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I don't know how well you know your specific area, but here are some of the things I discuss with my clients before buying, and a good reason to use a local expert:
- This one little area of the gated community is in a different school district. Very good schools, but the HS is in a different city 7 miles up the highway and only a handful of kids from the middle school will go to that HS (meaning your kids won't know anyone in HS).
- This property has a great view and large open area behind it, but there is a commercial developer asking for permission to create a large strip mall right there behind it.
- See that 200 acres of empty space right there? The planning commission has approved a development project for 700 new homes. The access to that neighborhood will go right by this house.
- That house was listed as a foreclosure last year. There is a year round foot deep "pond" of water that sits in the back yard. You should have it carefully inspected by a geologist before buying.
- The shake (wood) roof on the houses in this neighborhood are all about 20 years old and will likely need replacing in the next 5 years. The HOA doesn't allow composition shingle, and it can cost $35K+ to put on a new tile roof (because reinforcing the structure is necessary).
- This area is in a high fire hazard area and it's hard to get fire insurance, and certainly expensive.
These are the types of information that you need to know before buying. Get an agent that knows your area now. 3 months is not much time to find, like, agree on a contract, and buy.
concerning crime statistics.. agents have to tread lightly at times concerning the info they provide. If I went and gathered info and then forwarded it to a buyer, and that info were incorrect, I could possibly be at fault and have a lawsuit on my hands. I'd rather provide the client with the materials to do the research and form their own decision.
Interesting logic...dont provide specific information to a client b/c if info is wrong you could be held accountable. Unfortunately, your statement rings true, I have had agents shy away from giving specific information for this very reason. Agents will claim that they can "assist" with contracts, etc but when the &^%$ hits the fan, they are quick to remind you that they can not provide legal advice.
People hire Realtors, and other "professionals" to provide them with valuable information. If you are going call yourself a "professional" in a specific field, you should have the training, expertise and confidence to provide valuable "information" and advice to your clients.
What if an attorney refused to provide a legal opinion to a client for fear of being sued?
Interesting logic...dont provide specific information to a client b/c if info is wrong you could be held accountable. Unfortunately, your statement rings true, I have had agents shy away from giving specific information for this very reason. Agents will claim that they can "assist" with contracts, etc but when the &^%$ hits the fan, they are quick to remind you that they can not provide legal advice.
People hire Realtors, and other "professionals" to provide them with valuable information. If you are going call yourself a "professional" in a specific field, you should have the training, expertise and confidence to provide valuable "information" and advice to your clients.
What if an attorney refused to provide a legal opinion to a client for fear of being sued?
it would depend on how subjective the information is.. if a client asks if a neighborhood is a "bad" neighborhood, it is difficult for me to ascertain what their definition of bad is.. are we just talking major crime, or sex related crime, or kids egging cars, or tires being slashed etc etc etc.
it would be impossible for an agent to know daily neighborhood statistics of every community. it is also illegal to steer a client in or out of a neighborhood.. it is very easy to provide websites for schools, crime statistics, police dispatch info, registered sex offenders etc, letting the buyer decide where their comfort level lies
Interesting logic...dont provide specific information to a client b/c if info is wrong you could be held accountable. Unfortunately, your statement rings true, I have had agents shy away from giving specific information for this very reason. Agents will claim that they can "assist" with contracts, etc but when the &^%$ hits the fan, they are quick to remind you that they can not provide legal advice.
People hire Realtors, and other "professionals" to provide them with valuable information. If you are going call yourself a "professional" in a specific field, you should have the training, expertise and confidence to provide valuable "information" and advice to your clients.
What if an attorney refused to provide a legal opinion to a client for fear of being sued?
it would depend on how subjective the information is.. if a client asks if a neighborhood is a "bad" neighborhood, it is difficult for me to ascertain what their definition of bad is.. are we just talking major crime, or sex related crime, or kids egging cars, or tires being slashed etc etc etc.
it would be impossible for an agent to know daily neighborhood statistics of every community. it is also illegal to steer a client in or out of a neighborhood.. it is very easy to provide websites for schools, crime statistics, police dispatch info, registered sex offenders etc, letting the buyer decide where their comfort level lies
Correct. Agents are to be the "source of the source", not the "source" of area information.
Agents cannot become experts in crime statistics, how good the schools are, where the sex offenders are, etc. Researching the area is the job of the buyer. In Arizona, we have a "Buyers Advisory" that provides links to every type of research a client can need.
While we can and should point out things like a plant nearby, railroad tracks, airports, Superfund (toxic waste) sites, and other physical objects, we cannot decipher crime statistics, location of sex offenders, judge the quality of schools, and things like that. They are out of our realm of expertise.
I will be purchasing my first house in March 2013 at the earliest (when my schedule opens up for a couple months). Currently, I am looking at listings online and at homes with signs in their front yards. There are plenty of nice houses on the market in preferable neighborhoods to me.
I don’t yet have a buyer’s agent. When do you suggest that I set-up a buyer’s agent to represent me?
When I contact a buyer’s agent, I will already have a list of my top houses to start making offers. The agent won’t need to show me homes. I have already been scouting in my free time. I envision that my agent will just handle the offer/inspection/ paperwork process to finalize the transaction.
Thank you in advance for your replies.
Before you decide if you need an agent you should:
1. Talk with lenders to determine how much you can afford and have a source for a pre approval letter.
2. Shop around for an inspector. You should handle this not your agent. It is a conflict of interest.
3. Get a good RE attorney who should review every contract you sign, including a buyer agency agreement.
If you decide you need an agent be very clear about what you expect and make sure they can deliver. If the attorney handles the contract and closing and the inspector inspects the house, do you need a BA? Spend some time with various agents before even thinking about "committing" to one (buyer agent).
If you decide on a buyer agency (BA) arrangement clarify the following:
1) THE FEE.
- How much do you owe the BA? Do not assume that you have to pay your agent 3%. Everything is negotiable, particularly if you have done all the leg work and located the home. The last house we bought, we paid our agent 1.5% and received the other 1.5% back as a rebate.
- If the commission from the seller falls short of the "fee", are you responsible for the difference? Most contracts stipulate that you are. If the commission from the seller is less than the fee, when will the BA inform you of this (before or after you sign the purchase contract)?
- Are there any additional "administrative" fees?
- Will you owe the "fee" if you find a FSBO on your own?
- If you have a signed contract on a home and you have to back out of the contract (for any reason) will you still owe your BA the fee?
- Is there a period where you are locked in with the BA? What happens if you want to get terminate the agreement and use another agent? This is where an attorney is very valuable. In general I would refuse to sign a BA agreement for a set period of time without a release clause.
2. Communication.
- How will things be communicated to you and what is the BA's availability? Is the agent available 24/7. Are there days and/or times that are off limits?
3. Dual agency.
- If you put an offer in on a listing from your BA's agency, how will the relationship change? Even if the agents are different, if a single agency represents both the buyer and seller this represents dual agency. Remember that the listing agreement from the seller and the buyer agency from the buyer is with the broker (or agency) not the individual agent. Dual agency reduces fiduciary duty of the agent and broker to you. The agent may not be able or willing to fully explain this. Another advantage of having an attorney.
4. Vetting.
- You are hiring this person for thousands of dollars, vet them like any other employee.
- Check reviews on line, with the BBB, your states Real Estate Commission (any complaints).
- You can do a background check online for less than $20 bucks
- Get references from the last 5 buyers that the agent has worked for.
Spend some time with various agents before even thinking about "committing" to one (buyer agent).
Dual agency reduces fiduciary duty of the agent and broker to you. The agent may not be able or willing to fully explain this. Another advantage of having an attorney.
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When electing to spend time with various agents before committing to one, be honest and upfront. Let each agent know that you intend to spend some time with various agents. Then the agent can make an educated decision on how much time he is willing to give you for free before making your decision.
Dual agency has a conflict in duties to both the seller and the buyer.
The dual agent can not advocate for either party.
The dual agent in effect becomes neutral.
Dual agency must be agreed to by the seller and the buyer in writing. Not all agents will agree to be a dual agent, so that would need to be a first question for you to ask the agent.
Before a seller or buyer agrees to dual agency,they should read the simple one page "Consent to Limited Representation" agreement (as it is named in Arizona). It spells out the limitation and conflict of duties in plain language. And it also advises that if you need legal, tax or other professional advice, to contact your attorney, tax adviser, or professional consultant.
When electing to spend time with various agents before committing to one, be honest and upfront. Let each agent know that you intend to spend some time with various agents. Then the agent can make an educated decision on how much time he is willing to give you for free before making your decision.
Dual agency has a conflict in duties to both the seller and the buyer.
The dual agent can not advocate for either party.
The dual agent in effect becomes neutral.
Dual agency must be agreed to by the seller and the buyer in writing. Not all agents will agree to be a dual agent, so that would need to be a first question for you to ask the agent.
Before a seller or buyer agrees to dual agency,they should read the simple one page "Consent to Limited Representation" agreement (as it is named in Arizona). It spells out the limitation and conflict of duties in plain language. And it also advises that if you need legal, tax or other professional advice, to contact your attorney, tax adviser, or professional consultant.
I won't. If someone contacts me about one of my listings, I'll happily pass them over to another agent in my office (assuming designated representation is an option)
"2... Shop around for an inspector. You should handle this not your agent. It is a conflict of interest.."
It is not a conflict of interest for agents to refer vendors.
There is a misconception among a few, that agents will refer inspectors who will overlook things; that is conjecture, not reality. Inspectors have mandated guidelines to follow, and they would be risking their career to falsify inspection reports.
Agents would be at considerable risk of losing their license, and even be accused of fraud, if they were to conspire with an inspector to overlook issues.
One reason for using the agent referred inspector is that the agent will know if the inspector does a thorough job, will communicate well with the client, and take the time to answer all questions the client may have.
However, the buyer, or seller, can choose any inspector, or other vendor they choose. If they don't want to use the agents referral, then they should be sure to have a referral for an inspector from someone who has used that inspector before and knows them to be good, honest, good communicator, and thorough.
While I agree with most of what you have said, in some cases, I prefer to have the listings gathered daily and then sent on to the buyer. this way, any homes that may not qualify for a certain type of financing, or have an oddball remark in the agent only fields, can be set aside.. preventing a buyer from falling for a property that they may not have the ability to buy.
concerning crime statistics.. agents have to tread lightly at times concerning the info they provide. If I went and gathered info and then forwarded it to a buyer, and that info were incorrect, I could possibly be at fault and have a lawsuit on my hands. I'd rather provide the client with the materials to do the research and form their own decision.
just my .02
Your standards of service appear to be high, higher than many buyers actually experience so hats off to you for that.
You are correct in that when an agent comments about crime rates and other statistics, the liability for the agent goes up, often beyond their ability to correct if something is off. Agents can often give good guidance on the "quality" of neighborhoods if they take the time to know their buyer clients, and help those buyers avoid buying into a pit of a location. Things like recent work to flood zone mitigation efforts come to mind. This could be difficult for the average buyer to find out.
Also, while I am a proponent of the buyer getting out there and doing as much due diligence as possible, often in a non-conventional manner, some buyers will benefit from the buyer agent providing much if the information. This is especially true in a track home type location vs something more rural or country. That is also true of locations where you have all those micro neighborhoods where McMansions are a street away from the projects.
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