bhamwire.com(89% of for sale by owners eventually list their homes with a real estate broker.)
The conventional wisdom with regard to For Sale By Owner sellers is that the buyer will be entitled to a portion of the savings that the seller enjoys by not having to pay real estate fees. Let's consider that statement for a moment. A house is worth as much as it is worth. When a real estate professional recommends a listing price, the property is generally not placed on the market with the price inflated to include the real estate commission. So if a property is worth $100,000 with a realtor involved, that is exactly what it is worth without one involved. Most sellers aren't planning on giving the buyer the advantage of the no broker fee discount. They are going to retain the money themselves-so I think it is important that buyers understand that fact. The other facts are these-when you become your own agent you also become:
-Your own negotiator
- You are responsible for your own due diligence on the property-meaning it is up to you to check county records to be sure you obtain any and all information of public record with regard to the property, including current taxes, tax liens, judgments, encroachments or easements. (The seller may disclose these negative items, or may not even be aware of issues. The title work will find encumbrances on title but not until you are deeply involved in the transaction-both monetarily and emotionally.)
- Working through the whole house inspection from ordering to results become your responsibility-if there are repairs to be made it is up to you to obtain the seller's cooperation. You will also need to know what inspections are requirement of your mortgage loan type so you can be sure those are done in a timely fashion.
-Writing a legal purchase agreement becomes your job, along with obtaining appropriate disclosures from the seller. It is up to you to negotiate your own terms such as who is paying the closing costs, understanding your loan type and the time it will take to close the transaction. You will also need to determine who is choosing the title company-you or the seller.
Here's the thing...when you give up your buyer's agent- the person who by law is negotiating and working on your behalf you have given up your representation. You have given up a valuable ally and skilled partner who can probably get you the best price, terms, and conditions on a property. You have also given up someone who is knowledgeable in legal issues, inspections and the ramifications that can come with them, and someone who can deal with any concerns that crop up with the title search. For instance what will you do if the title work comes back with the information that the seller isn't in title and is not free to sell the property-which actually happened to a buyer for whom I was originating a loan.
Or perhaps there is a well issue or septic problem. From time to time we see those systems encroaching on the neighbor's land or households sharing one or both. What then? Or perhaps the driveway is on the neighbor's land not the land of the property upon which the house sits. You see, these are all problems with properties that have occurred in transactions that have crossed my desk over time. If it wasn't for the realtor partners involved in the transaction, those sales probably would never have closed. That they did, and closed with the appropriate legal steps having been taken is testament to the skill and dedication by the professionals that were representing their buyers and the seller.
For the most part buyers that discard their Realtors or who believe that they can navigate their way through the complications and intricacies of a real estate transaction, I would give you a word of caution. Unless you are a seasoned buyer and seller of real estate, proceed with care. If you decide to go it alone, you are on your own. You are now working without a net.
Many people believe that the lender will in essence do the work of the real estate professional. Not really. Lenders are not licensed real estate agents. And in Indiana at least, it is illegal to practice real estate without a license for a third party. The purpose of the lender is to ensure that the buyer and the property meet the criteria for the loan, and get the money to the closing table; we are not legal representatives of the buyer. Our job is to show up with the money. If I think something is amiss will I mention it? Sure. If the purchase agreement is incorrect for lending purposes will I hand it back for you to correct it? Yes. But I have no knowledge of the property other than what the appraiser determines in the appraisal report-and appraisers aren't contractors, whole house inspectors, or immune to making mistakes. The first inkling that I will have that the property is over priced or has some serious condition issue is when I receive the appraisal. At that point you may have invested some money that you may or may not get back -if for instance you didn't realize it might not be a good idea to hand a check for earnest money over to the seller.
If you had a buyer's agent your agent would have researched comparable properties to do their utmost to insure that the price you were offering was in keeping with the norms of the area in which the home was located. And if you think the estimates offered by a popular real estate website or the assessed value shown on the county records is an accurate reflection of what the value of a property really is, think again. It might be-but then again, maybe not. Those numbers are derived by computer modeling and averaging sales data for a geographic area and may not be typical for the type of home you are purchasing.
It is true that for sale by owner driven transactions do close and particularly if all parties are working together to make it happen they can work. And it's not that I won't work with a buyer who has selected a for sale by owner property-but I am much more open to these types of transactions if the buyer calls looking for a mortgage with the property already selected rather than having decided to kick their agent to the curb. In some cases I referred the buyer to that agent or the agent has referred the buyer to me. While we all know it is part of the business, it is a part of the business that leaves a rather unpleasant aftertaste.
It is important that buyers keep in mind that their agent can call on for sale by owners to see if the seller is willing to strike a deal so you can potentially make an offer on the home with the services of an agent. Or you can pay your agent yourself to represent you if you have the means. Or perhaps you can hire an agent to act as merely a facilitator-being sure the paperwork is correct and the transaction is moving along smoothly. These are options worth investigating, because when it comes to working without an agent...
sceameditions.com
it truly is Buyer Beware, not because the sellers are trying to deceive you (though they might be - it has happened) but what you don't know can hurt you.
No comments:
Post a Comment