Question on House Buying (Ping: Real Estate Agents)

[Dr. Sak]

I have been searching on and off for about 2 years now to buy a house. I bid on one last year but the seller did not accept my bid. This year I found a nice Cape Cod that I wanted to bid on. Right before I was about to go and see it, the house sold and is under a contingency.

I had my agent contact the seller's agent to find out what the contingency was. Well it is all contingent on the buyers selling their house. So I still have a chance at the house. Next I was told through my agent (from the seller's agent) that they have an offer for asking price, and if I were to bid on the house it would have to be for the asking price.

The next bad part is that the house is being rented right now and the renters are not too cooperative with letting people come in to look at the house since when another agent showed the house a few weeks back they left all the doors open.

I have a few questions, me being the skeptical person that I am wonders if this is just a ploy for me to pay the asking price for the house. Could this be the case? Also is this ethical for a sellers agent to tell my agent what another group has bid on a house before it has closed? I am pretty new to this whole house buying bit but if anyone has any advice it would be greatly appreciated. Thanks!

[Blackadar]

Caveat: I hate most Real Estate Agents. Bad experiences. NEVER use Prudential.

But considering I've bought and sold a few houses now, I may be able to help.

1. It's probably not a ploy that they want you to pay the asking price. They're renting it, meaning the mortgage is being covered by the renters. They have an offer on it, so that when the other folks sell their house, they know what they are going to make. So they're probably in no rush to move it (by having renters they get more in the net sale every month). You'll have to pony up the same amount to even get a shot at this.

2. Ethical? There are few ethics in Real Estate.

3. If you really want to look at it, tell your agent you have a strong interest and have her contact the other agent directly. They should be able to force the renters to let you look at it.

Frankly, I'd probably walk away and keep looking. The chances of you being able to even make a bid are slim to none. But after 2 years, what is it that you can't find? If you're serious about buying and can't find the right house after 2 years, maybe it's time to change agents.

Me? I'll avoid using an agent again if I can. If I do use one, it'll be REMAX without a doubt.

[Dr. Sak]

Caveat: I hate most Real Estate Agents. Bad experiences. NEVER use Prudential.


I am using Coldwell Banker, I almost used Prudential. I have been looking on and off for 2 years. I work and go to school. I live at home with my parents so I just save money. My girlfriend is going for her PhD at Penn State about 2 hrs away. So in between all of that I look for a house. I just think it is the right time for me to move out.

[Flasch186]

I cannot encourage you enought o have a home built...youll build equity before you even move in, and you wont need a realtor at all. GO to INEST.com and get a 1% rebate back, just take the coupon in with you. There prob. wont be any bargaining though as its a sellers market but if you stay ont top of the builder throughout the process and DO NOT allow them to close with a punch list, which theyll want to, youll be happy you waited.

[Blackadar]

Flasch, good points if he can wait. Just choose your builder *very* carefully.

[Flasch186]

The key, is to stay on top of the builder....let them know youre paying attention. MAke sure you get to do a framewalk before they go into sheetrock, cuz once the sheetrock is up they can deny that they mightve made a mistake behind the walls. DO NOT CLOSE WITH A PUNCH LIST until they say that they will cancel the deal (which they will). Be nice to the sales agent, youd be surprised what they can get done or fixed for you as opposed to being a jerk and having them not try for you.

[Blackadar]

What's your experience with closing with a punch list? That the builder has their money and little incentive to actually follow-through on it?

Also, depending on the demand of the area, you can sometimes put in penalties for missed deadlines. That's one of the biggest problem when having a house built - the deadlines keep slipping and you're still locked in. Rather than have an "out" clause, have a penalty clause written in.

If home prices go up substantially, an "out" clause if they don't finish in a certain amount of time may actually encourage them to drag their feet to get you pissed off enough to walk. Then they turn around and sell it at the higher price. A penalty clause starts taking money out of their pocket.

If he really want to get equity fast, find:

1. A finished spec house. If a house was built on spec and is done, it's costing the builder a ton of money. They will usually sell it pretty cheap. This is ESPECIALLY valuable in a new development that's not close to done. Prices rise in almost every new development as they build more and more - so getting one of the earlier houses on spec almost always is a great investment.

2. An older home that has a good basic structure (no wood rot, termites, roofing or electrical problems, etc.) but needs a good coat of paint and other things like that. They're a risk, but if you choose a good one and fix it up you can have some good equity right off the bat. It won't rise as much in the long run, but there's some undeniable charm to some older homes.

[JonInMiddleGA]

Also is this ethical for a sellers agent to tell my agent what another group has bid on a house before it has closed?

Not particularly, but as someone else already said "Ethics? What ethics?"

Then again, the closing attorney for our house told both the buyer(me) and the seller that we should have both taken steps to have the agents on both sides licenses revoked. Said he had never seen a worse case of collusion between two agents in his life. So ... let's just say I'm not exactly "real estate agent friendly".

[gstelmack]

We've had good luck here in North Carolina by finding a fantastic "Buyer's Agent". There are specific laws/regulations dealing with buyer vs. seller agents, and by using a buyer agent we've got someone working for us, not working for the seller. Topped off by the fact that we found a great one, and I've had a great experience working with a real estate agent. If your state has buyer agents, find one.

[CraigSca]

I have had very few good experiences with real estate agents, but they seem like a necessary evil. Last time we sold our house, it took a grand total of one day. There are very few jobs out there that do not require a college education where one can make a quick $9k in a single day like our agent did. Good grief.

[Flasch186]

there is a huge market for companies, like Assist to sell, where they get a flat fee and you do most of the leg work...they advertise (MLS and such). AGAIN, NEW construction is the key to getting ahead. The old home youre looking at, was once a NEW home in a NEW neighborhood, and the equity jumped 30-40k in a year!! Now that its tapered off, perhaps 5k / yr. It would be time to turn it over and do it again, by your 3rd or 4th home you could be w/o a mortgage at all. STAY away from Mortgage Brokers, theyre mostly, MOSTLY, thieves.....theyre are a few good ones, but if youre diligent you can do without them. Usually the builder's mortgage co. has such a good incentive that it is almost moot to compare deals BUT check and rewcheck and recheck their numbers....every now and then someone makes a mistake *wink - wink* that could bite ya.

[JonInMiddleGA]

Sidebar: It's interesting to see the comments about the escalation in new home value vs older homes, mostly because it's 180 degrees from what's true in my local (narrowly defined) area. Here, the homes showing major gain in value are the historic ones (say 60+ yrs old), where my "real" value is roughly 5-6 times what it was ten years ago -- that is to say that I could sell it for 5-6 times what I paid for it. Meanwhile,a lot of the new construction (say 5 yrs) is selling for maybe 20% over original prices, and sometimes for less than the original sticker.

[SoxWin]

there is a huge market for companies, like Assist to sell, where they get a flat fee and you do most of the leg work...they advertise (MLS and such). AGAIN, NEW construction is the key to getting ahead. The old home youre looking at, was once a NEW home in a NEW neighborhood, and the equity jumped 30-40k in a year!! Now that its tapered off, perhaps 5k / yr. It would be time to turn it over and do it again, by your 3rd or 4th home you could be w/o a mortgage at all. STAY away from Mortgage Brokers, theyre mostly, MOSTLY, thieves.....theyre are a few good ones, but if youre diligent you can do without them. Usually the builder's mortgage co. has such a good incentive that it is almost moot to compare deals BUT check and rewcheck and recheck their numbers....every now and then someone makes a mistake *wink - wink* that could bite ya.

Or buy in the right area at the right price regardless of age. My place has gone up $65,000 in value, or close to 50%, in 2 a bit years.

In Canada anyway, mortgage brokers are the tits if you get a good one. My mortgage took me a 2 minute phone call and 0 fees to set up (bank paid all the fees for me).

A good, honest realtor is a huge blessing too. I was lucky that a close friend of my Dad's has been in the business for 20 years plus.

[Blackadar]

The key to getting home appreciation:

Location, location, location

And a good local economy.

[gstelmack]

Sidebar: It's interesting to see the comments about the escalation in new home value vs older homes, mostly because it's 180 degrees from what's true in my local (narrowly defined) area. Here, the homes showing major gain in value are the historic ones (say 60+ yrs old), where my "real" value is roughly 5-6 times what it was ten years ago -- that is to say that I could sell it for 5-6 times what I paid for it. Meanwhile,a lot of the new construction (say 5 yrs) is selling for maybe 20% over original prices, and sometimes for less than the original sticker.
"They don't build 'em like they used to..."

That, and the 10-year-old house I bought was about 1/3 cheaper than it would have cost me to buy a plot and have a home built on it. I couldn't afford the new home at the size I wanted.

[Dr. Sak]

Today I found out through a friend who drove past that there was an Open House from 1 to 3pm. The selling agent never informed my agent of this. I know because I asked him. Also he said that he also believes that they do not have a full price offer for the house.

[kcchief19]

I have a few questions, me being the skeptical person that I am wonders if this is just a ploy for me to pay the asking price for the house. Could this be the case? Also is this ethical for a sellers agent to tell my agent what another group has bid on a house before it has closed? I am pretty new to this whole house buying bit but if anyone has any advice it would be greatly appreciated. Thanks! Yes, it is ethical for the seller's agent to tell your agent what the current bid for a home is in this case. We bought our current home in a similar circumstance. The best bid was $2,000 under the asking price and was contigent on the buyer selling their home. The sellers were moving in two weeks and needed to close ASAP. We bid $1,000 less and split the difference at $500 under the contigency bid and got the house. It's a common practice.

If the seller's agent didn't tell you about an open house, it's possible that it was scheduled after you spoke to them. There would be little reason for them not to tell you.

[kcchief19]

Caveat: I hate most Real Estate Agents. Bad experiences. NEVER use Prudential.

But considering I've bought and sold a few houses now, I may be able to help.

2. Ethical? There are few ethics in Real Estate.
That's flat out not true. I work with real estate agents daily in the course of my business and while I've got plenty of jokes about big commissions and lazy on-site agents, there are plenty of ethics in real estate and in most locations they must be licensed. Are there people in real estate with a low regard for ethics? Sure there are, but so does any industry.

Sounds like you had a bad experience or two with a Prudential agent. Prudential has thousands of offices and branches nationwide, just like a lot of other chains. There are plenty of great Prudential agents -- trust me, I know plenty.

I have a vested interest in suggesting you buy a new home (:)) but in a lot of markets it's just not possible. New homes for first-time buyers are in short supply, or they are in the exurban neighborhoods far from downtown and job centers. You might prefer to live in an existing home closer to work than have to drive an hour or two to work.

Specs can be a good deal, but there's a contradiction in buying a spec that has been on the market for a while because the builder has dropped the price -- the builder will have dropped the price because there is not demand for that product in that location.

Building a home is great and is the best way to get what you want, but it can be intimidating. If you do, do your homework up front. Research the builder, interview homeowners and check online, with the BBB and attorney general for information on the builder. Make sure you're comfortable with the builder before buying.

Punch lists are fairly commonplace. Sometimes the builder can get everything done by the closing time, but if you've got a loan to close and moving trucks on the way, you might not be able to wait while small details are tended to. I'd be nervous if there were big things on the list, but common punch list items are touch up and cosmetic work.

[Craptacular]

We built our first home last year. It was definitely a lot of work, but very rewarding in the end. We designed the basic layout ourselves from scratch, and worked with the builder to finalize everything. During construction, we came out pretty much every day (about 20 minutes one-way trip) and took pictures. We were lucky in that the builder lives a few houses down from our site, so we knew where to find him.

Before we decided to build, we spent over a year looking at existing houses. I can actually believe you could look for two years and not find what you are looking for. We came close to bidding on a couple of houses, but just didn't find one that matched our ideas. There are some deals to be found in spec homes, especially in areas that have been overbuilt.

I don't know how popular it is in your neck of the woods, but I'd stay away from the really big builders (ones that build entire neighborhoods for instance). I know in some parts of the country (Colorado for instance), it's almost impossible to build a custom house unless you're a millionaire. Everything is cookie cutter, and your options are limited. For example, the two biggest builders in my county merged last year to form a company that builds about half of the houses in the area now. If I'm looking to buy a home, why would I buy an existing one of theirs when I could have them build me a new one in 75 days with almost no work on my part. Unless the location is ideal, I don't see how these houses are going to appreciate much.

[Solecismic]

I'm looking to have a home built, as our current one doesn't have a yard or the potential for a finished basement (two musts now that the kid is running around at 100 mph).

Is there anyone here who would be willing to have me bounce a lot of questions off of? We think we've found a builder we like, and he was nice enough to show me a home he finished a few months ago, as well as one where he just started the wallboard. We're having a heck of a time finding a good piece of land in the areas we're targetting.

[Dr. Sak]

If the seller's agent didn't tell you about an open house, it's possible that it was scheduled after you spoke to them. There would be little reason for them not to tell you.

Just to add more discussion. My agent talked to the sellers agent on Friday evening so the time from Friday to Tuesday wasnt really that long of a time to add an Open House. Right now the house has renters in it and it was told to us that they are not very cooperative with letting others view their house since another buyers' agent left all their doors open after showing it one evening. Who can blame them?

I am suppose to be getting a full color brocheur on the house. That was supposely sent after the two agents spoke. If I liked that then the selling agent would try to get me in the house to look. So why wouldnt they inform us about this open house even if it was after they spoke? They know I am interested. This story just keeps getting better.