Princeton Real Estate Blog

How to buy a house without a real estate agent

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Princeton Real Estate -Do I Need An Agent To Buy Or Sell A House?

2008-03-31T21:07:49Z

Do I need a real estate agent to sell or buy real estate in Princeton? This is the gist of the questions coming to my blog in the last several weeks. I covered this subject before, but there were so many variations on this question, that I thought it may warrant re-visiting it again. This time I will focus on one issue: representation. All of this discussion applies to the state of New Jersey and laws may be different in other states.

Several things happened last week, that made me realize representation is not understood by many consumers. It's not surprising: the issue is kind of technical and kind of boring unless your live and breath real estate. Surprisingly, I found not all real estate agents explain representation to their clients sufficiently, if at all.

Back to the original question. Does a buyer or seller need a real estate agent? The short answer is "no". It is perfectly legal to buy and sell homes in the state of New Jersey without a real estate agent representation. I will focus in this post on the buyers. If the question was: " would I, as a buyer, be better off using an agent ?", the answer would be - "it depends on representation."

As a buyer you can do your research on the Internet. To see the house listed with a broker, you would need to have an agent show it to you. You have several options. To understand the difference in these options, you would need to understand the different ways agents represent clients and what it would mean to you as a buyer.

1. Listing/seller's agent representation.

A seller's agent usually has a fiduciary relationship (a special relationship of trust and confidence) with the principal, i.e seller. This special relationships carries certain duties that the agent must perform: care, obedience, accounting, loyalty, and disclosure.

An agent's loyalty means that they have to place a principal's interest above all other person's. When an agent represents the seller, he/she works only for the seller and owes fiduciary duties only to them.

When a buyer contacts the listing/seller's agent, they have an option of either being represented by this agent as a dual agent, or not represented at all.

2. Dual agent representation.

Dual agent works for both the buyer and the seller. This means that the agent will not be able to put one's party interest against the other, and can't advise or counsel either party on how to gain an advantage at the expense of the other party on the basis of the confidential information obtained from or about the other party.

3. No buyer representation.

The seller's agent, has an obligation to disclose to the seller all material information supplied by you as a buyer. For the buyer without representation, this option could be really least favorable.

The interesting thing is that the buyers often believe that one of these options is in their best interest. Many feel that they will get a "better deal" with the dual representation, because the agent would be more motivated, which will translate to them somehow buying the house for less. Without any representation for the buyer, they feel the seller would be more inclined to sell for less. The first of these options is suboptimal. The second can put a buyer at a real disadvantage. The best option is the following.

4. Buyer's agent representation.

Buyer's agent works only for the buyer and owes fiduciary duties only to them. This relationship is independent of who pays the commission to the buyer's agent.

There is another type of representation, such as transaction broker, which I didn't cover, because it doesn't occur often.

The above discussion applies to competent representation only without which these points would be irrelevant.

If you are looking to buy a house in the greater Princeton are, you may find these articles of interest:

15 Reasons you should not buy a home now ...5 reasons you should

15 Reasons you should not buy a home now ...5 reasons you should

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Who Needs Honesty And Trust In Real Estate

2008-03-30T07:15:41Z

The word "trust" is the second most overused word in real estate. "Honesty" - is the first one. These words are bantered around the Internet so much, people probably do not pay much attention to them. Nevertheless, misusing them in a real estate blog could lead to problems. Misusing them on a multiple blogger platform could lead to even more problems.

The goal of most real estate bloggers is business - i.e. demonstrating their expertise and personality to the blog readers, i.e home buyers and sellers. The idea is that these readers will be so impressed, they would want to hire the blogger as their real estate agent, mortgage broke, stager, etc.

The second goal of many bloggers, especially on Active Rain, is to get referrals from from their fellow members, again based on their blog.

So, what is the problem with using the "trust" and "honesty" words? The problem is not delivering on the promise. Let's say a real estate agent says on her blog "I sell all my listings for top $". The home seller, who hires her based on such a claim would be very unhappy, if he didn't get the promised top dollar.

Suppose, a mortgage broker says "I am never late with closing". If he is late, the consumer would be very unhappy, especially if the timing was an important issue to them (which is usually the case with mortgages).

The worst broken promise is of honesty. Misstating the facts, reneging on commitments, claiming that the other party misunderstood -are just a few ways to undermine honesty and ruin ones credibility.

Doing it from the pulpit of an individual blog is bad and inexcusable, because it undermines other bloggers in the industry. Doing it from the platform of Active Rain is in some ways even worse, because it undermines consumers' and other members trust in the other 60+ thousand bloggers.

When a member gives business to another, there is an explicit trust built in through the membership. Violating this trust could negate the efforts of many.

The points in this post are self evident to most, but not to all. Not all business opportunities that develop on Active Rain should be pursued. Here is one easy test - what post would the member, who referred the business to you, write at the end of the transaction? What post would a consumer write at the end of the transaction? Take the business, only if the answer is "glowing", "spectacular", "more then promised". You get the point.

P.S. Note to self: Grow up. Just because somebody says something on a blog (even on Active Rain), doesn't make it so.

P.P.S. Another note: I don't like the previous note -I have too many great friends. Having resolved this existential issue, I can get back to writing truthfully about Princeton real estate.

Please comment on which note you think makes more sense or what you think about truth on a real estate blog.

Photo by Katie Tegtmeyer

Princeton Real Estate - Is Honesty Required In Real Estate

2008-03-22T11:58:19Z

Honesty and trust are the most overused words in real estate. Look at the real estate agents sites and you will see declarations of honesty and trust somewhere real soon. Read the comments on Active Rain, or even Wall street Journal and you will find, as quickly, consumers accusing real estate agents of dishonesty and general mistrust for the profession. I usually write about real estate in the greater Princeton NJ, but this issue seems applicable to many places in the country.

It was with great surprise I found consumers discussing their dishonesty on the Wall Street Journal blog.

In the WSJ post the author describes her practice of going to the Open Houses without being in the market for another home. She registers under the false name and asks commenters if they do the same thing.

Only one person said that he leaves his real name and phone number. The gist of the other comments is "Who wants to be in a realtor’s rolodex? " (quote). Another angle on the same theme -the agents are there to find buyers for other houses, so it's OK to be the "lookie lou" (quote).

Several questions come to mind in terms of the real estate practice:

Should agents hold Open Houses only if it's been a successful method for them of selling the property, rather then looking for buyers for other properties?

Should the Seller be told, if this is not an effective way of marketing a property?

Coming back to the issue of consumer honesty, the question is for both consumers and agents:

Are consumers being harassed by the real estate agents to the point of consumers choosing deceptive practices?

Are deceptive practices by consumers justified for any reason?

The most important question of all: Could honesty and trust be a one way street?

Photo by MegElizabeth

One of the goals of the Princeton Real Estate Blog is to make a lot of the information, previously not available to home buyers and sellers, accessible at their own time and convenience. Here are some articles that could be of interest.

15 Reasons you should not buy a home now ...5 reasons you should

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If you want to stay current on the greater Princeton real estate, places, people and events, please subcribe using a feed reader or through the e-mail on the right side of the page.

Princeton Real Estate - Three New Things That Sell Houses Now

2008-03-20T09:33:33Z

Even babies in this country know the three L's of real estate; location, location, location. There is news for the Princeton real estate buyers and sellers: I am seeing the old adage being replaced with the new phenomenon.

The three P's are the new three L's. This post can probably be the shortest yet, as this pretty much sums it up. My data is anecdotal (unlike the rest of this blog), so I would understand if my graduate school professors may not want to continue reading.

In the 3d week of March, buyers and sellers need to think about their strategy going forward. I publish this post without big analytical data support, because time is of the essence and I wanted to share what I see in the greater Princeton real estate market.

This is what I observed this week. The house priced in the $500,000 had seven (7) offers and had the price bid up by approximately $150,000. Another example is a bit less dramatic, but similar.

The third example is a property that was on the market two years ago, was listed now for 5% less then then, and had an offer within a week. Another one - under contract in less then a week, was priced at $100,000 less and in better condition, then the house one block down the street.

There are sellers who think that their properties are undervalued, even if they had no offers in six months. For such a property the price is ZERO, using the definition of the market price being the "highest price the buyer is willing to pay without duress". This is a pill hard to swallow for many, especially when they get advised by the "experts".

Who should take notice of these events?

Sellers who need to get the idea of the market price and not price their homes "a bit more then last year" .

Agents who support these ideas, for reasons I don't want to contemplate.

Buyers who need to understand the idea that in the week market houses still go for over asking price.

So, it's the 3 P's. Before some people get upset, location and condition are still very important in this market, provided the price is right. For those who think it's nothing new - I agree.

Photo by John Holm/foto3116

15 Reasons you should not buy a home now ...5 reasons you should

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If you want to stay current on the greater Princeton real estate, places, people and events, please subcribe using a feed reader or through the e-mail on the right side of the page.

How To Create Important Content for Your Blog

2008-03-16T15:26:13Z

If I had to write my last blog post about Princeton real estate, what would it be? If I were to impart the most important issues for the Princeton real estate buyers and sellers (which is the focus of my blog), what would I have to say? These questions require some very serious thinking, at least for me, which I definitely intend to do.

I bring this question to my AR friends as an idea for creating important content for your blogs.

I borrowed this idea from several sources that came to my attention this week. The first source was the famous "last lecture" given by the Carnegie Mellon Professor Randy Pausch, in September 2007. The lecture, which you can watch here, has apparently been watched over six million times.

The second source was the post on my of my favorite blogs.

There are different ways to look and pursue what's important and it doesn't necessarily have to do with personal adversity. This is a great idea that could help bloggers focus their attention on what is really important and what they want their readers to learn and to know.

If each AR blogger wrote such a post, imagine the effect it could have on the Active Rain, or perhaps the entire real estate industry. It could create the distillation and the essence of the issues confronting the industry today. It could become the Wikepedia of all things important in real estate. Because it would contain all the most important real estate issues, AR could become the destination for anyone who cares about them, which is almost everyone.

It's really easy to get carried away dreaming

I would like your opinion. Bloggers, what do you think of this idea? Would you like to write "If you ever read one post, this is the one_____" post, and what would you write about?

Real estate buyers and sellers, if you wanted to read one post about real estate, what would you like to know?

Princeton Real Estate - How To Buy A Home Without A Real Estate Agent

2008-03-12T18:41:11Z

In the turbulent Princeton real estate market there are new things happening - some (like real estate prices) could be confusing, and some - are a bit puzzling. I am talking about a phenomenon of an unrepresented buyer. This type of buyer does their research on the Internet and contacts, for the properties they want to see, respective listing agents. They do not want to be represented by the listing agent (as a dual agent) or by any buyer’s agent. They want the part of the commission that would have otherwise been paid to the buyer’s agent, to be “credited” to the seller. The net effect of which, in the buyer's mind, is that they can offer less, and thus they would save a lot of money.

Assuming that the listing broker agrees to such an arrangement, what are the implications for these buyers? Is this a strategy for saving big or big losing?

This strategy could possibly work, provided these buyers have legal representation (and their legal rights are protected). The question is when could it work? The short answer: when a lot more human intelligence becomes publicly available. Here is a bit of a longer list of requirements.

The opinion on the price of the home is available from a public source. There is no such source now. Zillow, Trulia, Realtor.com, do not provide information on what makes one home more or less valuable then the other, or why a particular house on the same street sold for much more, or much less.

1. The opinion on the amount of the offer that will produce the positive outcome for the buyer is available from a public source.

2. The understanding of the inspection results for each property and the implications for the buyer are available from the public source.

3. The negotiation tactics for each property are available from a public source.

4. The ability to deal with the unexpected issues that can arise at any point in the transaction, including closing is available from a public source.

I am concerned that you as a buyer without representation, are not an equal match to the seller, with representation. Without needed intelligence available on the Internet, or from other public source, the buyers would have to do the best they know how. I am concerned it may not be "good enough", and that the potential “savings” could easily translate into big losses - financial, emotional, or both.

There are people who choose to represent themselves in court, some who are even facing imprisonment. I am not sure how many win. I know many lose. In this country it’s illegal to practice law without a license. It’s perfectly legal, though, to put oneself in jeopardy, doing it on their behalf.

The same holds true for real estate; thankfully for the buyers - their liberty is not at stake.