The People Who Assist You with Your Purchase
Having the right professional people to assist you
when you buy a home can be crucial. It can save you money, and
it can save you from major headaches. Remember that you hire the
people assisting you with your purchase. In almost every
purchase transaction something does not go as expected. You have
every right to ask when an error has occurred that it be set
right. The other people involved in the purchase transaction are
your paid advisors. It is your money, and you should be
making the decisions.
Should you use a Mortgage Broker?
It is the Mortgage Brokers job to find you the best loan. A good broker will shop your
loan for you, explain all of your options, and can assist you
through all the paperwork involved. It would be virtually impossible
for you to go to all the banks that the mortgage broker has
available to him and fill out hundreds of applications to apply
for multiple programs and then watch the rates on all these
programs hourly. A seasoned professional broker with all
his tools, experience and knowledge will watch the lenders
programs and rates and can place and lock you into the right
loan at a moments notice.
Mortgage Brokers are in the business of selling mortgages.
The interest rate that you get and the points you have
to pay should be the same as if you went directly to the
lender for the loan.
When choosing a mortgage broker you should check the
following:
How many lenders does the broker do business with? A
broker should do business with a wide array of lenders offering the
most competitive pricing and programs. If your broker only works
with the same lenders over and over you are not getting the best
representation.
Is your broker knowledgeable about all of the different
loan programs he is suggesting to you? Your broker should be able to
go into detail with you on every program and explain how they differ
and how they work.
The Real Estate Agent
A good agent will help you to find the home that meets
your needs. They will negotiate for the best price on your
behalf, and supervise all levels of the transaction, such as
inspections, and closing. Your agent should be
representing you alone.
There are different types of agency relationships,
depending on the type of agency contract that you have signed.
Seller’s Agent: The agent works solely for the seller
Buyer’s Agent: The agent works only for the buyer. Even if the agent gets a portion of the commission payable
to the seller’s agent, he does not represent the seller.
Both these types of agency relationships are known as
single agency, where the agent represents one party in the
transaction. Even though a buyer’s agent represents the buyer,
there is one thing inherent in the buyer’s agent relationship
that makes the transaction more questionable. The commission is
still based on the sales price of the house. There is a conflict
when you have an agent who is negotiating to reduce the purchase
price on your behalf, and at the same time the higher the price,
the higher their commission.
In a dual agency relationship there may be two
Realtors, one representing the buyer, and one representing the
seller. The difference is that both agents work for the same
broker. If a buyer decides to purchase a property, and the
sellers agent works for the same broker the agency relationship
changes as soon as the offer is made on the property. The single
agency relationship just changed, and each agent now also
represents the other party. Either the buyer or the seller. It
becomes that way because it is the broker that holds the agency. Since the broker is now the same, the agents now both represent
the other client. If the real estate agent that you select works
for a company with just a few other agents, the chances are
small that an agent from the same company will be representing
the buyer of the house you decide to purchase. If your agent
works for a large company, with many offices and lots of agents
the chances are much more possible.
There are two potential problems with dual agency. You
will need to feel confident that your agent is not sharing
information about you to any other agents of the company. Also,
if it seems as if you are being pushed into buying property that
is being listed by the same broker, be cautious. The agent may
be getting a larger commission if the same broker represents the
property you buy.
Your real estate agent does not get paid unless you
buy a home. This can create a conflict in some agents. It should
not create any conflict in a good agent. A good agent
should put your interests ahead of their own at all
times.
Commissions are calculated based on the sales price of
the home. Since you are the buyer, your agent would get paid
from the seller. Commissions should be negotiable. The listing
agreement should state that commissions are not fixed and can be
negotiated between the agent and the seller. Typically if the
agent works for a broker, the broker also takes a percentage out
of the agents commission.
A good real estate agent should have the following
characteristics:
They will educate you as the purchase transaction
progresses.
They explain your options, and allow you to make the
decisions.
They will advise you when
it could be necessary to ask for another expert opinion
such as an attorney or an extra inspector.
They voluntarily specialize in certain geographical
locations or properties so they can become more knowledgeable in
certain areas.
They should be full time professionals. Some agents
only work after hours and on weekends when they are away from
their "real" job. You require the services of a full time
professional agent who has been in the business for a few years
at least.
Your agent should have developed contacts in the field
whose expertise they respect.
Your agent should have time for you. Even good agents
should not be so busy and over extended that they are never
available for you. If your agent is constantly busy and
unreachable, find another agent.
You should interview at least three agents before
selecting one. If you need referrals, ask friends, business
associates, members of your church, clubs and organizations. Your employer may have a relocation service that uses a
particular Real Estate Broker.
Take each referral as a suggestion. It is highly
likely that the person doing the referral has never actually
used the person for which they are referring. In any case no
matter how highly recommended, you should still interview each
candidate.
The Interview
Ask each agent that you interview to bring a listing
of every property the agent listed or sold in the previous 12
months. Here is the information you need and what you are
looking for from that list:
Address: This will help you get an idea for the
area in which this agent might specialize. Has this agent
sold or listed properties in your target area? Do not use an
agent whose main focus has been outside your target area or
who does not seem to have an area.
Property type: Does the agent work on the type of
property you want to buy?
Price: Does the agent handle homes within your
price range? If an agent seems to specialize in properties
either much more expensive or much less expensive then the
range you are looking in, they may not be right for you.
Sale date: The Realtor should have activity evenly
dispersed throughout the year. If that is not the case, you
should ask why. If the agent has had little recent activity,
there could be personal problems going on that might effect
how the agent is able to do their job.
Seller or Buyer: did the agent more often
represent one over the other? A good agent who has been
around a while will have clients evenly distributed from
both. If the agent you are interviewing has mostly
buyers for clients there is a good chance that they are
relatively new. On the other side you also don’t want an
agent who deals mostly with sellers because they may not
possess the qualities needed for a buyers agent.
Grand totals: Comparing totals will give you
an idea of the success achieved between each agent. You
don’t necessarily want to select whoever is the top
producer though. They may have reached the top by
listing and selling large quantities of properties. These agents are usually extremely busy and do not have
any time to offer you any special attention.
Names of previous clients: Use this list to
contact some of the Realtors previous clients to obtain
references. Good agents should not have a problem
providing you with this information.
After going over the agent’s list you should also ask
questions of the agent. Consider the following as a good starting
point:
Do you work as a real estate agent full time?
Whom do you represent?
Describe you office to me.
How long have you been a real estate agent?
What kind of license do you carry? A
salespersons or Brokers?
Do you have any professional designations
through the National Assoc. of Realtors? What additional
education have you had?
What do you feel my needs are as a buyer?
I am also interviewing (blank) and (blank),
what do you think of them?
How many clients are you working with right
now?
Have you partnered up with any other agents?
Do you use an assistant?
Is there anything else that you think I should
be aware of?
Now comes the time to make the all important referral
calls. You should have a complete list of clients and be able to
choose from that list anyone you would like to call. Do not let the
Realtor just give you a fixed list of referrals. Any agent who will
not give you the full list or wants to delete it down has something
to hide. Do not use that agent.
You do not have to call every client the agent gives you. It is necessary only to get a good representation. To do this, go
through the list and weed out all clients that were sellers.
Since you are a buyer, their experience does not pertain
to you.
Next, look for people who
bought property similar to the price and type you are
looking for.
Now look for two buyers who bought about 12 months ago. Then find two who bought about 6 months ago. Finally, search for
buyers who just closed escrow on their homes. This should give you a
representative sample of the Realtor’s clients.
Now that you know whom you will call, you need to write
down what information you want to ask. You should consider the
following questions:
Did they find the agent to be honest? Did the
agent keep all promises? There can be no negative
information here. If there is, do not hire this agent.
Did the agent have time for you? Did they seem
overly rushed or hurried? Did they try to accommodate your
schedule? An occasional conflict in scheduling should not be
a red flag. If the occurrences were often, there is a
problem, and you should not hire this agent.
Were you satisfied with the level of information
you received? Did you feel that you were kept abreast of any
changes? Were things explained to you that you were not
familiar with?
Were the deadlines set for the contract reachable?
Was there any problem in meeting them?
What words would you best use to describe this
agent? "Committed?" "Motivated"? These words describe
someone who is on top of things. "Low-key" "easy-going",
might describe someone who is the opposite.
Did you find the home that you eventually bought
or was it your agent?
Did your agent negotiate a good price?
Would you use this agent again?
Is there anything else that you think I should
know?
After the interviews you should have a lot of information
about the agents you are considering. As the final criteria you need
to ask yourself a few questions. How comfortable do you feel with
this agent? Do they make a good impression? What do you feel about
the personality of the agent? Since buying a home can be stressful,
it is helpful to have someone who perhaps has the ability to ease
your mind. If you like the person yourself it can really be helpful.