Deb Espinoza's Real Estate BLOG: February 2012

The Cost of Financing the American Dream of Home Buying May Just go up AGAIN! National Association of Realtors just sent out a notice that the congress is thinking of making all the new homeowners pay for the extension of the payroll tax break. They are proposing that all federally backed loans; FHA, Fannie Mae and Freddie Mac loans come with even more fees to cover their ineptness of being able to cut out totally useless spending that they can't seem to stop.

Once again the middle class that are trying to get ahead and have the American Dream are going to be forced to pay for a government that can't do their job and balance the budget by STOPPING the crazy spending! This 'guise' of saying they are for helping the middle class is once again proven to be bunk!

Write or call your representatives and tell them that ENOUGH IS ENOUGH! - if they keep KILLING the housing market with their dumb ideas we will never get out of this mess! And THAT is my opinion

After getting several calls lately from prospective buyers asking me to rush out and show them a house “today”, and some even telling me they have an agent thank you, but just want to “save some time”, I realized that a large number of home buyers do not realize just exactly how a buyer agent works.

First thing to know is that a real estate agent is the only profession that I can think of where we do the work  before getting paid and sometimes NEVER get paid.  A home seller picks an agent, signs a listing contract and puts the agent to work. The agent spends money on advertising, open houses, agent caravans, flyers, signs, lockboxes, web sites, and more, counting on the fact that the home will sell in the next 60-90 days and they will receive their compensation for all the time and work they have put into marketing the home to sell.  For this reason the agent needs to have a reasonable, cooperative seller; meaning that the seller will allow a sign and lockbox, the seller will follow the stager’s instructions to ready the home for sale, they will keep the home in ‘show ready condition’ for showings at short notice, they will vacate the house for showing, preferably that they will get a home inspection BEFORE listing so they can take care of the issues that the buyer will find eventually when they have their own inspection, and MOST IMPORTANTLY, that they will price their home correctly from the get-go. 

  Out of the compensation that a home seller compensates their listing agent with, comes a portion that will go to a buyer’s agent that brings in a buyer that buys the home; (note that I said ‘buys’ the home and not ‘shows’ the home.  Ergo no agent gets paid to show a home) Now out of that also goes payment to the agent’s brokerage, advertising budget etc. etc, but that’s another story. 

When the listing brokerage puts the home on the multiple listing service they offer a part of their compensation to the buyer’s broker to bring a ready, willing and able buyer that purchases the property. 

Many buyer agents are fine with accepting whatever the seller’s brokerage is offering to pay them when their buyer purchases the home.  Many buyer agents will also go to “For Sale by Owners” and ask them for compensation to bring a buyer willing to purchase their home, and the sellers are usually more than willing to.

Buyer agents do not get paid to look up listings, nor do they get paid to drive buyers around and show homes or open up their own listing so prospects can ‘check it out’.  We get paid when our committed, qualified, buyer BUYS A HOME, and not before. We are willing to take time away from our families, gas up and wash our cars, and cull through pages and pages of listings, and show a buyer client homes, IF and only IF, the buyer is ready, willing and able to buy WITH US.  Let me define:

READY: You want (need) to buy in the next 0-3 months. Your lease is coming up, you are tired of renting or living with friends or family members, you are moving in from out of the area. You are not “looking to see what’s out there and if something is a KILLER deal then you might buy it”.  You have your financial house in order and have a loan approval or;

WILLING: are willing to meet with our preferred loan officer to see what you can qualify for. You are willing to get your financial paperwork together so the loan officer can approve you, you are willing to take a few minutes on the phone or at their office to meet and discuss what you are looking for in payments etc. so that the loan officer can get the best program for you and assist you with credit clean up if needed. (Over 50% of credit reports have errors on them and the sooner you find out the sooner they can be corrected and you are on your way to getting the best rate and term on a loan) You are willing to commit to us as your buyer representative.

ABLE: You have a job, steady income. You have been paying your bills on time and you’re not in the middle of a short sale, foreclosure, loan modification or bankruptcy.  A bank account with some savings in it would be nice, but there are programs that allow for 100% gift money if you have someone willing to give you a cash contribution to help you qualify. 

Buyers on a longer time line or ones that are not in a hurry but waiting for that perfect home we do have a program for as well. We set up your search for you so you are sent listings daily that meet your criteria, but we call you maybe every two weeks to a month and not daily like our “right now’ buyers.  You tell us when you see ‘the’ home or when you are ready to go on our fast track VIP buyer program. We know that not everyone is ready to go and that’s why we have different buyer programs.

Once you take these steps and we know you are serious about buying a home – We go to WORK! 

 We scour the listings daily, if you are not in the area and the market is hot for good homes like it is now- We will go preview the homes, take photos and video and upload for you to take a look. Yes, we have buyers that purchase homes that they have not seen in person.  We check expired listings, for sale by owners, call on properties that have been in escrow for a while to see if maybe it’s a ‘shaky buyer’ and maybe we can come in on back up if something happens. We work around your schedule to show you properties and get all the information about them so you can make an informed decision when making an offer. We negotiate the offer, schedule and attend all the inspections, negotiate repairs and other issues, read and decipher title reports, disclosures and escrow instructions. We are the liaison between you and the listing agent, escrow, title, inspection, home owner association, lender, appraiser- we hold it all together. Follow up, communication, follow up, we make sure each party is keeping the timeline so you have a smooth closing. We tell you when it’s time to call your insurance company to get a homeowner’s insurance quote, we call and schedule all your necessary inspections, home, septic, well, pool, roof and we attend them, we get you the information for changing over your utilities, trash, cable, we order your home warranty, we coordinate your loan signing with the lender, escrow and the notary, we do a final walk-thru of the home with you before closing and finally we get to hand you the keys to your new home on the day it records into your name. (Our favorite part!)

 But, we are different from most other buyer agents in that our relationship is just beginning.  We stop by in the first month to visit you in your new home to see how things are going. WE have lists of service providers that we can recommend for you when you need work done on your home or a good area service provider.  We call regularly just to say ‘hi” and see if you need anything, we pop-by with small gifts throughout the year just to say ‘we’re thinking of you’ and we have annual get togethers for our clients just to say “Thank you” for your business and for your referrals.

Let me let you in on a little secret about real estate law that almost every buyer agent violates. California law requires that before a real estate agent begins any real estate activity with a buyer or seller that they give a disclosure called Agency Disclosure (AD) and have the person sign that they received the disclosure and that it was explained to them.  What this agency disclosure does is explain what an ‘agent’ is and the three types of agency that can be found; Seller Agent, Buyer Agent, and Dual Agent (where the brokerage represents BOTH buyer and seller). This means that technically BEFORE an agent shows you a property they should be presenting you with an agency disclosure and explaining how agency works. They should also follow that up with a Buyer Representation Agreement which confirms a commitment between the agent and the buyer to work together exclusively to find the buyer a home. 

Let me tell you what can happen when there are no “Buyer Agency Agreements” signed.  Let’s say you have a family member or good friend that you plan to have write your Purchase offer because you know them and maybe they are giving you a deal by sharing some of their compensation with you; or maybe you have one of these part-time agents that just ‘don’t have the time to show you homes when you want to see them,  or they are on vacation and have not arranged for anyone to cover for them, so they tell you to go find something and then they will write the offer.  So you call the listing agent for the home and say that you want to look at the home.  I will say that 98% of the agents are so desperate for business that they won’t ask you many questions, including the all-important question “Are you working with an agent?”, and they will run out to show you the home in the ‘hopes’ that you buy it.  You may even say to yourself; “If they ask if I’m working with an agent I will just say ‘no’” because you think it doesn’t matter. This is why it matters.  The listing agent or one of their buyer agents drives out to show you the house, they answer your questions and leave thinking you’ll call or they’ll follow up and see if you want to make an offer.  You LOVE the house and you call your friend, aunt, cousin or part-time agent to write the offer for you.  The listing agent receives the offer and says “wait a minute, I showed these people the house and they told me they had no agent”. The listing agent’s broker then calls your agent’s broker because “HOUSTON WE HAVE A PROBLEM”- the listing agent has procuring cause and they are the ones entitled to the commission on the sale of the home with you as the buyer because THEY SHOWED YOU THE HOME and not your agent. So now you get to decide- do you really want the home?  Because now either your agent is now the listing agent or your buyer agent friend is now working for FREE and not splitting anything with you.

So the moral of this story: When you are ready to buy a home or thinking that you may be ready to start the process to buy a home. Find a good REALTOR and make a commitment to let them work for you and be willing to let them educate you on the reality of TODAY’s market. Now is NOT the time to listen to your friends, co-workers or media ‘experts’ on home buying. A good buyer agent will know what’s happening with home prices, what the list to sale prices are, what kind of seller concessions make sense in this market, what kind of lender you need to work with- Not your ‘average’ REALTOR that is doing 2-3 deals a year, but one that is putting in 2-3 offers a week for buyers, one that has good relationships with listing agents, escrows, inspectors, one that knows how to put an offer together that has a chance of getting accepted..- THIS is the agent you want working for you. This is Stage Presence Homes. Call us today to get started on your purchase of a San Diego home… and remember it doesn’t cost you anything, but your commitment- and we guarantee your satisfaction in writing.

Agent Lindsey Hasford gives some great tips to sellers when getting their home ready to show. First impressions, safety and security are all covered here!