Tuesday, September 20, 2011

Buyer's Guide - Step #5 - See Some Houses (Part 1)

Now that you've got a Realtor lined up, be sure to fill them in on your process so far and what you've seen and liked versus what you've seen and didn't like.  Without a good sense of what you are looking for, you and your Realtor are likely to waste time looking at houses that aren't interesting.

Your Realtor - Access to Information
Your Realtor has access to more information on the houses you might be interested in.  This includes the listing history of a home and the history of the asking prices.  This type of information is very valuable, particularly when it comes to putting in an offer.  Houses that have sat on the market for some time may still be over-priced.  The seller may be asking too much, but may also be willing to accept an offer that is much lower than their ask.  Seeing the history of asking prices can also clue you in to how serious the seller is about getting the house sold.  Consider a house where the seller has reduced the asking price by 1% every three months for the past year.  That likely indicates that they aren't willing to move much lower, perhaps because they owe a significant amount on the home, or they aren't in a rush to move, or maybe they just feel very strongly about the true value of their home.

Now consider the same house where the seller has reduced their asking price by 10% each of the past three months.  That's a pretty clear indication that the seller "needs" to get a deal done and might entertain a low-ball offer.

You also may find that a home you are interested in was taken off the market after an offer was accepted but is now back on the market because the deal fell apart.  Did the potential buyer find something wrong with the house?  Does the seller feel pressured to get a deal done quickly?  These are the types of questions your Realtor may be able to answer for you by calling the seller's agent.

Seeing a House with Your Realtor
Your Realtor can schedule a time for you to see a house that you are interested in.  Sometimes, you'll go to see an Open House, which is when the Listing Agent looks to host many potential buyers and other agents at the house to generate some interest.  Other times, the Realtor will contact the seller's agent and schedule a time for you to walk through the house on your own.

* Warning * I would advise against going to an open house on your own if you have begun working with your own Realtor.  The Listing Agent running the open house is not on your side and could potentially put some pressure on you to make an offer - you can already hear the agent saying "I've got another interested couple coming here in an hour and I think they are going to be putting in a offer", right?  While some undo sales pressure is the last thing you need, the other issue has to do with your relationship with your Realtor.

As we discussed in an earlier post, your Realtor ends up splitting the commission on the house you buy with the seller's agent.  Well, if you've gone to an open house without your Realtor, the seller's agent may not be required to split the commission with your agent if that is in fact the house you end up buying.  This is because at the time you weren't exactly represented by your agent.  So if you then tell your Realtor "hey, I went to this open house on Sunday and I really loved the house and want to make an offer" they may then be unwilling to help you along as their is no commission for them at the end.  You can then be stuck without a Realtor on your side, or you may have to make a separate arrangement to pay your Realtor to compensate them for their efforts.

The other purpose of an Open House is for the seller's agent to generate more business for him/herself.  The seller's agent will want to get your information knowing that you are in the market to buy.  Maybe he/she can help you with that?  Or maybe you are looking to buy a new home and will also need to sell your existing home - again, the seller's agent will be happy to give you his/her card.  This again gets back to the relationship you have with your Realtor.

Next, we'll continue our discussion on viewing houses in Part 2.

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