A few days ago I received a call from a past client. She excitedly told me that she was helping a very good friend who was in the process of buying his first home. The friend was enticed into the market by a Parade of Homes advertisement a couple weeks ago. It was for a new construction home in the Lindstrom/Chisago area that was for sale for around $150,000 with a zero down financing option. The friend was intrigued and asked my past client to tag along to see the home. At the model they were told that this particular home would qualify for one of the only zero down programs still available. From the conversation, the first time buyer thought the lending program was only available on this particular home, with this particular builder so he met with the builder's recommended loan officer and was approved to buy the home at full price. He was seriously considering buying the home. But before signing, this first time buyer and my past client started talking and thinking, maybe we should run this by a trusted professional, a REALTOR®. Since the friend had never purchased or sold a home, my client called me.

Whatever prevented this young man from signing the document, a gut feeling or voice inside his head, it doesn't matter. The instinct was right. He hadn't looked at enough homes to know if this was a good deal. See, it is in the builder's best interest to make a sale at the most possible profit. So, this first time homebuyer wasn't told a few things that really changed the picture:

1. The USDA program can be used to purchase almost any home in Chisago County including Lindstrom, Chisago, North Branch, Shafer, Center City and several other communities as well. (USDA financing isn't available in the Wyoming area though.)
   
2. A buyer does not have to pay full price on a home even from the builder. They can negotiate the sale price the same as on any other property.
   
3. If you walk into a model home without your REALTOR®, the builder is under no obligation to pay out a commission to your agent. This means if the friend now decides buyer's representation is necessary and signs a buyer's representation agreement with me, the seller/builder is not obligated to pay any commission to me as their agent. The buyer would end up paying a commission to me out of pocket or buy the home without representation.
   
4. The builder, or builder's representative, in a model home is not going to tell you if there is a better deal down the street. Even if there is a REALTOR® hosting the open house, that agent represents the builder of the home. They work for the builder and have fiduciary duties to work in the builder's best interest to make the sale of the model home....Even if it is overpriced.

Again, thank goodness for that little voice; that pull in the gut. No contracts had been signed with this builder.

I explained that the USDA program was available in several areas, including some that would be a quicker commute to work for the buyer than the home in Lindstrom. After I did my MLS search, I found several well priced homes that would qualify for the USDA zero down program. In fact one almost brand new home that had gone back to the bank 8 miles closer in with 4BR/4BA that was almost $60K less than the builder's model. There were almost 20 homes that I sent over to this first time buyer this morning that I felt were a significantly better value than the home they were looking at with the builder.

My exact words were that had he bought this new home at full price it would have been like paying sticker price for a brand new car and discovering that as soon as you drove off the lot, the value dropped. Previously owned homes in this area are selling for significantly lower prices per finished square foot than this home.

My past client's friend is now my new client and he is very excited with all the housing options he now knows he has. He has reviewed the listings online and determine a half dozen that seem to be a good value for a first home. I, as his buyer's representative, will show these homes over this weekend. Thanks to that little voice, that uneasy feeling, this is one first time buyer who won't be overpaying for a home in this amazing buyer's market!

Need additional information on using the zero down USDA financing program in Chisago County? If you are buying or relocating to Minnesota and need help from a professional REALTOR®, give me a call or visit my website for a FREE Relocation Packet, Homebuyers Success Packet or sign up for Listingbook Twin Cities Home Search. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Buying a Home? Check out my new HOME BUYER'S BLOG!

Copyright 2009 Teri Eckholm http://www.terieckholm.com/

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