Here’s What’s Wrong Today

How to handle Buyers Remorse by Loren Keim of C21 Real Estate

“Ultimately, there is no single answer for how to handle buyer’s remorse when it appears. Just be aware of the potential for a buyer to panic. If it happens, the buyer may try to withdraw from the agreement, or he or she may begin nitpicking the home because he or she is frustrated. Do not become emotional.  If you are representing the buyer, simply respond the best you can and if you’re representing the seller, you may have to use the (escrow) deposit as leverage to keep the buyer from withdrawing from the purchase.”

After reading this I asked myself…. Are these the kind of Agent’s I want working for me?  Loren Keim wrote the above article – as part of a C21 agent-training program. 

Here is a perfect example of what is wrong with today’s Seller orientated Real Estate Industry.  Get the deposit so they can’t back out of an offer… mentality.

If the Buyers Agent has done his/her job, Buyers Remorse is not an issue.  The property has been researched, the market has been correctly identified, property values have been established, and with a thorough inspection, the Buyers know EXACTLY what they are buying.  The Buyers Remorse, if any, takes place before the offer is made.  The Buyers Agent and the Buyer have discussed the offer in detail, all the negatives as well as positives have been weighed and the buyer can make the offer with Full Disclosure and eyes open.  This is also called Fiduciary Representation and is provided by Exclusive Buyer Agents for their buyers.

It’s a Buyers Market

It is a buyer’s market due to the influx of homes on the market because of the increase in foreclosures. According to US News, this gap between the buyers’ and sellers’ markets is expected to narrow later in 2010.

It may become harder to secure a loan. Mortgage delinquencies are up, which will likely result in the FHA tightening their belts on lending standards. Changes may include, “raising up-front cash requirements, boosting minimum credit scores, and perhaps charging more for insurance premiums” said US News.

Realtor Full Disclosure

Why “Full Disclosure” is critical !

Some Real Estate Agents Can’t Provide you Full Disclosure ! There have been court cases upholding situations where the Broker and Listing Agent knew that a large portion of a homes back yard had been sold but, were not required to advise the prospective Home Buyer that this had occurred. (see Oklahoma Supreme Court). In a Real Estate Brokerage, the Broker OWNS the Listings. Under this contract the Brokerage is obligated to market and sell the property under the terms and conditions of that contract. Agents working for that Brokerage have obligations to the Seller by virtue of that contract. This is one area of “Conflict of Interest” that relates to representation or “Agency”. 

A ”Buyers Agent” or “Single Agency” agent, when constrained by the Listing Contracts of the Brokerage, can not provide a Buyer fiduciary representation and must transition to a dual agent or transaction agent. In this form of representation – or lack thereof, ”Full Disclosure” is not possible. For example if the transaction agent knows what the seller’s bottom price is they would be harming the seller to divulge this information to the Buyer who may be willing to pay more. Listing Brokerages comprise 98% of all real estate Brokerages. This raises the question,  If a Real Estate Brokerage is part of a national or international Real Estate corporation, doesn’t that brokerage have obligations to all the Sellers represented by that corporation ?

In North Carolina a 2008 court ruling requires agents and brokerages to disclose the compensations offered on properties shown to home Buyers. This was a result of real estate agents not showings properties with low commissions in favor of higher commissions and/or a bonus on another property.

Real estate agents in Florida are NOT required to make this disclosure. In Florida in 2008, the state dropped the standing requirement that an real estate licensee identify whom he/she was working for or represented at the very first meeting with a new client. This law was originally written to protect buyers from agents showing properties and not disclosing they were really working for the seller. Real estate buyers are supposed to “know” without disclosure that their agent is a transaction agent.

Exclusive Buyer Brokerages provide Full Disclosure to their home Buyers because they work directly for the home Buyer. They have no obligations to the seller so there is never a conflict of interest. The entire buying process is completely open including what commissions and/or bonuses are being paid.

Representing Buyers Exclusively

First Time Home Buyer Tax Credit Changes

The Worker, Homeownership, and Business Assistance Act of 2009 provides a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence and a tax credit of up to $6500 for repeat home buyers who have owned a home for five consecutive years out of the prior eight years. The tax credit is available for eligible purchasers who are in contract by April 30, 2010 and close by June 30, 2010.
 
H.R. 4701, introduced by Representative Eliot Engel (D-NY17), would provide relief to certain married couples who would otherwise be ineligible for the first-time homebuyer credit. The bill provides that married individuals filing a joint return would qualify for the appropriate credit even where one spouse is ineligible. For example, if one spouse is a first-time homebuyer and the other is ineligible, the couple would be treated as first-time homebuyers. However, such a couple could qualify for up to $4,000.00, as opposed to the full $8,000.00 tax credit had both spouses been first time homebuyers. The bill has recently been introduced in the House.

To follow progress of this bill check HERE

Year End Housing Sales, Good News or Bad?

Reuters has reported today that sales of pre-owned homes in the US fell dramatically in December after the deadline for the first home buyer credit expired.  The media moguls tend to see this as bad news, and on one level, it is.  However when viewed from the home buyer’s perspective this could be viewed as good news, very good news. 

As we neared the end of last year, before the home buyer tax credit had been extended, buyers in many regions of the US were seeing something surprising, bidding wars.  Most buyers have heard that we are in a “buyers market” for the last couple of years, so to find fierce competition when submitting a contract was shocking.  Part of the cause was that the first time home buyer credit did push a lot of fence-sitting buyers into action; they did not want to miss out.  Also the pool of homes that are readily available, those that are not short sales, is not large.  Sellers who were not in trouble, who could close quickly were seeing multiple offers – a real turn around. 

Today’s Reuters news may cause anxiety among home sellers and perhaps will give home buyers a slight edge, but only for a short time.  As we approach the expiration of the second, and probably last, home buyer tax credit on April 30^th the buyer pace will accelerate once again, as it did in at the end of 2009. So for a very small window of time buyers will have an advantage in price negotiation when buying a new home. Talk with your Exclusive Buyer Agent to get the most up-to-date information on the home buying market and to get help in creating your best buying strategy for 2010.

Florida.. Looking out for Home Buyers

Looking out for the Buyers

In 1983, a Federal Trade Commission study revealed that over 72% of all home buyers mistakenly believed that they were represented by the agent who was showing them homes. The fact was that most agents showing homes were representing sellers. And by the legal requirements of “agency representation”, a Real Estate agent must negotiate in the best interest of their client. This requires not withholding any information from them (possibly meaning they would reveal such important information as buyer’s motivation, financial qualification etc.) and presenting their property in most favorable way. When consumers became aware of this, they demanded their own representation. Consequently, laws requiring disclosing representation were passed all over the country… Enter the “exclusive buyer agent”, an agent that does not have a conflict of interest since he/she only represents the buyer in a transaction. An Exclusive buyer agent works in Buyer’s best interest getting back to the legal definition of “Agency Representation”.

Florida’s Dual Agency Solution ?  

Florida is now a “Transaction Brokerage” state. Due to the FTC finding and the widespread practice of “Dual Agency”, where the seller’s agent would represent both the Seller and the Buyer… “Conflict of Interest” was a legal problem that more and more brokerages had to deal with.  Todays Transaction Brokers must walk a tightrope between the Buyer and the Seller. The Transaction Broker can’t provide Full Disclosure or Fiduciary Representation to either the Buyer or Seller (some would call this leveling the field). In fact, They can’t represent either one. They are simply  “Facilitators”.  And, this is why they are called Transaction Brokers. Why would an agent choose to do this…. ?  Because, he/she is able to collect both commissions, the same as if he/she were Dual agents..

About Face….  

Some have argued that today, Florida Law protects the Buyer’s interest from a Seller orientated Real Estate industry and Dual agency. However, in 2008 the state of Florida DROPPED the long standing requirement that a Real Estate Agent must identify who he/she was working for or representing at the very first meeting with a new client. This law was originally written to protect buyers from agents not disclosing they were really working for the seller. Since then there has been a rush to “Buyer Brokerages”,  Exclusive Buyer Agent.

The Informed Home Buyer   

Last month the department of Housing and Urban Development (HUD.gov) added the following statement to their “Home Buyers Handbook”,

“It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you.”

Home Buying – Doing it Right

Okay you are ready, you have spent months on the internet and have found “the” home to buy. You contact the listing agent through their internet form, you get  a callback  from the listing agent and you are off and running! The next thing you know you are in the listing agent’s car or their buyer agent’s car, looking at the home you requested and probably a few others that the office has in inventory. Perhaps the agent has asked you about bedrooms, baths, and most definitely will want to know if you have your financing in order, but that will probably be it. Rarely will you meet at an office prior to viewing the listings; the key is to get you in shopping mode! 

Contrast this scenario with a buyer working with an Exclusive Buyer Agent. First of all you have to work to find one. Since Exclusive Buyer Agents use a different  business model than traditional real estate, it will not be easy. They do not have listing sites to grab your attention. You will not find them on Realtor.com, or Zillow.com, or Tulia.com because these sites showcase listing agents and their home listings. If you want to find an Exclusive Buyer Agent you need to search a little deeper. A good place to start is the National Association of Exclusive Buyer Agents or sites that offer lists of Exclusive Buyer agents. 

 The extra work will pay off. Money Magazine noted that “A study by U.S. Sprint found 233 relocating Sprint employees who hired buyer brokers paid an average of 91% of a home’s list price. People who used traditional agents typically pay about 96% of a home’s list price. On a house priced at $150,000, that’s a difference of $7500.” 

Did you Buy or were you Sold?

 

Exclusive Buyer Agents (EBAs) work for buyer brokerages. Buyer brokerages do not work with sellers, and have zero listings to sell. EBAs will take the time to do a buyer interview prior to viewing homes, they will discuss preferred home styles, types of area amenities, commute times, what special features you want in your new home, and discuss financing options; in short they will work for the buyer to make sure they get all the important information and advice before looking at a home. EBAs want to make sure the home buyer buys a home and is not sold a home!

Mortgage Tips for Florida Home Buyers

Today’s average 30yr fixed interest rate is up to 5.29%.

Get your loan early in the year.

The Federal Reserve plans to stop buying Mortgage backed securities by the end of March. Most mortgage experts believe that rates will rise when mortgages go off Fed support as private investors require higher rates to compensate for the risk.

Ask for three or four loan scenarios.

Instead of focusing only on the interest rate, consider more than two combinations of discount points and loan type.

Know your numbers.

The housing boom busted more than three years ago, and still people are tempted to take on too much debt. Let the Federal Housing Administraton be your guide for home buying.

Small down payment? Go FHA.

For people who don’t have the 10 percent, the FHA is an option. To get an FHA-insured mortgage, you need a down payment, or equity, of at least 3.5 percent.

No down payment? Go VA or RHS.

The Department of Veterans Affairs guarantees no-down payment mortgages in the VA Guaranteed Home Loan Program. To meet eligibility requirements, you must provide proof of military service.

The U.S. Department of Agriculture’s Rural Housing Service doesn’t require down payments, either. The eligibility requirements include restrictions on income as well as property location.

Need more help?   Florida Exclusive Buyer Agents are committed to assisting Florida Home Buyers, exclusively.

What ALL Home Buyers Need to Know…..

What ALL Home Buyers Need to Know..…

What HUD.gov say’s about Realtor Representation

Here’s what HUD says,  “It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you.”

Because 98% of all Real Estate Brokerages are Seller orientated, that is they sign a contract with the Seller, they can not provide Buyers Fiduciary Representation.  Fiduciary Representation means Full Disclosure, Complete Confidentiality, seeing ALL properties meeting your requirements and putting the Buyers Best Interest First.

An Exclusive Buyer Agent can be found at brokerages that do NOT contract with Sellers.  These Exclusively Buyers Brokerages never list properties for sale and work directly for the Buyer, usually on a Flat-Fee basis with the Buyer Agent commission going directly to the Buyer at closing.

A directory of Exclusive Buyer Agents in the US can be found at ExclusiveBuyerAgent.USm