qroy@whuxl.UUCP (QROY) (09/20/85)
[property of netbug]
It's that time in my life to settle down and buy a house and live
happily ever after. However, after dealing with a local real estate agent,
I'm beginning to realize that buying a house is extremely stressful
and time consuming.
First of all the prices are outrageous! I sincerely believe, that
real estate agents intentionally jack up the listed price of a house
to increase their commission. So question one:
(1) Does anybody have a formula (or rule of thumb) for coming up with a price
offer, based on the listing price, location and/or other factors?
(2) Is it better to deal exclusively with one realtor or use several?
(3) Should I apply for a mortgage now, before I've found a house, or wait
until I find one?
Any advice on general strategies for dealing with agents and sellers would
be appreciated.
My search is in central NJ, but I think any information would be of interest
to this newsgroup (I don't think there is a net.real-estate, perhaps there
should be), so use discretion when posting, if you have any doubt, mail me.
Thanks in advance,
roy
{ihnp4}!whuxl!qroyheneghan@ihu1m.UUCP (Joe Heneghan) (09/23/85)
> [property of netbug] > > It's that time in my life to settle down and buy a house and live > happily ever after. However, after dealing with a local real estate agent, > I'm beginning to realize that buying a house is extremely stressful > and time consuming. > > First of all the prices are outrageous! I sincerely believe, that > real estate agents intentionally jack up the listed price of a house > to increase their commission. So question one: > > (1) Does anybody have a formula (or rule of thumb) for coming up with a price > offer, based on the listing price, location and/or other factors? Mostly see what other homes are going for with similar characteristics and don't forget to include what it's going to cost you to fix and remodel to what ever degree is required to your liking. > > (2) Is it better to deal exclusively with one realtor or use several? No question here- some expect you to buy a house in a day and some will stick with you for a year if need be. Some will pressure you and some will try to find you a house they like and not what you like. > > (3) Should I apply for a mortgage now, before I've found a house, or wait > until I find one? > If your realtor is worth their salt they will look for you at all alternatives. > > Any advice on general strategies for dealing with agents and sellers would > be appreciated. > 1. Make sure you account for loose ends like things that need to be fixed. Tell your lawyer that you want some contingency to make sure things get fixed and when you close, don't wimp out, make them pay up. 2. When you make an offer, be sure it's written, stay away from verbal offerings. 3. Look the house over carefully yourself. If you have a hunch about something, there's probably a reason. Good Luck Joe Heneghan
mauney@ncsu.UUCP (Jon Mauney) (09/24/85)
Having recently bought a house, I can testify that it is time consuming and stressful. > (1) Does anybody have a formula (or rule of thumb) for coming up with a price > offer, based on the listing price, location and/or other factors? Ask your agent to let you look at the back of the multiple listing book, which (at least around here) has a cumulative list of recent sales, including asking and selling prices. When you are ready to make a bid on a house, ask your agent's opinion. (do you think they'll take $35k for this house?) Though the agent has an interest in getting a high sales price, he has a stronger interest in completing the sale; better a $100k sale today than $105k sometime in the future. She also has a deferred interest in making you happy, for referral and repeat business. It is probably not wise, however, to tell your agent how high you are really willing to go, as he legally represents the seller, and may feel tempted or even obligated to tell the buyer what you'll pay. > (2) Is it better to deal exclusively with one realtor or use several? If two agents are members of the multiple listing service, then they have the same information (though a really hot house may sell before it can appear in the listing). So it becomes a matter of how well the agent scans the market for you. There is certainly nothing wrong with using more than one agent. But be careful never to go into the same house with two different agents; the commission situation will get complicated, and it will be your fault. > (3) Should I apply for a mortgage now, before I've found a house, or wait > until I find one? You can't complete the application until you know which property you're buying and how much you're borrowing, but you can be prepared. At least start checking rates, so you'll know where to go when you're ready. On the mechanics of the sale, ask your agent; she has a very strong interest in making sure you don't screw up the legal details. -- Jon Mauney, mcnc!ncsu!mauney "The door's not shut on my genius, but... North Carolina State University I just don't have the time."
gadfly@ihuxn.UUCP (Gadfly) (09/24/85)
-- > First of all the prices are outrageous! I sincerely believe, > that real estate agents intentionally jack up the listed price of > a house to increase their commission. So question one: I'm no fan of realtors, but I think your analysis is wrong. They make 7% of the sale price, which amounts to only $700 per $10K, and only half of that if there's 2 realtors splitting the commission. Not a lot, when you consider that $10K might be the difference needed to make the deal at all, and thus the difference between some remuneration for their work and none at all. The real factor is supply and demand, and tax considerations here and there (Calif.). > (1) Does anybody have a formula (or rule of thumb) for coming up > with a price offer, based on the listing price, location and/or > other factors? There are formulas for rental property (easiest rule: price = 100 * monthly income), but nothing for owner-occupied residence. There's no substitute for getting a feel for the market, which means making a lot of very low offers (don't be embarrassed, the realtor has to submit whatever terms you want). Sooner or later, one won't be rejected out of hand--you'll get a counter-offer, and you bargain from there. By which time, the realtor has spent a lot of time on you, and will probably try to convince the seller to come to some agreement with you so that he (the realtor) can get paid for all the schlepping around. > (2) Is it better to deal exclusively with one realtor or use > several? Gee, you don't know much about these folks. You deal with one. But remember: THE REALTOR ALWAYS REPRESENTS THE SELLER WHO LISTED THE HOUSE WITH HIM/HER. Even if the house is listed through some other realtor--in which case the two split the commission, AND BOTH REPRESENT THE SELLER. Realtors are ethically and LEGALLY bound to that principle. If you deal with one realtor behind another's back and either finds out, both will stop doing business with you. Of course, you should shop for a realtor who will take an interest in you and not put on the screws for a quick sale. There are people other than "realtors"(tm) in the real estate biz. In most states, you have to be licenced to buy and sell real estate. Such folks can (and most do) join the Board of Realtors(tm), which costs a pretty penny. Members get in on the Multiple Listing Service (MLS), which is updated weekly, and subscribe to a not-very- demanding code of ethics. Realtors MUST work on 7% commission (or 3.5% each if your realtor is not the same as the realtor the property is listed with), and MAY NOT kick any of it back to you. "No-frills" real estate brokerages are becoming more popular now. They usually charge a flat fee. Realtors(tm) hate them. > (3) Should I apply for a mortgage now, before I've found a > house, or wait until I find one? You can, and you should, shop for rates, points, and the zillion things they nickel-and-dime you to death for upon closing. (Title insurance is one of the niftier scams at about $150 a crack.) But most lenders want to see an accepted offer, and since they send an appraiser to the property (whom you pay for but whose report they'll never let you see), you need a property before the bank will get serious. Check everywhere you can think of, especially the mortgage corporations, and check with your state and municipal gov'ts to see if there are any special programs you might qualify for. > Any advice on general strategies for dealing with agents and > sellers would be appreciated. See above. Remember--when you go to buy a house, the real estate agent always represents the seller, even if that agent is a total stranger to the one the seller listed the house with. The agent is obligated to submit to the seller ANY OFFER AT ANY PRICE AND ANY TERMS you specify. Don't be railroaded by what a realtor wants. All real estate offers are transmitted with so-called "earnest money", usually about 1% of the offer. If you want to show that your offer is really serious (even though it seems low), throw in another $1K with the paperwork. Earnest money is returned if the offer is not accepted; it's part of your down payment if it is. > Thanks in advance, roy Good luck and good hunting. [How I know about this stuff: I worked with a co-operative housing organization in Madison, Wis. for most of the 70's. And I've bought a few houses myself.] -- *** *** JE MAINTIENDRAI ***** ***** ****** ****** 24 Sep 85 [3 Vendemiaire An CXCIV] ken perlow ***** ***** (312)979-7753 ** ** ** ** ..ihnp4!iwsl8!ken *** ***
bobn@bmcg.UUCP (Bob Nebert) (09/24/85)
> First of all the prices are outrageous! I sincerely believe, that > real estate agents intentionally jack up the listed price of a house > to increase their commission. So question one: > > (1) Does anybody have a formula (or rule of thumb) for coming up with a price > offer, based on the listing price, location and/or other factors? > If you are going VA then use the appraised value the VA put on it or go to your local governmental hall of records and find out what the taxes were last year. I believe (If I'm wrong correct me please) taxes are 1% of value appraised. > (2) Is it better to deal exclusively with one realtor or use several? > The more the better. You can compare the different prices virses the property offered. > (3) Should I apply for a mortgage now, before I've found a house, or wait > until I find one? > I went down to a mortgage company and got qualified for a house I was thinking about buying. The wife didn't like it so I just dropped it but when I told agents that I already was qualified through FHA for $XXXXX dealings went much faster. > Any advice on general strategies for dealing with agents and sellers would > be appreciated. > > My search is in central NJ, but I think any information would be of interest > to this newsgroup (I don't think there is a net.real-estate, perhaps there > should be), so use discretion when posting, if you have any doubt, mail me. >
lrm@drutx.UUCP (MerlettoL) (09/24/85)
> (2) Is it better to deal exclusively with one realtor or use > several? >>Gee, you don't know much about these folks. You deal with one. >>But remember: THE REALTOR ALWAYS REPRESENTS THE SELLER WHO LISTED ^^^ ^^^^^^^ ^^^^^^ ^^^^^^^^^^ ^^^ ^^^^^^ >>THE HOUSE WITH HIM/HER. Even if the house is listed through some This is not necessarily true. There is now Buyer Broker representation. In this case the buyer pays a broker a retainer fee that binds the broker to fully represent the buyer. A legal contract is drawn between the buyer and broker which states the terms: length of time the contract is in affect, commission (mine is 2.2%), price ranges of houses, styles of houses, locations, etc. The buyer is then protected from jacked-up prices, loop-holes, etc. For someone like myself, it was a God-send. I knew nothing about the real estate market. My broker (who BTW does not list any properties - he only represents buyers) does all the looking, negotiations, and the dirty work that I don't want to do. I have been working with this man for five months, seen 50-75 houses, made a couple offers, but have yet to find the perfect house. But, because he is under contract with me until November, he can't get "fed up" by my extreme choosiness! Buyer Brokers are relatively new, but a couple months ago Fortune magazine did an article on the concept. The general concensus was that even though buyers traditionally don't pay to find a house, it was a very favorable change of standards. Its kind of like lawyers in a divorce - would you want to share one lawyer in a settlement!! -mouser-
smb@ulysses.UUCP (Steven Bellovin) (09/24/85)
> Realtors MUST work on 7% commission (or > 3.5% each if your realtor is not the same as the realtor the property > is listed with), and MAY NOT kick any of it back to you. The required fee was held to be an illegal restraint of trade, and is now (in principle) negotiable. But, as was pointed out, the realtor represents the seller, and hence that figure is negotiable between the realtor and the seller, not the buyer. If you and the seller are within epsilon on the price, it is quite proper for the buyer to ask the realtor about negotiating a fee reduction -- but the realtor is of course under no obligation to do so. (Incidentally, around here the standard fee is 6%.)
johnbl@tekig5.UUCP (John Blankenagel) (09/25/85)
> > Realtors MUST work on 7% commission (or > > 3.5% each if your realtor is not the same as the realtor the property > > is listed with), and MAY NOT kick any of it back to you. > > The required fee was held to be an illegal restraint of trade, and is > now (in principle) negotiable. But, as was pointed out, the realtor > represents the seller, and hence that figure is negotiable between the > realtor and the seller, not the buyer. If you and the seller are within > epsilon on the price, it is quite proper for the buyer to ask the realtor > about negotiating a fee reduction -- but the realtor is of course under no > obligation to do so. (Incidentally, around here the standard fee is 6%.) Here in Oregon, most (if not all) of the realtors are members of Multiple Listing Services. If a realtor does not follow the rules of the service, they are no longer allowed to be members. That means if a realtor charges less for commision to try to get more business, that realtor will have a lot of difficulty keeping from starving when they are disowned by Multiple Listing Services. Sounds a lot like a monopoly or something but I guess the politicians all own too much real estate to do anything about it.
sukenick@ccnysci.UUCP (09/27/85)
>> (3) Should I apply for a mortgage now, before I've found a house, or wait >> until I find one? >> > > If your realtor is worth their salt they will look for you at all > alternatives. Maybe your broker will get you the best deal - but shop around yourself to be assured of it. (My friend did and got one with the same points as the one the broker found but interest was lower by 1 point). Same goes for fire insurance - my friend found a policy 30% less $$$ and more coverage. > >1. Make sure you account for loose ends like things that need to >be fixed. Tell your lawyer that you want some contingency to make >sure things get fixed and when you close, don't wimp out, make them >pay up. Also, anything that is to be included with the house should be in the buying contract. When the seller says 'Oh, I'll leave the refrig in the basement,alarm system,tools, etc etc', make sure it is written and itemized in the contact. Best wishes, GDS
bobn@bmcg.UUCP (Bob Nebert) (09/27/85)
> -- > > First of all the prices are outrageous! I sincerely believe, > > that real estate agents intentionally jack up the listed price of > > a house to increase their commission. So question one: > > I'm no fan of realtors, but I think your analysis is wrong. They > make 7% of the sale price, which amounts to only $700 per $10K, If a house sells for $95,000, that ='s $700*9 or $6,300 commission. I don't know about your financial setup but I could live on selling five or four houses a year. Remember that all the expenses incurred running around trying to sell houses is written off (God I love that term).
andrew@orca.UUCP (Andrew Klossner) (09/28/85)
> It's that time in my life to settle down and buy a house and live > happily ever after. However, after dealing with a local real estate agent, > I'm beginning to realize that buying a house is extremely stressful > and time consuming. > > First of all the prices are outrageous! I sincerely believe, that > real estate agents intentionally jack up the listed price of a house > to increase their commission. Some of this reflects the skyrocketing cost of real estate. New Jersey is worse than average in this. And some of it is that you always list a house at a higher price than you expect it to sell for. > (1) Does anybody have a formula (or rule of thumb) for coming up with a price > offer, based on the listing price, location and/or other factors? First of all, never offer the listing price. If you do this, you're a chump. (I did it for my first house.) Otherwise, figure out what the house is worth (based on the market and what you'd pay for it), then offer a figure which is as much less than this as the listed price is greater. That way you and the seller can negotiate the price to the mean, which is your estimate of its worth. Of course, this is just a rough rule. There may be reason to offer much less, or much more. Talk with your real estate salesperson and see how desperate the sellers are; the longer the house has been on the market, the more likely they'll take a big cut in price. On the other hand, if the property was recently listed and there are other buyers, you may want to offer more. But beware: a common, though unethical, trick is for the salesperson to have accomplices come to the house during an open house and pretend to be interested in purchasing it, so as to make legitimately interested people anxious about whether they'll be beaten out. > (2) Is it better to deal exclusively with one realtor or use several? First of all, Realtor is a registered trademark. What you mean to say is "real estate salesperson." In general, every salesperson has access to almost all listings, because most listings are collected into a weekly "Multiple" (another trademark) book and distributed to everyone. (You can ask to look through this book; it includes pictures and short descriptions.) I think it's better to work with a single salesperson, except that you should NEVER consider purchasing a house using the same salesperson that has the listing. Remember that the salesperson is representing the seller, not the buyer, because it's the seller that pays the commission (at least in all the states in which I've lived, but I hear it's different elsewhere). So don't tell your salesperson anything that you don't want the seller to know. I have used this to advantage: on a piece of land where the asking price was $105k, I offered $55k. (I had learned that the sellers were pretty desperate; they were retired on a fixed income, the property taxes had increased dramatically, they had no need for the land, and it had been on the market for a long time, originally listed at $190k.) They countered at $90k. I countered at $70k with an 8% land contract with no balloon, and told my salesperson that this would be my last offer; I couldn't go any higher. (In fact, I would have gone as high as $90k.) I'm sure that she passed this information along; they countered at $70k and 10%, and we closed. > (3) Should I apply for a mortgage now, before I've found a house, or wait > until I find one? Standard practice is for a thirty day escrow to occur between the time you agree on the deal and the time that the transfer of title occurs. This gives you plenty of time to secure a mortgage. But there's no reason not to apply for one sooner if you want. Above all, pay heed to this rule: HAVE A LAWYER REPRESENT YOU AT THE CLOSING. This is in addition to the salesperson who is (ostensibly) representing you. Bring the laywer into the picture as soon as you make the agreement, at the beginning of escrow. Have him/her look over all the papers and advise you of your rights, your responsibilities, and what tricks to watch out for. He/she doesn't necessarily have to be present at the closing, but if not, and if changes are made to the papers, delay the closing until your lawyer can examine the changes. This will cost a couple of hundred bucks. I've heard of many cases in which people closed a deal without an attorney and were sorry, but I've never heard of a person closing with an attorney who was sorry they spent the money. -=- Andrew Klossner (decvax!tektronix!tekecs!andrew) [UUCP] (tekecs!andrew.tektronix@csnet-relay) [ARPA]
marks@yogi.DEC (10/01/85)
> improvements make for a high appreciation rate, and others > actually detract from the value of a house, such > as, for instance, an inground swimming pool) > >>Why is this the case? It seems counter-intuitive to me. And so it might be, on the West Coast. I forgot about the global nature of this network, mea culpa. In the Northeast, where the outdoor swimming season is 3 months in a good year, a pool is more an expensive liability than otherwise, and realtors tend to agree that putting in an extra fire place or renovating a kitchen will bring a much larger return when you sell the house. Pools are expensive to maintain properly, and you simply can't use them that much here. Also, people are spending more on heating utilities in this climate, and more on insulation and other weatherizing costs. Of course, even here, there are exceptions to the rule, and in the most exclusive neighborhoods there are beautiful pools that add to the resale price of a house. R.M. from Boston
woods@hao.UUCP (Greg Woods) (10/01/85)
> 1. Make sure you account for loose ends like things that need to > be fixed. Tell your lawyer that you want some contingency to make > sure things get fixed and when you close, don't wimp out, make them > pay up. Another loose end to close when buying a "used" property (i.e. from another owner as opposed to from the builder), is to get it in the contract that the place be left CLEAN. I just got burned big time by this, and had to spend a whole day and a half extra moving time making the damned place livable. Those of us who have lived in rental property are used to the place being left clean, because the landlord has the previous tenant's security deposit to guarantee it, plus you get to inspect the place with the landlord prior to occupancy. There is nothing in the law which requires the seller to leave the place clean (if I am mistaken about that, I'd LOVE to hear it so I could sue his butt off!) unless it so states in the contract. Now, the repairs he was supposed to make that ARE in the contract are another matter... --Greg
kjm@brl-tgr.ARPA (Kelly J. Benjamin ) (10/01/85)
> > -- > > > First of all the prices are outrageous! I sincerely believe, > > > that real estate agents intentionally jack up the listed price of > > > a house to increase their commission. So question one: > > > > I'm no fan of realtors, but I think your analysis is wrong. They > > make 7% of the sale price, which amounts to only $700 per $10K, > > If a house sells for $95,000, that ='s $700*9 or $6,300 commission. > I don't know about your financial setup but I could live on selling > five or four houses a year. Remember that all the expenses incurred > running around trying to sell houses is written off (God I love that > term). The real estate salesperson does not get 7% commission. The real estate *office* gets approximately 7% commission on the sale of a house. That money must be split at least three ways. The agent that listed the house gets a portion, the selling agent gets a portion and the broker keeps a large hunk. Plus, if the salesperson sells you a house from the multilist that was listed by another broker, the 7% commission gets split in half between brokers before any portions are given out. In that case, 3.5% would have to be split between the broker and the selling agent. Four or five houses a year would not be enough to live comfortably on.
suze@terak.UUCP (Suzanne Barnett) (10/02/85)
> > First of all the prices are outrageous! I sincerely believe, that > > real estate agents intentionally jack up the listed price of a house > > to increase their commission. So question one: > > > > (1) Does anybody have a formula (or rule of thumb) for coming up with a price > > offer, based on the listing price, location and/or other factors? > > > If you are going VA then use the appraised value the VA put on it or > go to your local governmental hall of records and find out what the > taxes were last year. I believe (If I'm wrong correct me please) taxes > are 1% of value appraised. Perhaps this is so in San Diego, Calif., but, the taxes are city, state and/or county specific. The rates vary from one location to another. For example, adjacent suburbs that are very similar in other ways may use drastically different tax bases. Likewise, in some cases, it is only the land, in others only the building and in others both that are taxed. > > > (2) Is it better to deal exclusively with one realtor or use several? > > > The more the better. You can compare the different prices virses the > property offered. Best to use one realtor who gets to know your desires, needs and priorities on a home, AND is a member of an MLS. > > > (3) Should I apply for a mortgage now, before I've found a house, or wait > > until I find one? > > > I went down to a mortgage company and got qualified for a house I was > thinking about buying. The wife didn't like it so I just dropped it but > when I told agents that I already was qualified through FHA for $XXXXX > dealings went much faster. You can find out what FHA and VA will set as mortgage limits, and can get an idea, from your total income, routine expenses and number of dependants what you could probably qualify for. A good realtor can get you this information very quickly. -- Suzanne Barnett-Scott uucp: ...{decvax,ihnp4,noao,savax,seismo}!terak!suze phone: (602) 998-4800 us mail: CalComp/Sanders Display Products Division (Formerly Terak Corporation) 14151 N 76th street, Scottsdale, AZ 85260
andrew@orca.UUCP (Andrew Klossner) (10/03/85)
>> I'm no fan of realtors, but I think your analysis is wrong. They >> make 7% of the sale price, which amounts to only $700 per $10K, > > If a house sells for $95,000, that ='s $700*9 or $6,300 commission. > I don't know about your financial setup but I could live on selling > five or four houses a year. Remember that all the expenses incurred > running around trying to sell houses is written off (God I love that > term). But there's more than one real estate professional involved in the transaction. First of all, the commission is split evenly between the seller and the person who holds the listing. When the two are identical, of course, there's no split, but more often the two are different people. Then the broker takes his/her cut. In the first real estate company at which my mother worked, the broker took 70% of all commissions and the salesperson took 30%. Out of that 70%, the broker is paying for the office, telephones, desks, advertising ... and his/her Mercedes. This is a company that will hire any warm body with a license. More selective companies will go as high as a 50/50 split. To get more than that, you must get a broker's license, which is much more difficult to acquire than a salesperson's license (at least in California). For the hypothetical $95,000 house, then, my mother the novice salesperson would have brought in $95,000 * .07 * .5 * .3 = $997.50. Selling four or five hours a year would bring maybe $5,000 before taxes and expenses. I sure couldn't live on that ... and neither could she; she got out of the business. -=- Andrew Klossner (decvax!tektronix!tekecs!andrew) [UUCP] (tekecs!andrew.tektronix@csnet-relay) [ARPA]
deb@haddock.UUCP (10/10/85)
>HAVE A LAWYER REPRESENT YOU AT THE CLOSING... >... Have him/her look over all the papers and advise you of your >rights, your responsibilities, and what tricks to watch out for. >>Absolutely! But I would add the following caveat: have a COMPETENT >>lawyer represent you. There are some situations which do not warrent paying for a lawyer for the closing. I've bought 2 houses without paying for this service. If you come up to this situation you'll know it. The originator of this base note might want a laywer present since having a lawyer present has a has a calming effect when one signs so many forms. But on this aspect as well as any others in buying a house one should not take any- thing for granted. I have a friend who became soooo discouraged buying a house that she became her own broker!
che@ptsfb.UUCP (Mitch Che ) (10/13/85)
In article <84800002@haddock.UUCP> deb@haddock.UUCP writes: > >>HAVE A LAWYER REPRESENT YOU AT THE CLOSING... >> >There are some situations which do not warrent paying for a lawyer for >the closing. I've bought 2 houses without paying for this service. If >you come up to this situation you'll know it. The originator of this >base note might want a laywer present since having a lawyer present >has a has a calming effect when one signs so many forms. But on this >aspect as well as any others in buying a house one should not take any- >thing for granted. > 99.999% of the time, you'd better go with a lawyer. Anyone who would like to hear horror stories about someone "saving" some money or just thinking "Oh, we really don't need a lawyer to buy this house" should listen to Bruce Williams show on radio (Check your local radio listing for "TALKNET", in SF KNBR at 10PM). We're not talking "calming effect" here, we're talking many otherwise intelligent people getting screwed, and losing a lot of money and time because they decided to skip having a lawyer represent them at closing. If you're saying you would skip having a lawyer at closing to save a couple of hundred dollars on a $100,000 to $200,000 purchase... well, remember the joke about performing your own appendectomy. It's a bad idea, but boy is it cheap. -- Mitch Che Pacific Bell --------------------------------------- disclaimer, disclaimer, disclaimer, too (415) 823-2438 uucp: {ihnp4,dual}!ptsfa!ptsfb!che