Trying To Avoid The Inherent Contradiction
Readers suggested a topic on buying a house. “Do you really need a re-al-TOR to buy a house? I’m going to start to look seriously in about six months, and I’m a first-time buyer.* I’m pretty sure I’ll need a buyers’ agent, but I’m also trying to avoid the inherent contradiction of buyer’s agents. I want to pay as low a price as possible, but they want me to buy at as high a price as possible for high commission. How do I get around that? (ps I intend to engage a RL lawyer too to help with the documents.)”
“In the DC area, rents are so high that buying is a better deal. Job is stable and will be more stable in a few months, especially if we can get past the fiscal year budget hump. I won’t even look up “realtor” in the phone book at least until the end of this year, and I intend to be very open-ended even after that. If I close within a year I’ll be surprised.”
“Also, I have no intention of paying $280K for a house. That was just a comparison of equivalents. I’m looking between $200-220K, which would be about $920 a month. That’s $1000 a month, which is real money.”
A reply, “Same boat here. Currently in a 3/2 rental for $2100 a month. Similar housing at 300-340k w/ 20% downpayment has $1400/mo cost. Assume piti - deduction = 1400 , net savings of $700/mo + equity build or about $8400/yr. Downpayment of 60k @10% only equals $6k/yr .. Still, I seem to be factoring in another 15-25% price drop I feel is coming in the next 1-2 years and it is making me shy. 15% of 300k is $45k or about 5 years of the savings I would get(more counting income on downpayment). I’m thinking I wait until similar houses are at 270-310 , or about a 10% drop, then if there is a further 10-15% drop my lost saving window is only a year or two… Not too bad.. Plus, it seems more like I am only getting 4-5% out of my downpayment money rather than anything close to 10%.”
One said, “Treat them like used car salesmen. They are not your friend. I recently talked with a Realt-Liar and I was floored when he asked ‘what is your price range.’ WTF?!! I simply said I’m not going to disclose that and to proceed with his work. Silence.”
A reply, “Assuming you are working with one, how are they going to know what to show you if they don’t have a price range? Should they be walking you around 800k houses or around 150k condos? I would avoid the ‘what is the maximum you will pay for this property’ question, but giving a realtor a price range to work with isn’t ridiculous.”
Another added, “They act like they run the show when in fact they are just a coordinator and another piece of the puzzle. Most will bring up interest rates, but they are not my mortgage broker.
They will bring up how well the house is built, but they are not my builder. They will say ‘You can fix that for $100,’ but they are not my contractor.”
“If the house is over my budget they will say ‘Well, you can afford another xxx a month,’ but they are not my accountant or financial adviser. It reminds me of my wedding: The limo guy gave us advice on the Tuxedos, the cake lady gave us advice on the flowers, the lady at the court house gave us advice on our honeymoon….. We figured they were just being nice, but realized they wanted to have their opinion heard. Since they were in the ‘Wedding Industry’ they felt like they could give advice on anything and everything dealing with weddings, but their job title said otherwise.”
“You could find one with your best interests in mind, but they are few and far between. By disregarding their advice on interest rates, builds, tax advantages, and anything else not in their realm you’ll have a better experience.”
‘My realtor here is a nice guy. My age, young kids, good person. He knows I am searching for REO houses and I’m not gonna get suckered into a dump because it has granite counter tops. I’m working with him because I am an easy client and I know what I want. He knows I am planning on low balling REO properties and wont talk me out of it. If I went with some old lady who did this part time she would give me the same old lines of ‘Well, REO really isn’t that good of a deal’ BS.”
“Times are slow in RE, and realtors will take any client they can. If you were one, do you want to waste your Saturday driving all over the place with some dingbat clueless buyer or do you want someone who is very clear on what area/price they want. Like the Syms Department store slogan: ‘An educated consumer is our best customer.’”
One had this, “They are keyholders, nothing more, nothing less. They’re the people who can let you in the door, literally, of the property you want to see. You’ll want to get your own, because otherwise you have to schedule every property viewing with a different realturd, which is logistically difficult, and all of them will try like hell to become your realtor when they find out you don’t have one already. Ask around, and you can probably find a somewhat tolerable one.”
“Tell them your price range overall, but act like every offer you make is final. Never tell them you’ll go higher if need be. Never tell them you’re head-over-heels in love with a property. Always act like you’ll walk if your current offer isn’t met. Remember- they’re all salesmen, and they want you to pay the highest price possible. But they have one good use: they can let you in the door. Act accordingly.”
And finally, “In your business transaction you have to take ownership of the deal. Dictate the terms upfront, spell out the conditions, negotiate the commission and then don’t be afraid to lowball. Please remember don’t ask don’t get. Have fun doing the deal.”
The Spectrum. “Washington County’s residential real estate market has changed dramatically in recent years, creating opportunities for prospective homebuyers and additional obstacles for many sellers. Carl and Lacy Franke said they understand the nature of Washington County’s housing market and have adjusted their outlook accordingly as they attempt to sell their St. George home. Carl said his family’s five-bedroom, 4,040 square-foot home was appraised at about $575,000 in 2007, but he recognizes that the inflated pre-recession value has little significance in 2011.”
“The home is now listed for sale at $389,900, Carl said, representing a steep decline from its prior value. While the value of Carl and Lacy’s home has fallen significantly, Carl said his family would not sustain financial losses if the property were to sell at its current asking price. ‘Everything was so inflated at the time,’ he said, adding that the home’s basement was unfinished in 2007 despite the sizable estimated value. ‘We would have loved to have sold it for $500,000, but you have to be realistic.’”
“Rand McCullough, president of the Washington County Board of Realtors, also serves as a real estate agent for Carl and Lacy Franke. Although the family’s home has been on the market since April without attracting a buyer, McCullough said an average home in Washington is expected to remain on the market for slightly more than 10 months. In late 2009, local homes spent an average of about 20 months on the market, he said.”
“McCullough said homes priced at $250,000 or less have experienced a slight increase in value during the past year while home prices at the higher end of the market continue to fall. ‘These lower-end properties are inching their way up,’ he said.”
“McCullough said approximately 2,300 homes are listed for sale in Washington County, representing an 8 percent decline from last year. ‘This is an excellent sign,’ he said. ‘It does mean our market is heating up a little bit.’”
“While the inventory is declining, McCullough said the 2,300 homes on the market represent a continued ‘glut of inventory,’ leaving prospective buyers with a wealth of options in terms of housing selection. In addition to lower prices and a vast selection of properties, buyers are now receiving more favorable interest rates on their mortgage loans, he said. He said many buyers are obtaining interest rates of about 4.25 percent. ‘During the boom time, 6-and-a-half to 7 percent was a good rate,’ he said.”
“A number of residents with no plans to buy or sell are feeling the emotional impact of watching their home values diminish, McCullough said. While most homeowners who plan to retain their properties have not experienced the difficulties sellers face while trying to sell their homes in a market rife with competition, McCullough said many remain troubled by recent price fluctuations.”
“‘It still bothers the heck out of them,’ he said. ‘It affects everybody emotionally.’”
“Austin Somerville, an 80-year-old retiree, and his wife Connie have lived in their St. George home for four years, and while the market has shifted dramatically since 2007, Somerville said he has not experienced the full force of the housing market’s collapse. After purchasing his current home within the SunRiver St. George retirement community for about $300,000, Somerville said the home’s value has dropped by about 30 percent in recent years, but he has no plans to sell his property in the near or distant future.”
“‘It won’t affect me until I try to sell, and I don’t plan to sell,’ he said. ‘I plan to stay here until they cremate me.’”
