Home buying / realtor questions (long)

[WiltOnTilt]

Hey guys, I hope this is the right forum.

For those of you who are familiar with real estate and realtors and home buying...

Background: My fiance and I are 25 years old and we're looking at purchasing our first home. We've been looking at mostly newly built homes that haven't yet sold in around 250k range (we live in the midwest). We're able to put 80k in as a down payment.

Currently we have a realtor who (in my estimation) is worthless. All of the houses she has shown to us have sucked, and the houses we've liked have been found by my fiancee through online home searches. We've been told that it's important to have a "buyer's agent" so there's someone in your corner and they split 6% of the house with the seller's agent, if it's listed. Also the buyer's agent will draft up the legal offer, which is a "benefit" because she "knows all the legal language for contingencies". She wanted us to sign a contract with her so she has rights to her 3% commission on any house we buy (even if we find it ourselves). I refused.

Questions:
- How important is it to have a buyer's agent? Are the reasons above valid?

- When asked by a seller's agent if I have a buyer's agent, does it work to say "If you'll give up 1/2 of your 6% commission to me, then I have no buyer's agent, otherwise I do have a buyer's agent" ?

- How hard is it to draft up your own legal offer with contingencies? Is there a place online that has offer templates where I can fill in the details?

- How much should I expect to pay a lawyer to draft up an offer for me if I cannot do it myself?

- I keep hearing "this is such a great time to buy" because builders have a huge inventory just sitting there. We really haven't seen this in the Kansas City area. What's the best way to find these mystery houses that are "such a great deal"?

Thanks for any and all replies,

KoW

[Thremp]

Just get a realtor. The reason you probably got one that sucked BTW is because you didn't sign a "buyer's agent" agreement. So you're essentially working with someone who has time to waste.

Why on earth would a good realtor go around with 2 people who are looking at a houses with no intent to use you as their agent?

BTW I don't know about the laws in your specific state, but I don't think you can transact real estate as just a person in some states. I don't even know if a lawyer is qualified to do this. Disclaimer: I'm not for sure on this, but I know where I live I personally cannot write up any contracts for real estate for someone else regardless of my ability.

Oyah, without a buyer's agent you're likely to get screwed also. GL

[pig4bill]

[ QUOTE ]
- When asked by a seller's agent if I have a buyer's agent, does it work to say "If you'll give up 1/2 of your 6% commission to me, then I have no buyer's agent, otherwise I do have a buyer's agent" ?

[/ QUOTE ]

No.

Every state has their own laws and regulations. Sometimes localities too. In the places I've lived, anybody can walk into the selling agent's office and make an offer. Just remember that they have a fiduciary obligation to make the best possible deal for the seller. All negotiating for your side will have to come from you. You can hire a lawyer but it won't make the house any cheaper as far as commission. The seller still pays them the whole 6%, and you'll pay your lawyer.

[PokerAce]

Using a buyer's agent is always a good idea. It sounds like you just found a bad one. If you don't have a contract with the one you are currently using, drop them and find someone else. You may want to interview a few different agents before using one. Also, the more experience they have, the better they likely are.

I am closing on my new house next week. I interviewed a few different realtors before deciding. The one I went with had 35 years of experience and was very knowledgable about the industry when I interviewed him. He was also very receptive towards my specific needs and showed me a lot of houses that met my criteria very closely.

[WiltOnTilt]

Hi Thremp, thanks for the response

[ QUOTE ]
Just get a realtor. The reason you probably got one that sucked BTW is because you didn't sign a "buyer's agent" agreement. So you're essentially working with someone who has time to waste.

[/ QUOTE ]

The reason we have this realtor is because she's a family friend of my fiancee's and goes to their church, etc. She offered to help us out. Everyone I've talked to has said don't sign the contract because if you find something on your own that is for sale by owner or direct from a builder, you don't want to have to give up 3% for her doing nothing.

[ QUOTE ]
Why on earth would a good realtor go around with 2 people who are looking at a houses with no intent to use you as their agent?

[/ QUOTE ]

We would be happy to purchase a house through our realtor if she found it for us, showed it to us, and worked on our behalf to get us the best deal possible. I'm not looking to screw anyone out of what they deserve. I simply want to see some value for the 3% they earn. It's been 2 months now and the only GOOD houses we've seen w/ our realtor have been found by my fiancee online -- and we requested our realtor show them to us. I'm sure you can see how this has molded my current thought process of "why are we using a realtor?"

[ QUOTE ]
Oyah, without a buyer's agent you're likely to get screwed also. GL

[/ QUOTE ]

Basically I don't see what value she is providing. You say I'll likely get screwed without an agent. Can you elaborate how? It's hard for me to see our realtor working any miracles to get us a cheaper price -- including, but not limited to, the fact that she gets 3% of the final sale price...

Shouldn't realtors have some other "ins" to find us houses we cannot otherwise find on our own? Isn't that what realtors are for? It appears that she has access to the same internet search engines we do...

Thanks again,

KoW

[Thremp]

KoW,

I don't want to come off as flaming you, but your thinking is very wrong. I will enumerate this to make it easier.

1) You are hiring a professional. Would you use a lawyer or accountant solely because they are a family friend or a friend of a friend? Find a good realtor and use them. Its like anything else. I'm sure you've probably put more effort into finding a body shop to work on your car, but when making a purchase over 100x the size... You use someone random to steer you through?

2) I assume you have a mortgage already. If so... congrats. If not... Go get one.

3) Someone is taking that 3% regardless. You are not getting it back. If I am a realtor and have people who want to represent themselves without a buyer's agent, they will usually have no clue of the market so I won't be pressured if my sales skills are any good and I make double commission. If they want a "break" on the price of the house I can "give" that to them.

3) In keeping that your 3% is sunk. Here's a great way. Getting a solid home inspector to view the property. Do you know a home inspector? Do you know what they do? Do you know any you can trust? If you answered No to any of those three questions a realtor is probably well worth it. Also she'll help get you market data very easily. You can get price per square foot for everything in the area, have someone to streamline the process, and to look out for your interests in case there are ethics issue with the selling agent. (Side story: For example selling agent does deal under the table without handling any paperwork. You being unknowledgable about the process don't know anything is afoot. You encounter problem... Call... No one knows what you are talking about. Oops.)

4) You are looking at new homes. I'm not certain what builders in your area do, but typically no. Its not hard to drive around a city and see where homes are being built. Internet searchs seem to be the worst way to look at homes. Also, you might wanna give your realtor something more concrete to work with. 225k-275k, 3 side or full brick, 2+ car garage, new, these school districts 2500-3k square feet. If you just go out and say "Show me house I love that are new ~250k" you'll probably not have any luck.

5) I'd venture to say most of the people you are talking to about not signing a buyer's agreement are morons.

Summary: Find a quality professional and use them.

Though on the selling end you can use a realtor to get all the applicable data and repairs that should be done and then list it FSBO and that will save money, but is also fairly unethical.

[scotchnrocks]

I recommend you change realtors. I'm closing on a condo tomorrow and my original agent was also a family friend and I had the same problem you did, she was basically just showing me crap and trying to sell me something, anything to get her commission. So I fired her politely and found my current agent through one of her online listings. Her site was very thorough and organized to the point that I could tell she was motivated.

Give your agent price ranges and zip codes/neighborhoods and have her send you the MLS listings or whatever, go see a few homes and talk to your agent about the things you like/dislike. Give him/her a chance to get to know your "style" and you should start getting somewhere. My agent didn't help me as much with selecting the home as much as she did doing all the leg work. She ran several errands for me, got in touch with my lender so I wouldn't have to relay info back and forth and in general did a very good job. She also negotiated a good price for me and saved me the cost of a home inspection. The condo I'm buying is brand new and though she recommended I have an inspection, she explained that it had to be inspected by the builder and all and that I could do it myself (probably wouldn't be able to do this on a house). She also had some good contingencies in the contract such as appraisal must be greater than or equal to purchase price, all appliances stay, I must agree with all Homeowner's association rules, seller must provide 1 year home warranty, and a few more.

Some of these things may be standard, but I am very pleased with my agent.

[WiltOnTilt]

Thremp,

Thanks for typing all this out. I really appreciate it. I'm going to read through your post a couple times and take action accordingly.

Just as a quick follow up - I understand the conclusions you're drawing based on the limited information I provided in my posts - but be assured:

-The mortgage is ready to go

-We've provided many specific details on the house we want (perhaps, too picky)

-I have access to a trusted home inspector, he's a friend of one of my co-workers that I know well.

-Morons or not, my parents were telling us not to sign the buyer's agreement because they were in a similar situation and talked directly to a builder who said "if you don't have an agent the price is $X, if you do have an agent the price is $X * 1.06 for this house". Perhaps that is an unusual case, but it was the primary reason for the advice given and similar situations with FSBO.

Thanks,
KoW

[maxtower]

If you work without an agent, you could probably negotiate with the selling agent to give you a cut of the buying agents 3% since the selling agent will be getting the full 6%.

[Thremp]

KoW,
That is very strange with the builder. If you can pull it off, GL. In my area most builders have agents which would preclude this situation. If you can talk to the builder and he's willing to provide information for other houses in the area with selling prices. There really isn't any reason to do this.

Are you only looking at new homes or are you looking at some "gently used" homes as well?

My decidely unprofessional opinion is that you should release your current agent and while gathering information for a newer agent, look around at new properties and decide places you like and don't like. Make out a list and talk to the ones with only builders and see what you can work out. If you are unable to find any that don't already have an agent, then find a recommended professional and get them to help you with homes that are already listed etc.

Scotch,

I don't think I'd ever buy a house without getting a home inspector to look at it. I bring a mechanic with me when I check out cars even though I'm relatively knowledgable, because he is far better. Home inspectors are the same way. BTW if something crucial is missed in a home inspection (wiring etc. who knows) that could make the home not pass code and when you try to sell it find a deal fall through or have to hire someone to come in and do work for you because you didn't shell out for an inspection. It also adds some protection to you, if something happens. As the inspector is an unbiased 3rd party that just makes notes on whats going on.