Thinking about buying my first house

[slakjaw]

I have been looking and have started thinking this might be a good time to get out of apartment living. I found a place that I really like, its on acre of land. was listed 2 weeks ago at 180,000 and has already been reduced to 164,000

Am I supposed to get my own Realtor or call the one who listed this place? I am not really sure how this works. ...

Looking for advice for a first time home buyer.

[Hugh R]

Get your own realtor. You may be able to negotiate a slightly better price however if you go with the listing agent. No splitting of commissions. Get a PPI.

[VINMAN]

You can call the listing agent direct. But I found it better to have your own agent. They will work harder to get you a better price. The listing agent wants to get as much as they can

[scottmandue]

Uh, I'm sure you know this but just to be safe... be sure to get a fixed rate loan!

[slakjaw]

LOL Yeah I am not down with these interest only loans that everyone thought were a good idea about 2 years ago.

[imcarthur]

As above. Get your own agent. The listing agent is working for the seller. That's where the commission comes from. If he/she sells the property the seller will get a slightly lower rate. That doesn't help you though. An independent agent will only have one client's interest in mind - you.

Ian

[scottmandue]

Also get an inspecttion or inspect the house very carefully yourself, defective plumbing/electrical/foundations/etc. can eat you alive.

You should at least personally test every faucet/drain/electrical outlet/light switch/light fixture and take a peak under the house and in the attic.

[Porsche-O-Phile]

Right there with you buddy. I'm hoping to be in something shortly after the first of the year. It's taken way too long having my life put on hold by the lunacy of the last few years. Finally things are starting to come back to earth. I'm finding nice detached single-family homes a train ride away for around $190k right now. 'bout time.

Best of luck to you.

[BGCarrera32]

Typically if you're selling a house the standard commission rate is 6% (at least in MN). 2.8% of that 6% is payed out to the buyer's agent. That means if you go get an agent, then your agent stands to make 2.8% of the selling price. There are plenty of hungry realtors in MN, they all have access to the MLS. Your agent can see how long the house you are looking at has been on the market, how many homes are on the market just like it within an X mile area...all of which can be good negotiating tools for the buyer (you). If the house is listed by a discount realty (like 4.5% to sell your house! or whatever they claim) expect that the payout to your agent will be less than 2.8, consequently your new agent may want you to look elsewhere so he/she can get a higher commission. Not that that's a bad thing, just be ready for them to offer to show you around.

And another thing, ask to meet your agent or interview them before you start a relationship and get on the hunt. I had one lady that seemed o.k. but turned out was bat s--- nuts and carted my future wife and I around to look at houses in a Honda CRV.

[the]

Originally Posted by imcarthur

As above. Get your own agent. The listing agent is working for the seller. That's where the commission comes from. If he/she sells the property the seller will get a slightly lower rate. That doesn't help you though. An independent agent will only have one client's interest in mind - you.

Ian

All agents work for the seller.

If there's no sale, there's no commission for anyone.

[the]

My point being - DON'T TRUST ANY REAL ESTATE AGENT. There is no such thing as an independent agent who only has your interest in mind. You can listen to what they say, take it into consideration, but at the end of the day you have to do your own due diligence as far as any particular house, market conditions, accurate pricing, etc. YOU are the only one in the transaction who truly has your interest in mind.

[imcarthur]

Originally Posted by the

All agents work for the seller.

If there's no sale, there's no commission for anyone.

I know where the money comes from. I have fought an agency (and won) over an agent that lied to make the sale. It was my listing agent too.

Ian

[911Rob]

Whoa, Whoa, Whoa!!!!
Slak!!!

If you're gonna take advise, then at least take advise from someone who knows what they are talking about! My wife and I have owned over 50 homes personally, some bought with the listing agent and others with a buyers agent and a few for sale by owners.

Not that there aren't people here who don't have experience, but the art of real estate negotiating is not a beginners game, imo.

I've been a real estate developer all my life and recently (past 3 years) became a Realtor and started my own real estate company. Now I'm a land developer, builder and Realtor; all in one. Through my skillful knowledge of real estate negotiating my real estate company became the No.1 in the entire Region, almost instantly and we've maintained that level since.

Prepared, Prepared, Prepared and yes; Location, Location, Location.

I'll gladly give you the step by step advise that YOU SHOULD take!

First, if the home is listed on MLS, then the seller has already agreed to pay a real estate commission to the listing agent; whether you have your own Realtor or not, the amount is already set in place; it rarely changes. The seller has signed a contract to list the home with the listing agent and in that contract it will stipulate a "selling" commission portion to be paid to the person who brings the buyer to the seller, even if its the listing agent.

So understand this.... there is already two commissions in place. One for the "listing" end and one for the "selling" end. Let's assume its 6% with a 3%/3% split.

If you call up your own realtor, there will be no negotiating in the real estate commissions; period. The listing agent will take his share and your buyers agent will take his/hers. So I would (and do) do this:

1. Call the listing agent and tell him that you are interested in the property he/she has listed. Then tell him that you have a relationship with a local realtor; however if the property turns out suitable for you, in most likelihood you'll be writing a less than full price offer. Therefore, in cooperation with the sellers ability to negotiate a lower real estate commission payable, you will work with them exclusively as a dual agent. (Sorry if this is not permissible in your state; its allowable in my Province) Tell them that you'd like to meet them and view the property and if you find them able to provide a workable relationship you will proceed to use them as your buyers agent.

2. View the property and meet/greet the agent. Discuss the details of an offer; which subjects they recommend and how they feel about the property and the current market. Ask them to provide you with a list of recent sales that are comparable. See if there is a recent appraisal available.

3. If you feel comfortable with the agent, then proceed. If not, then back off and get your own agent. (I've done this many times when the listing agent didn't provide me with what I wanted or a comfortable relationship).

4. When you write the offer, let them know that you're willing to have the Realtor provide dual agency for a reduced commission; this will save the seller money and ultimately allow you to write a lower offer. Let them know that you want the revised commission written into the offer and signed/accepted by the seller, either in a commission disclosure statement or part of an addendum.

5. Write a low offer to begin with; and in this market I MEAN LOW!

Good luck Slak! I'm an expert in this field, feel free to email me anytime with any specifics that I can help you with; I would be more than pleased to offer you any assistance I can. rob@rolyn.biz

After you have an accepted offer, its a very good idea to have a home inspection done by a professional home inspector. A subject clause in the offer should read..... "This offer is subject to the buyer receiving and satisfactorily reviewing a professional home inspection on or before November xx, 2008. This subject is for the sole benefit of the buyer and may be waived unilaterally by the same."

You should also have a subject clause for suitable financing and insurance.

It would also be a good idea to have a personal friend walk the property with you; someone that knows 'something' about homes and real estate.

Do not pay more than the highest comparable of a SOLD property; not a listed property, but a sold one! Especially in this market.

Cheers!
Good Luck

[Porsche-O-Phile]

"Dual agency" relationships are a joke. Frankly they ought to be illegal, IMHO. There is simply NO WAY that one individual can act in both the seller's AND buyer's best interests. No way. I've always had a fundamental problem with these arrangements and would question the integrity of any agent who even suggested acting as one. Agents in general aren't to be trusted. "Dual agents" are ABSOLUTELY not to be trusted.

That said, what I've been told (and what makes the most sense to me conceptually) is to find an individual who is willing to contract with you exclusively as a "buyer's agent" ONLY. At least it eliminates the conflict of interests. Even then, I think the old adage "trust but verify" comes into play, since a lot of these guys know each other and I wouldn't doubt for a minute that some don't collude behind the scenes to get a deal done, while screwing the buyer to the maximum extent possible in order to pad their commissions and make their boat payments. Illegal? Yes. But I've no doubt whatsoever that it happens. But in most cases the conventional arrangements are probably legit (but if it smells fishy...)

Best still, I'd look for FSBO deals (and I am). I'm finding more and more good ones out there. Realtors are perhaps the most overpaid individuals in the world relative to the value of the service they provide, IMHO. One stands to lose very little by avoiding dealing with them and can stand to save an awful lot of "deadweight" back-end money wasted, IMHO. I liken them to travel agents from years ago - they only exist as a convenience and really their only value is in their ability to access their respective mystical databases (for travel agents, it was the airlines' fare and schedule database, for realtors its the MLS). In the case of travel agents, they ended up going the way of the dodo once the public-at-large started to be able to access fares & schedules directly / online (a consequence of the advent of the Internet) and no longer needed the overpaid middlemen to do it. I'm seriously hoping that the realtor-based real estate system goes the same way for the good of everyone - and the evidence I'm seeing is that it is in fact starting to go that way, albeit slowly - I suspect it will take much longer to finally fade into the pages of history, probably on the order of 10-20 years. Anyway, there are lots of FSBO listings these days with more coming online every day. But I digress...

Unfortunately in today's market, most good deal homes are bank-owned and banks DO play the game with realtors rather than opting to list "FSBO". The FSBO deals are usually people in trouble looking to dump just before going into foreclosure (at least that's what I'm seeing), so they're out there but the ones that REALLY have the good prices are the ones that the bank has already repossessed and are now looking to unload.

I'd avoid short sales too - at least for right now. I have several friends who have had offers accepted on short sale properties and the banks are all hemming and hawing right now, not approving the (seller accepted) offers because they all want to see if they're going to get federal $$$ to shore up higher, above-market-value prices rather than cutting their losses and letting places go for what the market will bear right now. Stupid and short-sighted (and sleazy), but that's banks for you.

[gprsh924]

That is interesting Jeff. Around here, when we see FSBO, it is usually relatively wealthy, comfortable people who can afford to wait around a little bit to try and sell their house on their own without having to pay a realtor.

[stomachmonkey]

FSBO's that we ran into were all people who thought their place was worth more than it really was.

Agents would give em the reality and they simply did not want to listen.

Or they were trying to save the broker commission which indicates they are cheap which makes you question how they addressed issues with the house.

In my experience they were the worst houses to view.

Owners would always follow you around jabbering away about stupid stuff that was relevant to them but buyers most likely did not give a rats ass about.

One guy spent 15 minutes on the light switches on either end of a long hallway. Wanted to shot him.

[Rick Lee]

Jeff, if you're doing a FSBO deal and you have no agent, I'd be surprised if you're not in for a very rough ride. I understand the sentinent about realtors in general. A lot of FSBO deals offer 3% for a buyer's agent. If you're looking for those that do not, the true, commissionless FSBO's, you'd better know what you're doing. And knowing how much you distrust lenders too, I don't know how much one of them will help you beyond doing the loan. Do you really know how to write a real estate contract? I mean beyond going to Staples or Legal Zoom and getting a general one for California. Are you planning on hiring a lawyer to go over everytihng beyond what's normally required of a settlement atty. and the $500 the usually charge for the closing?

Unless you find a perfect house that needs nothing, be prepared to write in all kinds of contingencies. Copper or poly pipes? Evidence of termite treatment? Survey says the fence encroaches 1' onto the neighbor's yard? (This last one happened to me.) Recent repairs warrantied for the new owner? This stuff is not rocket science, but it's a lot easier to have someone who does it every day and a buyer's agent costs you nothing. Sure, some houses have the agents' commission built into the price, but some FSBO listings allow no agents at all and are still too expensive, which is why they decided to try it on their own. Good luck. You'll need it.

[911Rob]

FSBO's that we ran into were all people who thought their place was worth more than it really was.

I'd agree that FSBOs are either sellers who over price their properties or can wait patiently (or both). Whenever I had a property for sale I would both list it on MLS with a Realtor, then I would list it also on all the local FSBO sites. It was fun and I would get referrals from my Realtor for referring buyers to him; it's one of the things that led me into owning a Real Estate business.

I always wanted my properties to get the best exposure possible. Over a few years I was amazed by the data I was able to collect regarding FSBO sales vs: MLS. I can tell you that MLS out performs FSBO by 10 to 1, if not greater. If your property isn't on MLS you're doing yourself a dis-service. (another reason I got into the bizz)

Jeff and I have had a run in or two about Realtors and his comments are so left wing negative about the entire industry; I'd stay far away from any advise he has on Real Estate, unless you're looking for advise on renting an apartment?

I made well over a million dollars on this last "Economic Swing" over the past 3 - 4 years; and as I've stated before; anyone who couldn't make money in the past 4 years in Real Estate better stay out of the business!!!

There isn't one single bit of truth to what you've stated above Jeff ^^^^ not one single bit! Unless of course you're referrring to the bottom feeder, good for nothing Realtors that are operating out there. I don't know of one single client that my Real Estate company serves that doesn't totally appreciate our services. A good Realtor will do nothing but save you time and money! Your expectations of a Realtor will only do just that for you.... negative expectations bring negative results. Try working with someone that's in the top 1% of their industry and leave your negative attitude at home when you do.

I certainly could SLAM alot of architects that I've worked with over the years; but I've learned to work with the good ones. There are architects that are a tremedous asset to a development team and then there are architects that are a hinderance. Just because someone calls themselves an architect doesn't mean they know the first thing about building a building, a development or running a business. In fact, most are just glorified over paid draftsman; and very few make any kind of serious coin these days.

My Real Estate company currently sends out information regarding property searches to over 5,000 clients and every so often a client will ask us to be removed from our system for one reason or another; this is what we end our removal completed reply with.....
“There are no good deals that are on the market for more than 1 day. The best deals are usually sold before they hit the general market or the first day they do. That is why it is a key part of success for a Real Estate investor to have a special relationship with the proper Real Estate Agent!”

Now if that doesn't make any sense to you, then it doesn't apply.

So once again Jeff, get off your high horse and realize that a good Realtor is worth their weight in GOLD!

FSBO; ha! Good luck with that?

[Porsche-O-Phile]

Sorry to drag this thread off subject here - I'll just make a few more minor points and then won't comment on this again (we can always make another thread to discuss the merits/detriments of realtors versus FSBO transactions).

The reality of my own situation is that although I'm certainly looking at and scouring the FSBO listings, most really ARE too high. There are a few good deals, but mostly the owners are dreamers, even the ones about to get f/c-ed on. Two I've talked to seemed like nice people but really got a little offended when I told them straight-up I thought their price was too high and I was thinking more in the neighborhood of such-and-such for price. I guess pride trumps common sense sometimes. But those are the breaks. I guess I'll always get my shot at their place in a few months after they've been foreclosed on, right?

Back to the subject of realtors:

What (seriously) is the "value added" service that they provide? Really. You call up some slick-talking sales guy (which is what they really are), give them a list of parameters which they spend about 15 minutes programming into a search program on a computer. The computer then spits out about two dozen "hits" (same thing that realtor.com, homes.com, etc. will do). They hit the "print" button, call you with the listings and spend a few hours on a Saturday tromping around empty houses they know actually very little about with you, then expect to be paid a king's ransom for it? Seriously - there is absolutely NO WAY someone can make the case that a realtor's job is really worth 3 (or 6) percent. Not a chance.

By contrast, an architect's typical fee on a residential job is around 5-7% (one of the reasons we don't like to do residential). For that, you get us to conceptualize the design, draw it up, revise it. Revise it again. Revise it again. Get it through development boards and planning commissions. Size the structure. Research utility connections with often-unresponsive municipal agencies. Generate a set of buildable construction documents (including specifications). Get everything permitted through Building & Safety, Fire, Planning, Water Reclamation and whoever else wants their pound of flesh. Coordinate consultants, oversee construction and deal with all the headaches and B.S. that fickle, cheap residential owners can dish out (which is often a lot). And most importantly, we accept the liability for full compliance with applicable codes and associated life-safety of the public. This is really what an architect's fee is for - because we are charged with DIRECTLY looking out for the safety and welfare of the public. In the words of one of my professors years ago, "an architect who makes a mistake can kill thousands of people at a time in a single moment. A doctor (who is paid a lot more) can only kill patients one at a time with their mistakes". What does a realtor do? Oh yea, they hit a "print" button. Tell me who earns their keep in this world more again?

Are there some architects who are better than others? Sure. Are there some really good realtors? I'm sure there are. However I'm speaking from my own personal experiences here - I've dealt with no less than a dozen different realtors over the last few years (that's the ones who would even bother to return my calls - most won't). They are ALL to some extent "sleazy" and set off warning bells in my head. To varying degrees, yes - but they all did it. I never, EVER felt that any of them was working hard enough to have earned $6,000-$10,000 of my money. I CERTAINLY never, ever felt that any of them really was working hard with MY interests truly at heart. I guess I'm not really worth their effort since I'm not looking at seven-figure-price-tag properties, hmm?

I have no problem paying someone for a service, but they better (1) damn well earn it and (2) damn well better provide me with "value added".

Why do you think everyone and their brother was kicking the door down the last few years to get their realtor's license? Hmmm. EASY MONEY brother! A 12-hour course and a few "click-click-clicks" on the computer and you could be raking it in! I don't know too many people who were kicking the door down to be architects with our 5+ YEARS of academic training and 8+ YEARS of apprenticeship required and ARE examinations (nine grueling separate exams of several hours in length EACH). Tell me again who earns their keep more?

(off soapbox)

The reality of the situation is this - I've finally found a guy in my target market who is "okay". He at least picks up his phone when I call and he at least sends me decent listings targeted to my parameters (i.e. he set up the search program well). I don't get the typical "shotgun listing approach" that a lot of guys have given me in the past. He's not too much of a slick-talking, pushy salesman, which I respect. But neither do I think he's doing anything NEAR worth the money he'd demand. Not by a longshot. Sadly, I suspect that I will end up going through this guy rather than an FSBO deal. Not to say for sure - I might get the best FSBO deal of a lifetime fall into my lap tomorrow, but statistically speaking, it is more likely we'll go through an agent-brokered transaction. I WILL do my damndest to make this guy earn it however. I will be a pain in the arse, I'll innundate him with questions, I'll push EVERYTHING I possibly can onto him. Even so, I still doubt it'll be worth what he'll get paid. I'll DESPISE the thought of paying him for his "service". But in the interest of getting things done, it's small change considered over the long term, so I can probably just do it and move on without having too much of a mental meltdown over my inherent loathing to do so.

One parting thought - who really cares about realtors being able to find "the best deals" before they even hit the MLS? Maybe that counts for something in a high-demand market with a lot of properties flying off the shelves and people in bidding wars and what-not, but in today's market BUYERS are clearly in the driver's seat. There's NO WAY I'd want to be looking at or making offers on a place that had only been on the market for less than a day. It'd be akin to hanging a sign around one's neck saying "OVERCHARGE ME - I'M DESPERATE!" The average length of time the places I've been looking at have been on the market is in the triple-digits for # of days. Average. And that probably includes several "relists" in order to reset those numbers (another game agents play that I'm well aware of).

I await your various rationalizations / rants in response, but I'm done with this thread. There is very little chance anyone is going to change my opinions on this subject. But you're welcome to try. I just call 'em as I see 'em.

[911Rob]

Just two words..... "stay broke"