Monday, October 29, 2007

Two Buyer's Agents You Should Never Use

One of the projects I'm working on is an article about agents you should never use. No, I'm not naming names, but rather categories of people that you should think twice about hiring if you're buying a home. Two of them were mentioned during a "Chat Plus" column in the Washington Post (read it here.)

The first category of "agent" you shouldn't use--though it's perfectly legal if the right disclosure forms are signed, and no doubt many agents would argue with me on this one--is the listing (or seller's) agent. This is the agent that has been hired by the seller to get the best deal for them. They have a legal and moral responsibility to keep information confidential, and to look out for the seller's best interests. In DC and VA, it's legal for an agent to be a "dual agent", meaning they can represent both sides. I wish someone could tell me how it's possible to have both people's interests at the top of their mind when negotiating a deal. My clients look to me for advice, and in a world of negotiation, it's quite frequently the case that what's best for one side is not what's best for the other. Yes, I've read the "win-win" books, and "getting to yes" strategies, but seriously, in today's real estate market, isn't 90% (or more in many cases) of the deal price? Maybe not for the agents out there, but I have yet to come across a buyer or seller who, if forced to rank what's important, doesn't say "price". And if I'm fairly representing both sides, isn't every dollar I negotiate hurting at least one of my clients?

Now the argument I hear from buyers is "I'll save x% if I don't have an agent." And that's a big myth. The truth is that the commission is negotiated between the seller and the listing agent before the property ever even goes into the MLS. That (full) commission is getting paid even if you don't have buyer representation. The only way around that is if the buyer negotiates with both the seller for the property, and the seller's agent (for the commission). So that agent is taking on more risk (because you're not represented), more work (because chances are you don't know the paperwork that's required and how to interpret it), for less pay. Not impossible, but I know a lot of agents who wouldn't do it. And of course if there's another potential buyer who DOES have representation, isn't it fair to argue to a seller that the buyer in that case is less risky? There's less risk of something falling through the cracks and blowing up at the last minute because there isn't someone guiding that buyer through the process.

The other issue is that the x% is already "priced in" to the list price. The seller knows that, the agents know that, and the buyer knows that. So if a buyer comes in and says "I don't have an agent, so I want x% off," don't you think the seller wants that same x% back?

Of course these are all generalities, and there are exceptions to the rule, etc., etc. My point is simply that it's not as straightforward as saying "I'll just negotiate the x%."

This is a complicated issue, and one that people get passionate about. (Don't they always when money is involved?) There are lots of qualitative reasons buyers should use an agent too, but I'll save those for another post.

By the way...I mentioned that the WP chat discussed two agents you should never use. The second? Yourself, to avoid the very issue discussed in the chat--signing documents you don't understand.

Sunday, October 21, 2007

First Time Buyer Assistance Programs

Believe it or not, this is a perfect time to start planning for a home purchase in the spring, especially if you're a first time buyer. The reason I say that is that I find it takes most of my first time buyer clients at least 3 months from the time they first speak to a lender until the time they move in. If someone has special financing restrictions, or isn't quite sure yet what they're looking for in a home or neighborhood, then it takes more in the range of 4-6 moths!

Financing in particular takes some very advance preparation--saving for downpayments and closing costs, sticking to a budget, and fixing any credit issues can take quite a long time. With the cost of housing (still) being what it is in this area, it's especially difficult for first-timers.

If you're thinking of buying in DC, though, there's a special program that may help you out. Like many special programs, there's a bit of paperwork involved, so it's best to get started far in advance. HPAP enables lower and moderate income buyers (that is, making less than $70K per year) to receive up to $70K in funds in the form of a low-interest loan. In addition, buyers can receive up to $7000 in closing costs free! Closing costs average 3% of a transaction, so on a $300K condo, that covers almost all of them! Tough to find a better deal, but there is paperwork and classes involved so get started now if you're thinking of buying in the spring. Get more info here, and contact me to discuss how best to coordinate your search using HPAP and other programs.

There are lots of other programs too; here is a link to some other area programs.

Confused about how to start your search? Attend a free first time home buyer class in Arlington, VA.

Energy Tax Credits for Homeowners

Time's running out for homeowners to take advantage of the Federal Tax Credits for Energy Efficiency. These are a great deal--not simply a tax deduction, but a tax credit that offsets actual dollars owed! Homeowners can benefit from upgrading to energy efficient windows, HVAC units, tankless water heaters, roofs, and more. But updates must be made by the end of 2007, so if you are overdue for some updates (or even if you're not) this is a great time to get going on those projects! For more info , click here.

Monday, October 8, 2007

Parkside Alexandria

Here's an interesting new twist for builders trying to liquidate inventory: the live auction. Parkside Alexandria, a condo community on Van Dorn St, is selling 30 condos with a minimum bid of $225K for a 2BR/1.5BA unit. There certainly aren't too many 2BR units inside the beltway for that price. There are some catches, of course - you must register by 10/23, sign the contract on the spot if you win, bring $5000 with you, and close before Nov 27, among other things. More details are here. Of course there are also the usual risks inherent to new construction. Contact me to discuss more on these.

One quick note of warning -- if you intend to use a real estate agent to advise you and help review the contract(at no additional cost to you), make sure your agent is with you when you register or the builder will not allow you to be represented.

Looking for Alexandria real estate news? Read our new blog here.