Sunday, December 19, 2010

Buying Real Estate; Realtors

     This is the fourth in a series on buying real estate. To access the first three posts click on Buying Real Estate on the right side bar under Labels. The earlier posts cover where to look, whether to build or remodel, and using the internet to look for real estate. I am not a realtor but only want to share what I have learned buying and selling a few properties over the years.

     Realtors are just like any group of people. There are good ones, there are bad ones, and there are shysters out there as well. There are the ones who will look out for your best interests, work hard for you, and be pleasant to work with. And there are those who won't do any of those things. And of course, there are those who excel at some points but fall short at others.
     The best way to find a good realtor is probably by word of mouth, asking your friends, or asking people in the business. Short of that, luck is the next best way. Or you can interview a few before you ever look at a house. Be aware that once a realtor shows you a property you are committed to them if you decide to buy that property. One last option is to go to an open house and if you like the realtor at that open house you can hope they will be good to work with. 

     Of the realtors we have used, one was a friend of a friend (the best of all, we are still friends 20 years later), one was an acquaintance (he was just barely okay), one answered the telephone at the office (okay), one happened to be in the office one day (the worst of all), two had a listing we wanted to look at and we just called the number on the sign (both very good) and we continued to use them to look at other properties. One of these last two drove right over 40 miles when we called on a Saturday while we waited.

     Once we have a realtor our mode of operation is to look at listed properties on line, or wherever we may see something, and when we see one we will do a drive by. Sometimes our realtor we give us a list. If we are still interested then we will call our realtor and set up an appointment to see the property.

     A good realtor has to have many talents. They need to know the local market, have good relations with other realtors at other agencies (keeps them up to date with the market), and will be willing to get down and dirty when looking at a house (will they look into a dark crawl space or venture into the dark and dirty attic), and be willing to listen to what you want.

     One area that can get a little tricky is if your realtor holds the listing for a property you are interested in. If this happens the realtor who is supposed to represent you, the buyer, is also representing the seller. The realtor also will get twice the commission- 11/2 percent as the listing broker and 11/2 percent as the selling broker. The agency he works for will also get 11/2 percent as the listing agency and 11/2 percent as the selling agency. (These are normal percentages but are negotiable. In some areas we have seen 5 percent instead of 6 percent realtor's commission.)

     This can work both ways. There is incentive to pressure you the buyer to double their commissions. But there may also be incentive to pressure the seller to meet your offer. Just be aware of this potential conflict of interest.

     If you find the perfect place and want to write up a contract, you want them to give you good advice on the price and any contingencies  that need to be included. And then you want them to hand deliver that contract to the listing realtor and sell that contract. How did you come up with the price and what did the comparable properties in that neighborhood sell for? If your realtor just faxes the contract over to the sellers office an opportunity is lost.

     Once that is done the realtor needs to follow up on every aspect needed to get to closing. The home inspection, survey, mortgage all need to be coordinated and checked for any problems that may come up and problems will invariably occur. If there is a mortgage needed that will be the trickiest thing of all. And then once the closing date is set the realtor needs to check that the funds are there in a timely fashion. I am sure there is much more.

     As you can see there is a lot of work and lots that can wrong. Buying real estate can be very stressful and for most people it may be one of the biggest decisions they will ever make. A good realtor can make all the difference.