H O M E B U Y I N G T I P S
Here's just a few tips and proven money saving secrets
from one of the Nation's leading home buying experts, David Mills.
"THE INFORMED HOME BUYER, IS THE SMART HOME BUYER"
TIP #1
Don't get stuck with the wrong agent.
As a Buyer, don't underestimate the importance of selecting the right real estate professional to assist with your home purchase. Having the wrong agent can lead to frustration at best, or to a serious financial mistake at worst. And remember this, all agents are not created equal.
Never, ever use the agent that has the home listed for sale. They represent the Seller and are obligated to get the best price and terms for the Seller. Be sure to secure your own representation.
Never, ever use what's referred to as a Duel Agent. The problem here is that many agents will not inform you that they are a Duel Agent. It's very easy to be misled into thinking that an agent is working for you, when in fact they are not (See Agency Disclosure Form Below). A rule of thumb here is that, unless you have a specific contract stating otherwise, by default most agents fall into the category of Duel Agent.
Only in situations when you cannot obtain the services of an Exclusive Buyer Agent mentioned below, should you ever use what's referred to as a Buyer's Agent. These "buyer agents" will work with Buyers, but the drawback is that they will also be dividing their time and loyalty by simultaneously working with Sellers. Their training and focus will predominantly be on "selling" homes. These "buyer agents" are affiliated with traditional real estate companies. Remember, anyone can call themselves a "buyers agent", it's just a license category, it does not mean they can, or know how to, represent buyers fully and completely.
Consumer advocates agree, if you're buying a home, the best agent you can retain (if you can find one, because they're rare) is what's referred to as an Exclusive Buyer's Agent or EBA. These real estate professionals are the experts when it comes to working with buyers; this is their specialty and all they do. An EBA only works with Buyers and never Sellers. An EBA will be trained in all aspects of buying a home with their attention and energies going toward securing for the Buyer the best home for best price and terms possible. The services of an Exclusive Buyer Agent will never cost you anything and in fact, as attested to by national studies, using the services of an Exclusive Buyer's Agent will actually save you money in the home buying process. Utilizing the services of a true EBA affords the Buyer the highest and purest form of representation possible.
TIP #2
Caution - many "traditional" Buyer Agents are now also referring to themselves as Exclusive Buyer Agents, when in fact they are not.
Here's how you can tell if someone is truly an EBA. If an agent calls them self an EBA, but works for a company that also takes listing and sells homes, then they are NOT an EBA. An EBA never has listing, does not sell homes, and works for a company that only services the needs of Buyers.
Representation, experience, and expertise can vary greatly among real estate practitioners and it's important to know if any agent is truly representing you to the highest degree possible. For a list of questions to ask a prospective agent go here. For information on the various agency relationships go here.
TIP #3
Always insist that an agent sign an Agency Disclosure Form.
One way to know just what kind of agent your dealing with is to ask every agent you have any significant contact with to disclose to you whom they represent. The state of Michigan had this very thing in mind when they developed the Agency Disclosure Form. Although this form is required by law to be shown to you, many agents do not comply. So, it's important that you not only ask any agent you have significant contact with whom they are representing, but make sure you also get it in writing by utilizing the Agency Disclosure form. Note that the signing of this form does not obligate you to any agent.
Caution: Regardless of what any agent tells you, or discloses to you via the Agency Disclosure Form (even disclosing to you they are a "buyers agent" for example) the only way to receive the highest degree of Buyer representation possible is to enter into a contractual arrangement with a true Exclusive Buyer Agent - a real estate professional that only works with Buyers and that is affiliated with a company that only works with Buyers.
TIP #4
Do not view homes before you secure your representation.
If you view homes prior to settling on someone to represent you, there's a good chance you will affect your ability to have representation at all. This is what is referred to as "procuring cause", a very hush hush, and potentially restraint of trade practice by listing agents trying to "double dip" a commission. A discussion of this topic would be too lengthy here, but if you want to learn more click this link. Bottom line - secure you own representation before looking at homes.
TIP #5
Do not view new construction homes or view a Builder's model
before you secure your representation.
If you view new construction homes or visit a Builder's model prior to settling on someone to represent you, there's a good chance you will affect your ability to have representation at all. Most Builder's will gladly work with a real estate agent that brings a Buyer to them. Meaning, in part, that the Builder will pay the Agent's commission. There's only one condition, that the Agent is with the Buyer during the first contact the Buyer has with the Builder or the Builder's representative. Another very important reason to settle on your representation first before going out and trying to find a home.
TIP #6
Utilize the right Purchase Agreement and Addendums.
Without a doubt most Home Buyers never consider this very important aspect of buying a home. This tip also directly relates to the individual (and remember too, that your getting the Company behind the individual) you select to represent you through the home buying process. Most traditional real estate companies, when it comes to the submitting of an offer and potential additional addendums that might be needed, typically use legal documentation (purchase agreement and addendums) that are "Seller friendly" - meaning protects the interests of the Seller. As a Buyer, you jeopardize your legal position and/or advantage with such documentation. An Exclusive Buyer Broker will use legal contracts (purchase agreement and addendums) that are "Buyer friendly".
TIP #7
Ensure that you'll see the most homes.
As a Buyer, you want access to the largest inventory of homes possible. More home choices means you make a smarter decision when it comes to choosing the right home. You might think, that just because most agents can show you every home listed on the MLS (multiple listing service) that there isn't much of a difference between agents when it comes to the number of homes they can, or are willing, to show you. Again, this issue gets down to agendas and business practices. In the offices of the traditional real estate companies (those that work with both Seller and Buyer) the agenda is simple, get listings and sell homes. It's not too uncommon, whether it's a Seller's agent, Duel agent, or "Buyers agent" for an agent to try and "push" their listings first, then the companies listings second, then other homes on the MLS. An Exclusive Buyer Agent, does not have listings, so they will never try and "sell" you any particular home. Moreover, they not only can show you any home listed with any other real estate company, they regularly show you for-sale-by-owner homes, foreclosures, other distressed properties, and more. Some Exclusive Buyer Brokers even have ways to show you homes not yet on the market. An EBA's objective is to find the right home for you by offering the largest selection of homes to choose from, and to never "push" any home on you.
TIP #8
Get pre-approved for a mortgage.
Being pre-approved for a mortgage is a must and the smart Home Buyer will get their financial house in order before shopping for a home. It's important not only to know how much home you can afford before beginning the home buying process, but also to consider what size mortgage payment your comfortable with. Remember, lenders are in the business to lend and believe it or not, sometimes you need to make sure your comfortable with the amount your lender is willing to lend you. Do not make yourself house poor.
A pre-approval puts you in a stronger negotiating position. Regardless of what your offer may be, you need to be able to prove to the Seller that you can "do the deal" should you come to an agreement. This is accomplished with a pre-approval.
You'll discover there are a variety of mortgage programs available from a variety of lenders, and some lenders are more knowledgeable than others in certain areas such as FHA, VA, new construction, or dealing with individuals who may have less than perfect credit. Although it's a smart idea to shop around for your mortgage, sometimes it can be difficult to compare one mortgage program to another, so make sure your comparing apples to apples. Since you should have close contact with your mortgage representative during the home buying process make sure they are available to answer your mortgage related questions and are conscientious about your goals and objectives. Every lender should provide you (it's the law) with what's called a Good Faith estimate showing you a close approximation of what your closing costs will be.
For a glossary of mortgage related terminology go HERE.
SUMMARY
These are just a few tips and proven money saving secrets from one of the Nation's leading home buying experts, David Mills. His most valued tips and sought after advice (negotiating strategies for example) are reserved exclusively for his Client's and cannot be disclosed on a public forum such as the internet. So, contact him today for a free, no obligation, confidential discussion of your home buying objectives.
DON'T BE SOLD A HOME !
Copyright© 2007 David M. Mills |
