It’s A Racket
If you remember the housing bubble, then you should remember when it burst. Well get ready for Housing Bubble Burst Part II.
Your “Buyer’s” Agent
Fresh out of a Seminar, the job of the agent is to close the deal. They are brokers. They are closers, they don’t make any money until the deal is closed. So, make no mistake, your buyer’s agent is all about the money. He/She is all about their commission. One thing you need to understand is that the more they sell the house for the more money they will make. Some offers never make it to the seller because of the commission factor. Each agent has a minimum that they are willing to work for and it’s all in the price of the house. Very seldom do a buyer actually get to see or haggle with the owner, in fact you may or may not see them at the closing.
This agent is ready and willing to write up and offer and take your “earnest” Money. Never, and I mean never give anyone any money unless that house is exactly the way you want it. This is not a handshake deal, they have your money and all you have is a promise. This agent don’t own this property, yet they will make excuses about the property. They want to close. They want you to like the property enough to give up the money, even though there are problems. I will get into property conditions in a future publication. The buyer’s agent will likely not know anything about the house you want to see. Check with the listing agent to see if the property is available, your agent may not know. There is absolutely no reason for an agent to show you a property that has already been sold. If this happens, immediately find yourself another agent. The listing may be sold and just not updated on the Multi-listing Service (MLS). Unless they are willing to do the foot work for you, you are basically on your own. You tell “your” agent how much you have/qualified for, how many rooms, bathrooms, square feet and all the things you want in a home. Besides, buying a home is the most important commitment you will make, second only to marriage. Keep in mind that being a real estate agent does not require a college degree. Getting a real estate broker’s license is easy. All is needed is 90 hours in classes. A Real Estate agent do not take an oath with their hand on a bible vowing to give you the best deal you can get. That being said, you will at least one time end up at a house that is nothing like the house you told the agent you wanted. You are not paying for their services, so why should they go out of their way for you. That is the attitude you should have. Besides, they see you as a person that is under the illusion that you are some day going to actually own a home.
You need to research the real Estate laws in your state. Then consider agents has already attended that seminar found some loopholes and end runs around them. There are a few things that you should realize. You will never own your home free and clear. There will always be property taxes, where the county levy against you according to the value that they think it’s worth. This method incorporates two ways of increasing your taxes. One in which the county just outright increase your tax rate, and other is when they increase the taxable value of your home. Tax Levies in some counties and cities are put to a vote. This is sometimes disguised on a ballot as a temporary tax that will expire in a few years. In a few years it is put back on the ballot as not raising you taxes, in which I might add is the year that the initial levy is to expire and your taxes would go down. In any case there would be a value assessment done and home values would be raised to accommodate the taxes needed. Are you getting the feeling that you might need some Vaseline? Then there is eminent domain, where the city, county, state or Federal government can come in and take your property just because they found a use for it. More Vaseline anyone?
A Real estate agent is on the same level as a used car salesmen. They don’t own the property, they don’t know much about it, they only know how much it is and where it is. I can’t stress this enough, they want to sell it to you by any means that they can. If they have their way you will hit the ground running and in a few years your home (for what ever reason) will be back on the market. That is their lively hood, recycling homes. Ask your potential agent “how many newly built homes have they sold?” If none then, your agent is Entirely in the home recycling business, and we all know how vicious and cutthroat the recycling industry can be.
Once your (Buyer’s) Agent have summited a written offer to the listing agent, you may be contacted by your “buyer’s” Agent and told that they have gotten a lot of offers for the house and suggest that you raise your offer. It’s not like you are at auction and can see who you are bidding against. In fact you may be bidding against yourself. The agent works on a commission and the more the house sell for the higher the commission. It’s not in their financial best interest to get you the best price. Don’t be a glorified lollipop (sucker) and fall into the real estate trap. You are making an offer, they will either accept it or a better offer. They will not tell you how much the other offer is. You will only know how much the property sold for after the agents close the deal and all is paid. Never consider it as losing a bid, you made an offer, you did not enter a bid, this is not an auction. You didn’t lose anything. You still have your money, and you are not burdened with an over priced home. As is the case and the result of so many foreclosures today. Most people don’t realize that they not only have to pay for the home but has to maintain the home. Buying an overpriced home don’t leave any wiggle room for maintenance, upgrades and improvements. Don’t allow your “buyer’s” Agent to get you bogged down with promissory notes.
Definition of “Promissory Note”
A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date. A promissory note typically contains all the terms pertaining to the indebtedness by the issuer or maker to the note’s payee, such as the amount, interest rate, maturity date, date and place of issuance, and issuer’s signature. The 1930 international convention that governs promissory notes and bills of exchange also stipulates that the term “promissory note” should be inserted in the body of the instrument and should contain an unconditional promise to pay.
Submitting an Offer
They love to ask the question “Are You Approved”?” and “how much are you qualified for?”. Never tell them how much you are qualified for, tell them how much you are willing to finance. Just because you qualify for 400,000 do not mean you have to go out looking for a home for 400,000 even though the $ signs and % signs are flashing all through the agents head.
When the offer is written by a good realtor, a realtor that truly represents you will go in under the asking price so as to have some wiggle room for negotiations. Most offers, if for the asking price will require the seller to pay all closing. If your agent can’t accomplish that, then immediately get yourself another agent. It will be in your best interest to require that they accept your offer by a certain time of a certain date. if they do not accept it by the stipulated time and date given, proceed to recover your earnest money immediately. No further negotiations on your part is required. If your agent suggest that you resubmit an another offer, if you chose to do so, do so without any earnest money.
Insure that there is a stipulation that the property will be vacated by the closing date. At closing, you will be responsible and liable for the property. Allowing the owners to occupy the home after closing without contract could subject you to liabilities and damages to the property that you would be hard pressed to recover from. It’s not worth it. There also should be a stipulation that all trash is to be removed. Also should be stipulated that any and all personal property that is left behind will be forfeited by the owners and shall immediately become the property of (You) the new owners.
Don’t be surprised after a couple of offers, your agent email or text you that they will no longer represent or work with you. Don’t be offended, they realize that you are not a glorified lollipop (sucker).
A professional would not allow it to get to this point. A professional would work with you and only show you homes within your criteria and within your means to pay. They would not expect you to settle for less or over extend your budget. A professional will find you a home, write up a reasonable offer, insure all the paper work is done to present to your lender close the deal and move on to the next buyer.
If you listen to some agents closely, you would think they are representing the seller. These UNPRO’s are urgently trying to close the deal, even at your expense. Besides, you are actually the only person in this deal that is spending money. Any money being spent by the seller is only after they are paid or comes out of the price of the home.
Remember, you are the one that will have a mortgage, you are the one that will have the liability and responsibility after closing and the seller and broker is paid. You are the one that will have to pay taxes, maintenance, upkeep and improvements over the next possible 30 years. Buying a home is not a speedy process, so don’t allow any agent to rush you into something that’s going to take you 30 years to get out of. Don’t worry about the one that got away, think about it as the one that got out of your way.
Always be mindful of what your mortgage payments will be. Keep in touch with your lender so you will be apprised of the interest rates. Go over your financing to see what you maximum payments will be. Just because you qualify for a certain amount don’t mean you need to spend that amount.
To Be Continued and Updated……….Continue to Part II