Concerned that my Home Sold for Over Asking Price

Question: I'm selling my home in a great area. We had many offers and the one we took was $20,000 over the asking price. The buyers are putting in a lot of cash and are only financing $100,000 of the $600,000 sale price. We're afraid that our house will not be worth that much, but does the lender care?

Answer: Lenders care very much about value and risk. They will make a loan based on the sale price or the appraised value, whichever is less. If a buyer wants to pay more, that's okay -- as long as the additional price is not paid with lender funds.

Appraisal problems are not common, but they do happen. When Realtors look at comparable properties that have sold, they also do a little give and take. Compared to the similar homes, the subject home may have more land, more updates, more square footage, etc. This is how a higher asking price is justified. Obviously, the buyer agrees, because he has accepted the sellers selling price. An appraisal is not an exact science, it is more of an art, or opinion of the appraiser, based on what he has seen with comparable properties that have sold.

In your case, you have a home selling for $600,000 and a borrower who is putting up $500,000 in cash. The lender is providing $100,000. The lender wants to be certain that in the event of foreclosure the property has sufficient value to re-pay the loan.

In this case, even if the property sold at a 75 percent discount from the sale price, there would still be enough value to re-pay the lender. From the lender's perspective, this is a loan situation with virtually no risk because there is so much equity in the property -- that $500k put up by the purchaser.

Why Does February have 28 Days?

February is a terrible month. By the time it arrives, we’re sick of the cold, sick of our winter clothes, and in many cases, just plain old sick. Fortunately, it’s a short month—just 28 days. But why?

Turns out, it’s not because everyone in the history of the human race has hated February. The month’s quirky timing dates back to the 10-month Roman calendar, which began in March and ended in December. That’s right. For a while, January and February didn’t even exist. To the Romans, who made their lot by planting and harvesting, winter was a nameless, dateless slog. For part of the year, there was literally no system for keeping track of the days.

By the time the second king of Rome took the throne around 750 BC, the Romans decided to add two more months to their year in order to sync their calendar more accurately with the 12 lunar cycles. Those two months—January and February—had 28 days each, until the king decided to add an extra day to January to make the year 355 days long. Even numbers were considered unlucky at the time, and a 354-day year was unacceptable.

The calendar still had its flaws. Following the lunar cycle worked well for a few years, but soon the seasons became out of sync with their typical months. To fix it, the Romans added a leap month called Mercedonius. Rome’s high priests would decide when the month would arrive, and no one else in the city could keep track of what day it was. As you might have guessed, this was a nightmare.

When Julius Caesar took power, he reconfigured the entire thing again and aligned the length of the year with the sun, so that each year would add up to 365 days. For some reason, he left February at 28 days.

And you know what? We totally agree with that arbitrary decision. February should always be as short as possible; no one likes it that much anyway. 

How a Small Increase in the Interest Rate can Affect your Finances (Choose Full Screen for best viewing)

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Renting vs Buying

What $1500 / month gets you when Renting in Indiana: (from msn.com)

$1,500 in rent per month buys you: 2,049 square feet

Percentage of dwellings with dishwashers: 55 percent

Percentage of dwellings with washer/dryers: 31 percent

Percentage of dwellings with air conditioning: 58 percent

Now.......

Buying a home with a 150,000 mortgage.

$885  P&I Monthly

$200  Taxes Monthly

$1085 per month.

Plus the vast majority of homes will come with dishwashers, washers & dryers, central air, a 

garage, tax breaks and a basement!

Who says renting is better?

Why was my Offer Rejected?

Question: We recently made on offer on a home, the owner counter-offered, we turned down the counter-offer. A few days later we e-mailed the broker that we would like to make the same offer again. A couple of days later the broker called and said the owner was considering our offer. A few more days passed, we heard nothing from the broker, but we decided to go with the owner's counter-offer if the seller turned us down again.

The call never came from the broker. Instead an e-mail was sent saying the owner didn't accept our original offer and that the home was now under contract. Now we think we should have been given the first chance to accept the owner's terms instead of it being sold to someone else. The home had been on the market for more than a year so it wasn't like there was a great demand for it. What do you think?

Answer: You were given any number of chances to buy the property. First you made an offer that was not accepted. Then the owners made a counter-offer that you could have instantly accepted -- but did not. Then you re-submitted your original offer and it was not accepted by the sellers. Lastly, you want another chance at the counter-offer you first rejected but by this time the owners had accepted a bid from other purchasers.

The bottom line: You had your chance. There are many players in the marketplace. The fact that the home did no quickly sell does not mean the owners are required to sell on your terms. Lastly, an offer or counter-offer once rejected is dead and need not be re-considered.

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