These Home Buying Mistakes Could Cost You Thousands
Buying a House Is Your Single Largest Purchase of Your Life….
How you go about it can make it an amazing accomplishment or a nightmare that costs your thousands of dollars and a mountain of stress. Understanding how the process works and some key nuances will make you an expert before you embark on this journey.
How Agents Work
Every real estate transaction has two sides, the seller of a property and the buyer. Most often there is an agent (or Realtor) that represents the parties on each side of a transfer of ownership.
A home seller hires an agent, what we refer to as a Listing Agent, to best prepare a home for sale to maximize profit, manage the mountains of legal paperwork, limit legal liability and draw prospective buyers in.
As a buyer, to purchase a home, you will also need to submit mountains of legal paperwork yourself. You do not have access to this paperwork, only a licensed agent does, and unless you are a legal contracts expert, you probably do not hold the experience to expertly navigate or strategize this paperwork.
As a buyer, you generally have two choices when you want to submit an offer to purchase a home. One: ask the Listing Agent to prepare and submit your offer, or two; enlist the work of your own agent, a Buyer’s Agent, to prepare and submit your offer.
The downside of option one, asking a Listing Agent to represent you, comes down to fiduciary duty, or the legal obligation to do what is best for the client you represent. A Listing Agent’s primary responsibility is to the home seller. This is usually a long term relationship that could be tied to many deals over many years. Relying on the Listing Agent to put your priorities, a buyer they barely know, is fraught with risk. Will they put your interests for a the best deal ahead of the obligation of their long-term client? Not likely. This choice is fraught with problems and many brokerages actually prohibit Listing Agents from representing both sides (it is called Dual Agency).
It is akin to getting divorced, you would not want the same lawyer as your soon-to-be ex-spouse, you want your own representation.
The One Choice That Could Cost You $$$$
“This could equate to thousands of dollars in the final price.”
Pasadena and Southern California real estate is in a transition right now. While sellers were see multiple offers and bidding wars for houses in 2017, that is not the case in 2018. Over-pricing has fatigued buyer’s into the wings and sellers are normalizing their expectations and some are even reducing prices after a home sits unsold.
This swing in power is seen as a market correction but it not something all sellers are willing to cope with. For buyers, now is the time for intelligent and strategic negotiation. Only a Buyer’s Agent will truly negotiate price offers for you, the Listing Agent will not. See how the choice of representation could equate to thousands of dollars in the final price?
The Online Search is Only The Beginning
The benefits of a Buyer’s Agent doesn’t end with negotiations; deciding what properties are right for you or finding off-market properties is almost even more important.
The pictures and descriptions you see on Zillow or Redfin paint a rosy picture but no house is perfect, and the older houses that are prevalent in Pasadena and those charming neighborhoods of Los Angeles are far from.
Having a Buyer’s agent advise on what could be wrong with a property during initial showings, open houses or walk through will give you a sense if this is the right home for you and therefore save you a ton of time. A great Buyer’s Agent is part General Contractor, part Consigliare who will research construction permits, prior transactions for said property and point out possible challenges before you are weeks into escrow.
Remember, every offer submission on a property will include a price offering. It is only by analyzing comps can you determine what a fairly priced offer should be. A great Buyer’s Agent will do this for you, a Listing Agent will not.
How Buyer’s Agents Are Paid
'“A Buyer’s Agent actually costs you nothing”
For the thousands of dollars and stress control that a Buyer’s Agent provides, you would think it would costs you thousands of dollars to retain this type of representation. Well, it doesn’t, it actually costs you nothing. Yes NOTHING, nada, zip, zilch. A Buyer’s Agent is compensated by splitting the commission the Listing Agent is getting from the person selling the property.
If a Listing Agent can represent both sides (Dual Agency), he keeps all the commission, hence why they are so eager to represent both sides. This never works in your favor, don’t fall for it. Book your own Buyer’s Agent.
Personally, I have taken a vow to never double-end a deal, and I work for a brokerage that also frowns upon Dual-Agency transactions.
With thousands of dollars on the line, months of stress and years of anguish at risk, the bottom line is, hire a great Buyer’s Agent to help you. Did I mention is costs you nothing?
Finding a Great Buyer’s Agent
Finding the Buyer’s Agent that will do the tough work for you isn’t as easy as doing a Google search. Veteran agents with tons of Zillow and Yelp reviews are almost always Listing Agents that opt not to work with Buyer’s. They know buyers can be fickle and indecisive and offer no guaranteed payday like a Listing does. Buyer’s are a lot more work so most veteran agents chose not to work with them.
If you do contact a veteran agent seeking buyer representation, you will most often be “assigned” or handed off to a “team member”; a rookie underling that is learning the ropes. They have the oversight of the veteran, but the veteran will not be the one working with you on the day to day basis that you need. Again, probably not the best move for the largest purchase of your life.
Personally, I like working with buyers and wholeheartedly enjoy the journey of uncovering hidden neighborhoods for people, discussing the nuances of historic home construction and the potential of renovations. There is something I genuinely enjoy about pouring over analytical sales data and comp research. It’s the geek in me.
You Are Not Chip, nor Are You Joanna
Fining the perfect home is a lot more than price, neighborhood and bedroom count. More often, it comes down to the condition of a home and unless you work in residential construction, it is something very difficult for buyer’s to determine. Redfin isn’t going to tell you that houses needs a new roof, going onsite will give you a better sense, but a great Buyer’s Agent will ask the right questions and suss out the condition of a home and sometimes it needs more renovation then what is realistic for you.
While HGTV makes everyone think they want a Fixer Upper, that is rarely really the case. Renovations take a lot of time and a lot of cash. Waiting six months to a year to move into your new home that needs a complete remodel is a daunting task, you will be paying a new mortgage and still need a place to live. Dealing with expensive contractors is a full time job. Do you know a plumber well enough to trust him with re-plumbing your new investment? Have a drywall team on speed dial? Most likely not.
A great agent will keep your reality in check and keep you from taking on lofty projects that could ruin you (or your marriage). While I am not a licensed General Contractor, I extremely well versed in the costs and challenges of home renovations. A great Buyer’s Agent will be comfortable sharing the possibilities of major construction costs.
For example, does that house you love have an 100amp panel and no air-conditioner? That will be a $20K+ upgrade easy or does that aged roof have two layers of roof shingles or is just one layer? The difference will equate to thousands of dollars.
Love that historic neighborhood? Is it a registered landmark district that will prevent you from replacing windows? If it is, it will, but it may qualify for a 53% discount in your property taxes. Being a great agent is about doing your damn best at predicting the future and being a true, and heartfelt consultant to your clients.
There is an endless list of nuances to home shopping and buying, having an advocate with your best interests first in mind is the best move you could make. Find your Buyer’s Agent.
If you would like to set a time to have a chat about your personal journey to homeownership, just fill out the form and I will promptly be in touch. You will never beNot an underling, just me and my twenty years of helping people make their dreams come true.
REALTOR®-Compass Real Estate
Michael Robleto is a Pasadena based REALTOR®. His analytical and open approach to sales and representation have served his clients well in his twenty years of sales experience. Michael is a staunch homeowner advocate that blends compassion with a highly advanced technology-driven approach to the buying and selling of real estate in and around Los Angeles. His client accolades of insight, integrity and hard work support the fact that he is not your average agent.
Michael leverages his personal passion for historic architecture to provide his clients the unknown insight on the pros and cons of older homes. Michael, a California native, grew up in an older Bungalow home and has spent 23 years in Southern California admiring the unique architecture of the region. He often writes on homeownership strategy, historic residential architecture and Pasadena related topics which can be found on Facebook, YouTube, Twitter and Instagram under the common profile name of his blog; BungalowAgent or at www.BunaglowAgent.com/blog.
Michael is a committee member and frequent volunteer for the preservation efforts of Pasadena Heritage as well as a supporter of the Five Acres center for children.