Thing is, we wanted to pay a maximum of $120,000 for a house.
It was a very awkward relationship, lol. She eventually had her "associate" (basically her lackey) represent us. And even her lackey treated us like we were dirt on her shoe.
That's just not okay. Realtors generally make enough commission to justify great service at any price, as long as you don't tie them up with an inordinate quantity of showings and other meetings - but even a $50K home sale could net a good hourly wage after all that, so it still chaps me that some act like such snobs about target prices. I've been licensed for about a year and plan to make it my part-time FIRE job, specializing in Mustachian buys - help people buy
below their means, include energy performance upgrades with purchases through creative financing, and generally stick to properties that will later make good rentals, etc.
Just FTR, in my case, the shit I took was fairly mild, the agent in question later rented a room from me in that house, and we've been friends ever since. She finally understands how the empire-building approach drove my decisions at the time (a late few nights with bourbon shots helped).
Yeah realtors are paid on commission, so they have a huge financial motivation to get you to spend as much as humanly possible. The deeper you go in debt, the more they get paid. It kind of makes me wish there was a way to attach fiduciary responsibility to realty, but that's never going to happen. The best we can hope for is lending reform.
The lending reform to date has helped some, but the brush is too broad if you ask me, and it often hurts investment financing. AS MMM points out, his financial situation doesn't fit modern underwriting standards, and that is true to varying degrees for many people.
I ran into a funny one recently where I was looking at financing solar panels, and underwriting said that a small rate hike on a $90K ARM on one rental could blow my DTI! The loan I wanted carried roughly a $100 payment, largely offset by revenue from the system, and the rate hike in question would represent a similar increment, so I'm apparently right at the limit.
I've been saving at least $3K/mo, but it didn't matter.
Underwriting asked for a copy of the note, which I didn't have, to analyze the possible loss of 1% of my income that would render me insolvent while I'm saving 30% or more. While waiting for that to ship, I ended up getting a no-fee, 0% offer from a card I've had for 15 years, and just wrote a check for $12K, which I'll pay off this year. These guys lost potentially thousands in interest (assuming I held that loan for years at a rate below my typical investment return) because lending reform inflated the risk associated with my transaction to a ridiculous degree.
It does appear that much of my trouble here is due to partnership investments. Underwriting rules apparently count 100% of my LLC's debt against my DTI and none of its revenue, even though it is
profitable and growing rapidly. When they do look at revenue, it's last tax year's revenue against this month's debt, which skews the ratio dramatically. (we grossed more in Q1 of 2015 than all of 2014, even with 1/4 vacant for improvements that will further improve revenue)
So I need to seriously restructure and hoard cash to expand further, even with a high SR and NW approaching 250K. I'm all for responsible lending but I feel like it's a classic case of unintended consequences.