Archive for the 'Agents & Brokers' Category
Make your Agent EARN their Commission
Most agents are desperate for clients, and will happily agree to scan the MLS and let you know when they find a deal. Be careful to explain to the agent specifically what you’re looking for, but avoid giving a price window. Saying a maximum price may tempt your agent to simply find the first home in that price range and pressure you to purchase, wasting everyone’s time.
I have personally struggled in past before I became an agent to find another real estate agent who could competently pass on the deals to me. I recall one agent who I asked to keep their eyes open over the next year or two and let me know if any deals ever came up. First thing the next morning I got a call from that same agent telling me that, surprise surprise, he had found a half million dollar home that was perfect for me as an investment. (half a million was a fortune in Utah at the time for a home). Sadly, the home was a complete waste of money, and the agent proved useless.
Finding a good real estate agent in Utah can be tough, as well as in any other part of the nation. But if you succeed, you’ll have an employee essentially scanning the MLS and bringing you the best deals in the market, which do exist.
Wells Fargo Mortgage, the nation’s second largest mortgage company, and one that encouraged me to lie in order to get a mortgage with them, has announced that they will no longer be permitting third-party brokers to issue subprime loans.
The company will continue to offer such loans directly to consumers (which is the method I had pursued when I ran into the loan officer’s ‘encouragement’ to fudge the truth. Hopefully they’ll proceed to further reform their in-house lending practices.
This move is seen as being indicative of widespread broker-abuse and predatory lending problems which have helped contribute to the increasing number of foreclosures across the nation.
The short answer, is YES.
You should always keep in mind (and hopefully this site has reinforced this) that Real Estate agents do not always know the law. They are not licensed to practice law, or to give legal advice. Ask yourself who do they really represent in a real estate transaction considering they only get paid if the deal closes.
If you’re buying a home for several hundred thousand dollars or more, or are a novice to real estate transactions, or have never dealt with a contract before…then you should definitely use an attorney.
1. Builders will sometimes use non-standard forms and contracts. If you’ve decided to buy a home without an agent, you should be careful before signing ANYTHING.
Prior to purchasing you should sit down and look over all forms, including the general state-approved forms. Make sure you’re comfortable with the language and wording of it all. If you’re not, you should decide on an attorney, agent, or builder’s agent to help you through the process.
2. If you find a builder and decide to use the builder’s agent as both your buying agent and their selling agent, keep in mind that the agent will have primary fiduciary obligations to the seller. That means you as the buyer, will most likely not get the best deal.
3. Use an attorney to look over contracts. Whether you have an agent or not, you can get in serious trouble if you don’t carefully contract the builder to build exactly what you want by a specific date. No one wants their home’s construction to be delayed three years, or worse, never be finished. An agent is NOT a lawyer.
4. Agents get paid off commission. As a result, most agents will act in their own best interests and not yours. This can be a serious risk, as the agent may not bother even looking over contracts and could get you a bad to terrible deal in an effort to secure a quick and easy commission.
5. Coming to the transaction with no agent should give you better bargaining power, especially with a builder. The advertised price for the home should generally includes a potential commission for an agent. This means builders can and should lower the price if you’re able to work without an agent. They should not increase the list price if they find you’re using one however.
Good luck on the purchase. A good agent can save you thousands, but a bad one can leave you with an unfinished home!
Often when purchasing a new construction, one is dealing with a builder in charge of dozens, if not hundreds of properties. It is not uncommon for the larger builders to employ one or more agents to sell their homes. If you’ve already been introduced to the builders by an agent, then chances are he or she will be expecting a commission, and you will have little to gain by cutting them out of the transaction.
For this reason, you should be careful to pick a good agent (one that will actually work for the commission!). Sadly, most agents seem to slack off when it comes to dealing with a builder. These transactions tend to be easy, and as a result agents have become accustomed to showing the new construction, then sitting back and waiting for their commission check.
A good agent will be able to negotiate a lower price, get you upgrades for cheap (or free) and earn you a better price than you’d have gotten by just approaching the builder unrepresented. In addition, the agent should check all paperwork, and advise you in all your dealings in order to guarantee that you get the best price, best home, and keep you from signing a potentially unfavorable contract (no one wants to wait a year and a half for their home to be built, have a builder go bankrupt etc…things happen!)
If you aren’t confident that your agent will be able to deliver such service, then find another agent or consider approaching the builders alone. (You should discuss what he or she will do for you prior to seeing new constructions).
The bottom line is, your agent should provide you the buyer with some protection, expert advice AND the same price or lower than you would pay without an agent. Make sure you find an agent who can guarantee and deliver on such service. If you can’t find one, consider going it alone.