So, no short sales for me I think. Foreclosures might be okay though, dunno. I have seen a few places that are cheap enough that I believe you could buy them and immediately have positive cash flow from rent, which is where you want to be with real estate investing. (mainly places that have "Mother in Law" units because you get two rents; I can't believe how much those things rent for; the one in my house is rented out for $850 and it's an absolute hole). (you wouldn't actually be cash+ because that's not counting property tax or upkeep or months when it's not rented, etc, etc, but then it's also not counting appreciation; in any case rent = mortgage is a rough sign of price sanity, or maybe just a sign that rents are awfully high around here).
There are houses in the Beacon Hill area that are under $200k. I could buy that outright and have no mortgage! My depression-era financial mentality finds that rather appealing, but it's really bad investment. One of the biggest advantages that houses have as an investment vehicle is leverage (the other of course is tax benefits) (and another is that the market for houses is actually propped up by the government, they actually subsidize your risk).
My understanding on fees is that the 6% is usually locked into the seller's contract, then they give 3% to the buyer's agent. This is an obviously illegal way of making you take a buyer's agent.
One option is to use Redfin, which gives you back half their fee (1.5% back). On a 500k house that's 7500, so it's not trivial, but maybe a good buyer's agent would save you 7500 worth of time and haggling and fixes on the house, so it's not a clear win. I've read good and bad things about buying through Redfin. It seems like sort of a shoddy operation, but I do like doing things online and I hate talking to humans, so that aspect is right up my alley.
The advantage of Redfin is that they will at least make appointments for seeing houses and take you around, so you don't have to call up agents. There's another one here called "$500 Realty" which gives you back 75% of the 3%, but they literally do nothing, you have to do all the touring yourself.
On top of the 6% real estate agent fee you get various closing costs which I understand are 3-5% typically. WTF WTF. 10% in fees on this transaction. This is such a fucking scam.
And I was thinking about mortgages a bit. Obviously fixed rate is the way to go right now to lock in the low interest rates. I'm kind of tempted by 15-year mortgages because I like the idea of paying it off (depression era youth, there you are again!), but I'm pretty sure the 30 year is actually a better deal. For one thing, the spread between 15 and 30 is very small right now; apparently sometimes the spread is much bigger and that makes more of a case for the 15. If you look at the total amount of payment difference, it looks like a big difference (almost twice as much), but that's a lie. You have to account for inflation - the dollars paid after the first 15 years are worth *way* less, and you have to account for investment income on all the dollars you didn't put towards the mortgage, and you have to count the larger tax deduction with the 30 year, and I believe the result of all that is a decent positive on the side of the 30 year. One thing I spotted that I wasn't aware of is pre-payment penalties. WTF, you fucking scammers. So, have to watch out for that.