Friday, January 17, 2014

How (Not) to Pick a Real Estate Agent and Live to Tell About It

Hey Man...wanna buy a house?
I'm bald. Wanna know why? One of the reasons is that every time I hear a real estate broker say his services are "at no cost to the buyer" I pull my hair out. I now have a big bald space ringed by hair (which got gray as well). Give me a sackcloth and I'd look like a friar.

But back to the topic at hand. For a full rundown on who pays the broker, check out this link. It's for both buyers and sellers. And this link has some ideas on how to choose a broker if you're a buyer.

Anyway, here's the problem. The buyer's broker will say the seller's broker pays him. It's technically true. The seller's broker (aka listing agent) has a compensation contract with the seller. To participate in MLS listings, sellers' agents have to agree to split the commission with buyers' agents. House sells, seller pays seller's agent, seller's agent pays buyer's agent.

Does that mean the buyer isn't paying his or her agent? You tell me. As buyer, your money makes the whole transaction transact. Is your broker really representing you at no cost to you? Kind of, sort of, and not.

Say you're buying a $300,000 house. The seller is paying a 5% commission to the seller's broker, and the seller's broker splits that with your broker, or $7,500 each. Question: Can you write into your offer, "Buyer's broker to receive $5,000 and the purchase price will be $297,500?"

Nope. Both brokers will tell you that the compensation arrangement comes from the seller, as explained above. Compensation can't be written into a buyer's purchase offer.

Okay, say you. Can you write, "Commission to be 4%, with purchase price to be reduced by $2,975?" Nope again. See preceding paragraph. The compensation contract is with the seller, not you.

So do you, as buyer, have no dog in the compensation hunt? Yes, you do. Try this: Threaten to cancel your offer if you don't get what you want, and watch everyone scramble to keep the deal together.

The difference between a lie and B.S. is that a lie understands that truth exists, while B.S. does not. If you're a buyer and your broker tells you he'll represent you at no cost to you, it's technically not a lie. But it's definitely B.S. Do you want a bullshitter to represent you?

In all of my years, the best real estate agents never told a prospective buyer that the broker's services were free. That's the one you want. You'll live to tell about it and you'll both be happy, do well and lead prosperous, fecund lives.

Sunday, January 5, 2014

Five Reasons You Should Buy a House in 2014

Most real estate professionals will always answer with a sunny "Yes!" when you ask them if now is a good time to buy a house. The Captain does not, as prior posts show. It depends on a person's time and circumstances. But if the stars seem to be aligning for you and you're still unsure, here are five reasons why you should consider leaping into the homeownership void in 2014.

1. You won't have to go to your in-laws for holidays. Whether you're single or have a partner, the issue of where to go for Thanksgiving or Christmas dinner will go away. I mean, you can go if you want to and endure tipsy political rants, boozy-breathed advice and what-not, but if you own a home and have spent time decorating it for the holidays, staying home is a clear and unarguable choice.

2. Your landlord can't raise your rent. It only makes sense to put yourself through this rent-versus-own calculator before you make a decision, but most cities are going through the tightest rental market in memory. If your landlord raises the rent to cover the ubiquitous "increased costs," whether or not they actually exist, what're you gonna do? A monthly mortgage payment, though, stays the same. Bonus: Mortgage payments are usually due on the first and late on the tenth. Those extra few days can be nice. If your rent is a day late, you pay a late charge.

3. You can turn up the television or stereo as high as you want. Enough said.

4. You can have a water heater bigger than a margarita glass. Yes! You and your partner can both take long, hot showers (or baths) and have plenty left over to do a couple of loads of laundry. Added bonus: the washer and dryer are down the hall, not down the block.

5. You can hang pictures at 3 a.m. if you feel like it. And paint every wall in the house a different color. And cook smelly food. And have a range vent that actually works, not to mention door handles and faucets that don't wiggle.

So, see? This space can be as fair and balanced as anyone else.

And all the best for 2014!