Archive for the ‘Buying a Home’ Category
Tuesday, March 1st, 2011
I’m going to keep this one short.
Now this may be complete speculation, but I’m going to say it anyways because the internet is free press and as a real estate observer and writer, I feel I’m somewhat justified in my claim, if not completely: realtors sometimes don’t like inspectors (unless they’re in cahoots.)
As I’ve mentioned before, several times, and if you’ve followed this blog at all over the past year and a half, then you’re probably sick of hearing it, but realtors do have a certain code of ethics that they must adhere to, and sometimes they do things that aren’t necessarily in line with their code.
Home inspections are a part of the majority of real estate transactions, and as the frequency of home inspections has increased in recent years, there has been a growing concern of brokerages working with realtor-referred home inspectors. The problem arises in the field of conflicts of interests. In fact, stories have emerged about some realtor agencies actually forcing inspectors to lower their rates in exchange for jobs.
According to a New England-based home inspection service, Applewood Home Inspection, there is a growing concern for this conflict of interests and they proclaim on their website that they are not involved in the growing trend. 1goodhomeinspection.com cites the home inspector as a buyer’s “last line of defense” in order to ensure the validity of a home’s integrity.
“In my experience as an inspector,” one blogger writes from 1goodhomeinspection.com, “the vast majority of referrals come from Realtors. In my not so humble opinion this is significant error in judgment on the part of the buyer. I will say there are a few Realtors out there that do genuinely have their clients’ best interests at heart. This is significantly easier for the Realtor if they are working for the seller, but requires amazing moral fortitude when working as a ‘Buyer’s Agent’.”
So there you have it folks, something to look out for when dealing with realtors and inspectors. The real estate world can be a very strange place sometimes, and the more you know about what to expect the better off you’ll be.
Tags: Dealing with Realtors, For Sale By Owner, FSBO, inspectors, realtor-referred inspectors, realtors, ten things about realtors, yigdigs blog
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Monday, February 21st, 2011
In keeping with our TEN THINGS ABOUT REALTORS column (which has taken much longer than I expected) we now move on to number six: Your realtor, although he/she may act like he/she knows about zoning laws about what you can and can’t do on your own property, they’re probably not as eloquent in zone-talk as you might think.
A lot of times, zoning restrictions are apparent. If you’re in the middle of an office park, then it’s probably safe to say that there’s not a chance you’re going to find a residential property there. Same goes vis-a-versa. If you’re a home-buyer, then typically you’re not too worried about zoning. Residential living is hardly ever offered in a commercial zone. By the time you get there, the restrictions have already been read, and followed. And your realtor’s not going to try and sell you a property that you’ll have to give up in a week because you intended it for residential purposes and legislative mandates said it was purely for business. That would be bad business.
However…
There is a phenomenon occurring across the nation. As throngs of people move from the suburbs back into urban areas, we are seeing the rise of mixed-use developments. When walking was the primary mode of transport, all that existed was a form of mixed-use developments. However, as individual transportation became more and more the norm, it was a completely viable business model to stick your retail store in a shopping complex as opposed to opening it closer to where people live. Now that gas is so expensive and traveling proves to be more and more of a hassle for the everyday American, people are migrating closer to the places they work, thus the mixed-use developments are once again on the rise. Sorry suburbia. As specific-use zoning becomes more of a thing of the past and residencies move into the city, zoning laws will become a bit of a blurry subject, and sometimes, a touchy subject.
If you’re a home-buyer that’s looking to purchase a property and make major renovations, it would bode well for you to take a little extra time and figure out your property’s zoning restrictions as well as the ordinances therein.
Here’s an example: My friends who are brand now homeowners, purchased a house in the northern suburbs of Austin, TX. They bought it with plans to remodel their kitchen and once they started to do so, a neighbor called them in to the city on account of their minor remodel job. Now their kitchen is gutted with nothing but the drywall up, no sink, they have to eat out every night, their refrigerator is in the kitchen, and they’re so hung up in paperwork applying for a permit to finish the job, it doesn’t look like they’ll be able to host a party for the Texas Rangers season opener.
The above is a minor case of a zoning and ordinance mishap that can hinder any homeowner at having their dream home. It’s important to know what you can and can’t do with your land, and what you can and can’t do with your property. Although your realtor may seem like the expert when it comes to specific zoning and ordinances, every place is different. There would be nothing worse than buying a house with the intent to add a pool house and then find out that zoning laws say otherwise. Realtors aren’t planners.
Tags: 10 things about realtors, building permits, building restrictions, Buying a Home, Dealing with Realtors, For Sale By Owner, for sale by owner zoning, FSBO, fsbo blog, fsbo real estate, home buyer, home owner, how to find your zone, mixed-use developments, realtors, urbanization, what to watch out for with realtors, zoning
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Wednesday, January 26th, 2011
This one if for the buyers out there.
When hunting for a house out there on the market, there are several people you deal with. Unfortunately, most of all of those folks are attempting to sell you something based on the fact that they’ll get a commission out of it.
So, you go searching for that helping that’s just there to guide you and ask for nothing in return. You find a “Buyer’s Agent”. Contrary to common belief, these buyer’s agents don’t necessarily always operate in the buyer’s best interest. They’re working for a commission too—3%, which is usually what sellers get on sales. It has also been documented that many buyer’s agents are sourced by brokerages that pay them more to sell an in-house listing, so although this house may seem perfect and your agent may seem unbiased, you’re actually only seeing the one piece of the pie that they want you to see.
But who can blame them. It’s nearly impossible to remain unbiased when there is a financial incentive. It’s something that we call a conflict of interest here in the real estate world and it plagues more real estate professionals than you know. In fact, according to a study performed in February, 2010 at Carnegie Melon University, researchers found out that when there is a conflict of interests (such as financial endorsement) it is almost an unconscious act to favor that which might benefit you more.
“The evidence from Experiment 2 suggests that financial incentives had a stronger influence on public reports than on private beliefs. However, agents’ relationships with their principals acted as a more powerful influence on their private judgments than did financial incentives.” (Judgement and Decision Making, vol. 5, no. 1, February 2010, pp. 37-53)
This basically, means that folks who were asked to be unbiased, appraised the value of the test company higher when dealing with sellers and lower when dealing with buyers. There was a financial incentive in place to reward them on how high they sold the test company for and how low they bought the test company for. Researchers found that, when offered financial incentives, appraisals were much more biased than when all agents were paid a flat fee. (You can read all of this in scientific jargon if you click the link above and scroll down to Experiment 2.)
What I’m trying to convince you of is the fact that those completely objective buyer’s agents do not exist. It’s the commissions that sway their ethics. So next time you’re thinking about who’s really looking out for who in the real estate world, just remember this: it is every man for himself.
Tags: buyers for sale by owner real estate, carnegie melon university, For Sale By Owner, FSBO, impartial buyer's agent, judgement and decision making study, realtors, the ill-conceived notion of an impartial buyer's agent, things about realtors
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Monday, January 24th, 2011
2010 wasn’t the best year for the real estate market. After the short bump in sales due to that stimulus package, we saw relatively dismal numbers across the nation when the tax-credit was no longer available. Which means, realtors, FSBOs, and the real estate inclined are looking forward to the new year: a year of hopes, dreams, the realization of one’s true potential – hey, you might even sell a house too.
So as with all end-of-year lists, so too come the beginning of the year predictions and for the most part, things are looking okay. If you happen to live in the hard-hit areas of Southern California – a state not only swimming in shadow inventory and foreclosures, but also massive debt problems – you’ve got something to look forward to. It was projected by the Local Market Monitor, a North Carolina-based research firm that studied patterns and cycles in over 315 real estate markets across the nation, that those So-Cal metro areas (San Diego, Santa Ana, and San Jose) which faltered so hard last year look good for a comeback.
On the contrary, Florida cities that suffered greatly will remain so for the most part in the coming year, along with several western cities. “The big difference between Florida and Southern California … is people are moving into Southern California, but they’re not moving to Florida.” That’s Local Market Monitor President Ingo Winzer on why these two regions will fare so much differently in the coming year. Flordia property markets pertain a great deal to second homes and retirement homes. These properties are increasingly hard to maintain financially and increasingly harder to sell. However, the California markets are attracting newcomers, for their attractive city culture and the growing job markets.
This harkens back to much of what was said in late 2010: the real estate market is fatally linked with unemployment rates and income levels.
(Here’s a link to the original article.)
Tags: 2011 homes, 2011 real estate, 2011 real estate predictions, california real estate, florida 2010, Florida Real estate, For Sale By Owner, FSBO, Industry News, Local Market Monitor, Real Estate, real estate predictions, Realtor, San Diego, San Jose, Santa Ana
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Monday, September 27th, 2010
There’s no denying it: the green revolution is upon us. People are wanting efficiency, cost-effectiveness, conservation, sustainability, recyclability, renewability, and all of the other amenities afforded by such a technologically advanced and environmentally aware civilization.
Homebuyers want this and home builders are slowing catching on. Detailed in the Austin American-Statesman’s September 25th edition is an article about a particular builder in Dallas is making waves among the McMansions. “This fall, I have five new homes sold under 3,000 square feet,” he said, “this is where I’m carving out my niche—small and green.” Jeff Baron, the builder in question, predicts that his new home in Old Dallas among the McMansions, standing a mere 2,000 square feet will have electricity bills under $100 dollars. Even the exterior is made of low-maintenance materials.
Buyers are gravitating towards these kinds of homes for many reasons. They’re cheaper for starters, and you find that you’re not just buying furniture and fixtures to fill space that you didn’t need.
It was originally thought that smaller-scale suburban style homes were mainly for the first-time homebuyer demographic, but now that buyer consciousness has shifted towards smaller and more efficient, buyers are reacting. Studies show that the ideal home size is now somewhere between 1,400 t0 2,600 square feet. This applies to 60% of potential buyers. It’s a smart and, hopefully, lasting trend.
Tags: Dallas Building Smaller Homes, More Efficient Homes
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Monday, September 20th, 2010
In an article published in the NY Times online real estate web site, certain pitfalls are catching buyers of new properties off guard. Since the market has slowed, the government and investors alike are withholding funds from the market and this is creating a few unlikely hang ups for potential buyers.
One homeowner paid for the deposit on an unfinished house in a new development with the promise of a completion date. The contractor has yet to finish the house because they haven’t been approved by the FHA for the project.
Another purchased a condo only to find out that she would be the only occupied unit on her floor, something she quickly corrected: “if I moved in, I would be virtually alone on my floor, and that’s not what I bargained for.” (The buyer in question wished to remain unnamed.)
You can read about both here.
The bottom line is that new developments and condos aren’t always making the cut, and early investing could cost buyers a lot of money given that there are so many uncertainties that could occur.
SO….
(Here’s my pitch:) Why not buy existing property? And while you’re at it, avoid all those costly fees you accrue when working with a realtor and buy it from an FSBO. Then not only do avoid any unforeseen investment dangers, but you also save thousands from going right into realtor’s pockets. HA!
Tags: Buyer Pitfalls on new construction, Buying new property vs. buying existing property
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Saturday, September 18th, 2010
The market is struggling—that much is true. Pretty much every analyst across the spectrum attributes it to the “tax credit hangover”. Ain’t that some nomenclature!
[Taken from Wall Street Journal Blog]
“Moody’s report cites some all-too familiar drags on the real-estate market: The home-buyer tax credits left the market with a hangover. The “market is now paying for [the credits] in the form of large declines in sales and slowing construction,” writes Celia Chen in the report.”
This is evidenced by a recent study on the current dip of home prices by Moody’s Analytics. They officially increased their estimate from 5% to 8%, accounting for a backlog of foreclosed and potentially foreclosed properties that could apply more drag on the market in the coming months.
But not all is lost, Homebuyer. Here’s what you’ve got to look forward to:
Mortgage rates are going to continue to remain at astronomically low levels, thus making it cheaper to afford those usually costly house payments. This is expected to continue until the housing market stabilizes, which might not be until late 2011.
And…
Unemployment numbers are “projected” to lighten up on us soon. (I mean, how could it get any worse?) As more and more people go to work and start making money, they will invest in the real estate market in some form or fashion. Unemployment is one of the biggest factors keeping the real estate industry in a slump, as it prevents people from spending money on such investments. Once unemployment levels out, the effect should be positive. It’s really only a matter of time. Just as what goes up must come down, what goes down must come back up, I think…
Tags: Low Mortgage, Positives in the Housing Market, Unemployment
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Friday, August 27th, 2010
LOOK AT THESE HEADLINES:
housing crash news from patrick.net
Pierce the Housing Bubble! (nytimes.com)
House Prices May Drop Another 25% (theatlantic.com)
Another Record Low for Housing (economix.blogs.nytimes.com)
Burning Down the House; New House Sales Consensus 330K, Actual 276K, Record Low (Mish)
Rosenberg Explains Why Not One New House Priced Over $750,000 Sold In July (zerohedge.com)
Housing market continues to decline (csmonitor.com)
Lack of Jobs, Foreclosures May Keep U.S. Housing Depressed (bloomberg.com)
New Foreclosure Numbers Reverse MBA Survey’s “Bright Spots” (cnbc.com)
Experts Say Housing No Longer Builds Wealth (irvinehousingblog.com)
An unsupportable American dream (nationalpost.com)
The Housing Bubble: The Economists Should Have Known (newgeography.com)
After Housing Bubble, the Dark Side of Houseowner Dreams (time.com)
Treasury Admits Program for Struggling Houseowners Just a Ploy to Enrich Big Banks (alternet.org)
The Fed’s Monetary Insanity (atimes.com)
Great Firewall of China Blocks Posting To Patrick.net (patrick.net)
Commercial Property Owners Choose to Default (online.wsj.com)
I thought I would try and give the “glass half full” side to all of this gloom and doom journalism, and try and illustrate some positive reasons to delve into the housing market this fall.
The first and most obvious reason just so happens to be that mortgage rates are at record lows. You can find sub-5% Fixed Rate Mortgages with almost any broker. That means that your rate of insurance will never change over the life of your loan—and 4.75% is a great rate! More later…
Tags: Record Low Mortgage Rates, Upside to Housing
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Monday, August 23rd, 2010
What’s the alternative to buying a house in this market economy? When property values are dropping and mortgage rates fail to change? When people simply don’t want to get bogged down into another mortgage payment? Renting.
Yes, my friends, renting. And although it may be a bit contrary to the “American Dream” of owning a house and grilling in the backyard, it has its upsides. Take this Chicago couple who relocated from their Michigan house to rent an apartment over Lake Michigan in the Chicago. They have found that the reduced stress on property maintenance and other expenses greatly outweighs the notion of owning your own home—for now at least. Read the short article here.
While renting does alleviate you from the extraneous responsibilities of home ownership, it also has its down sides. For instance, rent payments are simply going to a landlord, while a mortgage has the weight of equity and return. Some folks look at it like you’re just throwing money in the trash, others see it as biding your time for a recovered market.
So if you can handle it like the Cleavers then more power to your, but renting is not the be-all end-all answer from our struggling housing market—just an alternative.
Tags: Renting a Home, Renting vs. Owning
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Wednesday, August 4th, 2010
So I came across a startling article on the often informative and fun Patrick.net forums. It details a case where a seller listed their home on an MLS with some very appealing photos. However, one potential buyer came to find out that these photos were taken when the house was in very, very good condition and the current structure didn’t necessarily live up to expectations.
The moral of the story is that you can’t really make a decision based on good MLS photos. For all you know they could be fake or doctored. So always, always check out a house—but you know that. And sellers, don’t think that you’re getting away with something by posting falsifying photos. It’s not going to work because any smart buyer knows better. Anyways, have a look at what these folks tried to get away with. Link to Forum.
Tags: MLS, Multiple Listing Service Fraud
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