Real Estate Pro With 30 Years Of Experience Says Walking Away Over A $5,000 Price Gap Is A Mistake Because It Only Changes Your Payment By $32 A Month

You find a house you love. It meets your needs, and then the negotiation stalls over $5,000. Do you walk away? Real estate veteran Wayne Turner says that could be a costly mistake, and there is math to back it up. By Turner’s numbers, that $5,000 gap changes your monthly mortgage payment by only about $32.

Home buying advice video cover beside a hand holding house keys at a front door.

Turner shares the idea in a video of ten lessons on buying a house. Turner says these are the things somebody should have told them more than 30 years ago, when buying a first house. For nearly 30 years, Turner has bought, flipped and sold houses and helped thousands of people buy their own.

The $32 Lesson

Turner’s advice is not to get emotionally attached and overpay, but also not to lose a good deal by staring at the price alone. Turner says a lot of people miss out because they look at only the sticker number. If the house meets your needs, talk to your lender and say: we are $5,000 off, or $7,000 off, so what is the difference in my payment going to be?

Turner’s rule of thumb is that it is $64 for every $10,000 you borrow. So $5,000 comes to $32 a month. As Turner puts it, the last thing you want to do is step over a dollar to pick up a dime. Your own number will depend on your loan, so the best move is to ask your lender for the exact figure.

Approved Is Not the Same as Qualified

Another lesson from Turner is knowing the difference between being qualified and being approved. Qualified, Turner says, is when you talk with a lender briefly on the phone. Being approved is when the lender actually pulls your tax returns, verifies your income and pulls your credit. It has nothing to do with a specific house, and Turner says it does not cost you any money. Once you are approved, it is like having cash in the bank.

Choosing an Agent

You do not have to have a real estate agent, Turner says, but whoever has the property listed represents the seller. Turner asks the question, would you go through divorce court with the same attorney as the other side? When interviewing agents, ask how many transactions they have done, how many years they have been in the business, and how familiar they are with the area. Turner adds that the buyer’s agent asks the seller to compensate them, and says 99% of the time sellers are glad to do it.

Money Tips for Buyers

Ask about incentives. Ask the lender about down payment incentives and programs for first-time home buyers.
Try house hacking. Turner suggests buying a duplex, triplex or quadruplex with an FHA loan and living in one side for one year. USDA loans, Turner says, need very little money down.
Plan for closing costs. Turner says they always run around 3 and a half percent of the loan amount, and that sellers will pay them in just about any market unless it is a flaming crazy seller’s market.
Understand PMI. If you do not put 20% down, you have to pay private mortgage insurance. On a $200,000 house, 20% down is $40,000, which is hard to save.

Turner also says home prices have appreciated an average of 4% per year for over a hundred years, so there is no need to be afraid to buy a house. On a conventional loan, once you have 20% equity, Turner says you can call the mortgage company, they send an appraiser, and the very next month PMI is removed. On FHA, Turner says, the mortgage insurance never comes off.

Contracts, Inspections and Closing

Turner says to ask every agent to send you a blank copy of the required state contract before you click through 11 pages on DocuSign. Reading it ahead of time means no surprises later.

Earnest money, Turner says, is typically $500 to $2,000 and is often refundable if you are approved and the house fails inspection. Get the house inspected even if it is brand new. The inspection period is typically between 10 and 15 days. Broken items that do not work as intended, like a broken window or a leaky roof, are negotiable.

Before closing, ask for receipts and do a final walk through. Turner would pay the home inspector, who may charge $150, to go back and verify repairs. The appraisal typically runs about $400 and compares your house to homes closed in the last six months within a three mile radius.

The Bigger Picture

The thread running through Turner’s lessons is that a house is a series of numbers, and each one deserves a closer look before you decide. A $5,000 price gap sounds enormous in the moment. Broken into a monthly payment, it looks very different. The same goes for closing costs, mortgage insurance and repairs.

The next time a negotiation hits a wall, pause before walking away. Ask your lender to run the numbers, compare the monthly difference to everything else you love about the home, and then decide with a clear head. You may find the gap is smaller than the feeling it creates.

Willow and Hearth