Buying a home is somewhat of a daunting task. With the increased use of the internet, potential buyers are at risk of being exposed to some pretty common myths. We've all been told at one point or another - just because it is on the web does not actually make it the truth.
OK, I realize that this is on the web and it can suffer the same fate as other articles.
So, let's just get down to the basics. You are pondering or in the beginning stages or maybe in the middle of the process of buying a home. I will begin with one irrefutable truth, the purchase of a home is one of the largest single investments you will make. It matters not if it is your first home, your second home or your last home. It is a lot of money. You should be careful as you proceed. There is no insurance you can buy that will allow you to return the purchase and get your money back. In most cases, the final sale is recorded "as-is".
Cautious? You damn well should be.
There are 6 big myths that should be avoided when you are buying a home.
- The information about homes found on-line is always accurate.
- You can get a better deal if you buy directly through the listing agent.
- You don't need an agent to represent you in the process.
- The more homes you see, the better your chance of finding the right home.
- The highest amount offered is always the winner in multiple offer situations.
- The ______(Spring,Summer,Fall,Winter) is the best time to buy a home.
None of them are absolutely true. They sound good. On the surface, they certainly seem to make sense. In reality, each one of them is flawed and not totally accurate. Let's go through them one at a time.
The information about homes found on-line is always accurate.
If you were a real estate agent and partook in the various discussion groups, you would know how wrong this statement happens to be. When looking at homes on-line, you go from one site to another and marvel at all the homes for sale. Of course, you never stop to consider...how did they get there? What is the source of the information? Well, I will avoid sharing the long version. It is more than the dreaded GI-GO (garbage in, garbage out) that plagues databases world-wide.
You stand on the shore. Between you and your final destination (finding the home of your choice) is a sea of inaccurate information. You want information. Your goal is finding the right home.
Of course it never crosses your mind to consider the goal of the information providers! It is perfectly normal to assume that the information is provided to entice you to buy a home. Beneath the surface lurks reasons that are sort of in line with your thoughts, but not exactly.
The process begins when an agent lists a home for sale. That agent enters the information into their multiple listing service (Unless they have convinced the seller that they will be better served if they restrict access to the information. Those listings are referred to as "pocket listings" and are the subject of another article.)
The information then becomes fair game for everyone that has access to the listing. You see we are in the age of syndication. Syndication has merits. It does allow for the information to be shared across the internet. Unfortunately, the accuracy of the information is not policed very well. Let's just look at a few of those that share the listing information and what their goal may be.
- The listing broker - information shared hoping that you will contact them and you will either buy the home via their agent (In many areas this is referred to as "Dual Agency". You may or may not be represented.) The listing broker's goal is to sell the home and make a commission. Secondarily, if you do not buy that home, they hope you will develop a relationship with one of their agents so they can represent you and make a commission on the home you purchase.
- Other brokerages in your area - information is shared hoping you will contact them and you will buy the home via one of their agents. Their goal is to have you use them to represent and make a commission in purchase of a home.
- Other agents - in this day and age, most agents have a personal website. They hope you will contact them so they can represent and make a commission in your purchase of a home.
- Zillow, Trulia, Realtor.com and many other websites that are not owned by a broker - These firms pull their information from third-party sources. They make their money selling your name (when you fill out one of the "yes, send more information" forms you are becoming "meat on the hoof") to agents that pay for "leads". The larger the data base of homes, the m opportunity they have to snag an unsuspecting buyer. The experts they offer ALL pay for having their name adjacent to listings. In actuality, those agents are "expert" in paying for names, phone numbers and email addresses. The information is not updated as often as the multiple listing service. Remember, their goal is to get your name. They leave to their customers (the agents that pay for the names) to explain why that home for sale actually sold last year.
Your best course of action Develop a relationship with an agent that will provide you with one website that is offering accurate information. it may not be as pretty as the lead generating sites, but in the end - bad information is very ugly. Sure, I can do that for consumers in the DC metro area, but so can most other competent agents.
You can get a better deal if you buy directly through the listing agent.
, that seems to make sense. If you deal directly with the listing agent, there must be some sort of commission reduction that will work in your favor. Of course that happens sometimes. There are buyers that have gone through the listing agent and purchased a home that was listed for $300,000 and been able to strike a deal and pay only $291,000 dollars. At first blush, that appears to be a saving of $9,000. Pretty good deal, no? Maybe and maybe not. You see using the listing agent removes all ability to negotiate. The listing agent represents the seller and they can not represent you (OK, to be clear, I am referring to the DC metro area.).
Do you really believe that spending one-third of a million dollars using your limited ability to determine a fair market price, to make sure you understand all of the contingencies needed to protect your interest in the purchase and be 100% sure you are protected is in your best interest? How many of those $300,000 homes should have been priced at $275,000? How much money has been spent correcting defects, etc. after the closing of the sale? How many defendants in any court case request that the prosecuting attorney represent them? How many of those sales would have resulted in the same purchase price if the buyer was represented.
Ego is a nasty thing to have when spending hundreds of thousands of dollars on one purchase. It is much safer to actually hire an expert. You have a much better chance of paying a fair market price and buying a home in the condition you expect when you have an agent represent your interests.
You don't need an agent to represent you in the process.
This sounds a lot like the previous myth. There is a difference. You see there are some that feel they can educate themselves sufficiently to purchase a home without the assistance of an experienced, licensed buyers agent. I won't say that it's impossible. As the saying goes, "even a blind squirrel can find an acorn sometimes." This should not surprise you. I believe wholeheartedly that you need to have an agent represent you in the search for and purchase of a home. You may or may not know, but there was a time when every agent (even the one showing you homes) represent the seller of each home.
The system was flawed. The buyer had no counsel. In the early 90's, buyer agency came into recognized practice. It was accepted that a buyer should have the right to an agent that had a fiduciary responsibility to them. This form or representation requires a contract between the buyer and the agent. It protects the consumer. Agents are trained and educated before they qualify to be licensed. Every transaction increases their knowledge base. Agents deal with home purchases every day. Remember, you are in the process of spending a really large amount of money. Protecting yourself adequately requires the knowledge and skill of an experienced agent. I can not emphasize that enough.
Of course, I would like to represent you and yes, that is how I earn my living. Just remember, that is how I EARN my living. The same can be shared about the majority of agents in the area. Talk to a few. Find one that gives you a comfort level. Sign the buyer-broker agreement. Only then should you proceed.
The more homes you see, the better your chance of finding the right home.
has several programs about the experiences of folks buying homes. In several of them, buyers are shown three (3) homes and then they are to choose one. Three. I would hope that most people watching understand it is not totally factual and is presented in a way meant to entertain you for thirty minutes. Sure, there are some agents out there that believe you should be able to narrow your selections down to a few and then decide. Can we say "over simplification!"?
Here's the real deal. You may walk through the door of the first home on your viewing list and fall in love and be convinced "this is the one". I would hope you have an agent there sharing a simple phrase "In comparison to what?". It may be the one. You should spend a little time seeing a few more. If you see less than five homes, you have short circuited the intelligent buying decision process. In most cases, your emotions have just raced past your practicality. The joy of finding "the one" is soon threatened by "I have to buy this before someone else sees it and it will be their "one" as well.". Slow down. You have to see a bit more. Put things in perspective. Of course, if there is limited inventory, you will have to act quickly. Be that aside, you had planned on visiting a few homes that day, keep going. If it sells in the next few hours, that is out of your reasonable control. There is more than enough time in one day to see the homes you planned to see and still put an offer on that home. (This presupposes that you have an agent working for you)
On the flip side of the coin, once you have seen a representative amount of homes that meet your criteria, you have to accept the fact that you have seen the market. If you go out week after week or month after month and do not find a home, it may be time to re-evaluate your criteria. Like it or not, there are only so many different floor plans. Form follows function. The framework of a home works around pipes and plumbing. There are only so many configurations that work. There are only so many floor plans. If you find you are seeking 1,600 square feet and every home you visit in a development has 1,400 square feet or less, it is likely you will not find a home a large as you want. Planned developments and neighborhoods tend to have limited floor plans. Even before planned communities, builders used boiler plate drawings to create homes. (Have you ever driven across Florida Avenue or out Georgia Avenue? Have you ever seen Glenmont?)
You shouldn't stop at one, but you don't have to see twenty. Oh, and please never fall into some formula trap that says "See the three best that are close to your criteria. Pick one and be done.". You can avoid those pitfalls by using an experienced buyer's agent that knows the market, the neighborhoods and the street where you'll live.
The highest amount offered is always the winner in multiple offer situations.
You will just have to trust me on this one. I can share that my clients are well aware of this fact. There are so many pieces to the puzzle in negotiating. The true skill of an agent is revealed when they sit down with you and share how they plan to put together your offer.
This is where the rubber meets the road. Your goal is to purchase the home. You want to do so at a price that is within your comfort zone. While it may seem quite natural to just look at the amount of your offer, it is best to recognize, the truer measure is your net offer. It is how things are placed that creates the offer that is accepted.
People really don't engage me to find a house. I can point them to good sources in the beginning. I am paid for my experience in measuring up a homes condition, a homes location and preparing an offer that protects my clients while appearing to be just what the seller was hoping to see. It is not always about the money.
Over the years, I have had clients purchase homes at below appraisal. I have had clients purchase homes for less than listing price. I have had clients stunned to experience the joy of hearing "you got the house", when it seemed like those words would never be shared. Did I mention, I welcome new clients and would love to help you?
The ______(Spring,Summer,Fall,Winter) is the best time to buy a home.
This can be refuted quite simply. The best time to buy a home is when you are ready, willing and able to make the purchase. Common sense should prevail, but the National Association of Realtors seems to think that we need a jump-start after every winter.
Why do people move? Why do people buy? You have to dig pretty deep to come up with the reason has something to do with the seasons. If you set aside Federal Holidays when nothing much seems to happen, millions of dollars of real estate deals are transacted every single day of the year. Every day.
People become a couple on every day of the year. People stop being a couple on every day of the year. Babies are born every day of the year. People die every day of the year. People are hired every day of the year. People are fired every day of the year. People retire every day of the year. Life changes occur on any day and they occur every day of the year.
Of course, there are peaks and valleys in the occurrences. It may seem like one season is better than another. It is not so. The best time to buy a home is when you are ready, willing and able to do so. Waiting for a season may appear to make sense. Unfortunately, for you if you wait, someone else may own that home of your dreams before you see it.
So there you have it. Six myths to avoid when buying a home. If you have questions or would like to discuss your situation, I can be reached at 301-509-5111. I don't claim to be a know it all, I just know real estate and I enjoy putting my knowledge and experience to good use.
1000 Pennsylvania Avenue SE
Washington, DC 20003
Business Phone: 202-546-0055
Business Fax: 202-546-0511