal from closing. Also, your agent didn't list the septic system in the original offer because she wants you to spend money on this house for a full inspection. Once you spend money, then you have skin in the deal and you are less likely to let go. From her point of view, it is brilliant. From your point of view, completely stupid. Why would you pay for an inspection if you could already ask the seller if they are at all willing to pay for a new septic system. If they are not, deal is over and you look for another house at no cost to you. Even though she is a friend or your sister's friend, she is still playing you. She wants this deal to close and she hung you on the hook.

Stop trying to justify her actions, don't pay for an inspection until you have a face-to-face conversation with the seller and ask about the septic system. Don't let her keep you from talking to the seller. Agents have every story in the book to explain why you can't/shouldn't talk to the seller. Don't listen. Tell her she is fired if she doesn't arrange the meeting. She is obviously not working in your best interest.

Finally, if you hire an attorney, don't tell him the name of your agent. Just have home review the paperwork. Best if you can sit with him for 2 hours while he reads it. Make sure he works only for you and has no incentive to get the deal closed fast like your agent.