San Diego Housing Bubble News and Analysis

Sometimes it's a good idea and sometimes it isnt. Its up to you to decide.

If you are looking to avoid the uncertainty of offering and bidding, then this might be a good idea.
I am not at all clear that it is a good way to avoid overpaying.

That said, I would recommend that you ask for an agent to review the contracts (possibly without telling the listing agent) before signing.

I doubt you will get someone to do it for free but it is cheaper and has greater practical advantage than an attorney.

We started out thinking we wanted to just use the listing agents, but with the sheer number of properties we would be looking at, we quickly discovered how much additional time is involved when you don't have a buyer's agent. We picked one we liked at a random open house, and even though he was new and made a few mistakes, he was a HUGE help and earned his commission.

Personally, I see no advantage to not using a buyer's agent. The seller is paying his/her commission. Unless you have at least a little experience in purchasing/owning real estate I would recommend using a broker.

Don't rely on a broker to negotiate a better price. That depends on you. But, what they can be good at it identifying the specific concessions you may have to make to get a deal, as well as keeping tabs on all aspects of the deal to ensure that you close.

Sure, you can theoretically save 3% on a purchase, but in my opinion one cannot determine the appropriate price for a property to within 3% (nmaybe even 5% in most cases). So, it's effectively in the noise.

I can see where someone repeatedly showing up a day lay and a dollar short on these distressed properties might want to increase their odds by going to the listing agent.In the hotter markets or segments, I would drop by lots of offices and tell them you will let them serve you if they have the right property. Perhaps, hire a consultant you can trust to give you leads and advice but not necessarily act as a procurring agent.

Get prequalified, so you can prove you are ready to buy.

Yep. I think going to the listing agent is going to work better if you have the stuff to make them want to do a deal with you. Best for "highly qualified buyers".

If you know the area, you know what you want and you can afford it (20% down?) I'd say go to the listing agent directly.

The listing agent will double as your agent as well, which means he/she will assist you with the mechanics - inspection, the escrow, the title insurance, etc. You will also have access to irresponsible anonymous advice givers of the Internet, such as myself.

Based on my limited experience working with the listing agent directly will give you an advantage, as long as you project an image of a buyer who does not require a lot of attention (meaning you know what you are talking about when you call the agent - you have the downpayment ready, you know what earnest money is, you are familiar with the standard CAR contract, you are familiar with the timeline, you know what contingencies are).

Selling agents can be more of an obstacle and annoyance.

In reality any part of the real estate transaction can be done without an agent.

The only real value add of an agent is as an experienced consultant and negotiator.

If you have bought and sold several properties, have MLS access, know all the current vectors in the subject market and understand the contract mechanics (like when your deposit becomes in jeopardy or what repairs you can ask for), then honestly you might be better off without an agent.

Just like you don't need to go to a nice restaurant for a gourmet meal or to a mechanic to repair your car, you really don't need to reproduce a set of skills and experience that you already have or can go just as well without.

Some things to consider:

I see a buyers' agent doing three things for you:
1) Preview houses
2) Negotiate, offer pricing advice and write offers.
3) Move the process along.

1)
How familiar are you with the market and area in which you are buying ? If you just moved here, it'll be tough without an agent.

If you have already found a house, or if you really know the area well, then you might be ok without an agent.

Also - how much time do you have ? If you don't mind taking the time to check on places, you may not need an agent but it can get old quickly.

2)
How business savvy are you? There can be tricks and traps in the negotiating process. You have to know when you are being lied to.

If you are patient and don't mind making some negotiating mistakes in which you lose houses you want, then you can learn as you go.

Can you pull your own comps ? Knowing the actual sale price of comparable houses is important.

3)
Make sure the escrow agent is solid. A good one can really keep the process moving and makes a buyers' agent less necessary.

Tell the selling agent you expect him/her to help move the process along. Maybe she could provide forms for you to write up offers ?

Considering a short sale? That could be a major pain without a realtor.

Overall, one less middleman makes things just a little easier, if you don't mind doing the work and putting your fate in your own hands.

Getting pre-qualified is a must.

sdduude:

Well put.

Guys never forget this one

http://www.businessinsider.com/the-infam...

Suzanne researched this.

That is a good one to remember.
I think that it kind of illustrates the mentality of a lot of generally rational people during the boom (and a long time before).

The assumption was that home prices increase at a rate faster than the cpi and would for the foreseeable future.
There was also the fear that if one did not join jump on the train now, they might be priced out forever.
When challenged on the viability of future effective demand, many folks considered intelligent would point to Japan's 50 and 100 year mortgages as an example of potential future lending innovation.
This was not necessarily a dumb position to take either.
Intelligent journalists (eg: Tanta) would point to prewar mortgages (when the max loan to value was 40-50%)as an example of how innovation could be progressive and beneficial.

Of course this forgot the obvious:
-that these examples were cherry picked to illustrate deviant results
-that outside of real estate circles, Japan's financial innovations were seen as a poor example of risk management (perhaps "disastrous" would be a better word)
-that inflationary pressure can't be contained to a single consumer good (nor deflation)
-that buying something for twice the cost of renting it just because you think it will shoot up in value is, by definition, purely speculative
-that listening to good news from people who have a financial interest in puffing the news is a bad idea
-that the US (prior to 1920) has a very well documented history of credit crunch following a period of loose lending

My point is that hindsight is 20/20 and it is important to remember what some of us had to learn the hard way.

i think buyers agents are there to work on your emotions.

Sure if you don't know a neighborhood they help but
if you do know it, the buyers agent only gets paid if you buy so they seek to work your emotions

4S Ranch Buyer, See the thread "offer in. now we play the game...(REO)" to see if it makes sense to you. Bottom line: Buyers agent bad for REOs, may not be bad for non-REOs.

For this statement to be true, it means:
-that the listing agent is small time and therefore willing to risk the bank relationship in service of a few points on this escrow
-that you can get to the listing agent directly.

In smaller towns (eg: temecula, menifee, el centro) these are more likely to be true. In larger cities, it is less likely. In SD, probably the largest reo crew is Weichert Elite (headed by Donna SanFilippo and Erik Weichelt (not the same name as the company)). They used to be San Diego REO's until Weichert national bought them out. Last time I talked with them, they close more than 50% of their deals with other agents involved. Smaller agents (with only 5-10 listings at a time) are more likely to need that extra few thousand.

It's not a good idea. Unfortunately, some people think that they'll save 3% without an agent when purchasing a new construction home. Most national builders know how many homes will be sold each year by agents and how many will be sold to buyers without agents. The builder builds the commission into his marketing budget. Say a builder knows that 83% of his sales are Realtor generated. He budgets for this. When you walk in without an agent, you're one of the 17% that he's budgeted for and you give him an opportunity to move lesser desired properties. Chances are, you'll pay more than you would have because you won't have the benefit of your agent's advice and experience, and also comps if available.

Breckenridge Realtor
http://www.luckymountainhome.com/

Urban sometimes you are damned if you do and damned if you don't. You can pull out stats and many examples about how going directly through the listing agent does not give you the golden ticket such that your offer will be accepted. For the most part your entries will be thought of as solicitations. Kristian Peter does alot of REOs as well, (currently they use TAZA for thier entry system) and there are guys like Earl Gervias at American Eagle as well. Your point, and sdr has said it alot as well is that if you run the numbers it would be surprising how many of these guys actually double end deals. Does it happen? Yes. As much as people think? Probably not. It is understandably frustrating for buyers though. I would also strongly agree it is the small timer onesy/twosy guys that are more susceptible to be a sheister.

Also on the other thread BSR referred to there was a comment about cash being king which is true BUT within limits. It is king for a few percentage points, however if there are lots of contingencies or a longer escrow it is not.

Here is an idea, for anyone out there, if you see an REO and you wanna know how many double ends that particular agent has done or that brokerage list the REO and one of us will post the numbers.

What would be interesting is the double ended deals numbers for very few days on market vs. a month or more. I don't think stuff with market time is frustrating buyers much. I don't really know how it would turn out. The topic seems to have started to preclude short sales and I think they are just as important as a separate category. Also what percentaged of in house deal were highly qualified buyers vs. zero down,lots of contingencies? I think we are recommending this with a caveat that the buyer have their ducks in a row.

It seems to me the idea is that you want to get your foot in the door on properties that are going fast, fully aware you are not going to steal or get burned with any kind of agent.I don't look at it as finding a crooked listing agent,just trying to bump your place in line up a bit.If it were me I'd take the listing agent to lunch and pay for it too.Keep him busy. You can always work with another agent on properties with market time.

I don't think that's true. Houses aren't like used cars - people can't be talked into buying a house they don't want. Any reasonably intelligent person can see manipulation a mile away. The buyer's agent is there to let them into houses, do the paperwork for offers, and give advice when asked. As a buyer, I turned my back on any realtor who tried to do more, or give me any kind of pitch, but luckily there weren't many of them.

If you don't use a Realtor you won't have the benefit of the sound business reasoning skills demonstrated by the argument above.

As a first time buyer myself, I would recommend going with an agent. Ofcourse you need not pay 3%.. you can negotiate a rebate from the commission depending on the level of support you need and the home price you are looking at. In our case the agent was more or less an experienced seceratary who helped us get to see the homes when we want, write offers the way we want and prepare paperwork. Would we do it for the next home.. maybe not. But what we found useful was though we knew exactly what we want, it was good to hear what prospective buyers would prefer or not prefer through the agents experience (resale value/ home's desirability).

Um Let's see how many errors I can find here

1) Houses aren't like used cars. Yeah, My 12 year old Camry is paid for. If i had a mortgage,
I'd still be paying.

1b) Houses are sold based upon payment. Very few
people figure out $/SF, Estimated depreciation, Maintenance budget, Hell most people don't know
what PITI means.

1c) Houses are sold emotionally. How many people
look at the "Curb Appeal", me I want an ugly duck.
I'll fix it up. My house in Oklahoma was Fugly
when we bought it, 5 years later, it was gorgeous.

2) People can't be talked into buying a house
they don't want? Woah, dude, there are a
million salespeople who'se livelihood is
based upon your denial.

3) Any reasonably intelligent person can see
manipulation? Wow. You realize people voted
for George Bush. The average person is an idiot.
50% of all Americans are below average.

Yes, let's.

That appears to be an agreement.
I am not sure how the comparison constitutes a mistake.
Glad to see you agree with Ren.

Houses are sold upon a variety of factors.
As your statement confusedly illustrates (they know payment but not PITI?!?!), many people are pretty seriously uninformed. I would venture to say that this is less true now than it was 5 years ago. However, that is anecdotal and I have been wrong before when estimating the skill of civilians.

You are not particularly unique either in your interests or in your bragging. Lots of people look for beaters and declare themselves immune to curb appeal. Looking for a particular cocktail of price, upkeep, and upgrades is pretty normal. It may or may not be rational.
Recently, a friend's sister asked me to find her a house in a specific neighborhood. The one we got for $405,000 was turnkey and lovely. However, the one a block a way was about $120k less and was a model match. The difference was that the cheaper one needed about $35k of work and had not been updated since it was built 55 years ago. For her that was uninteresting. She and her husband have 3 kids and precisely zero interest in fixing or improving anything. With 3 kids, they wanted to move right away.
The point here is that these decisions are based on more than just affective emotion. Often, they are based on rational (or irrational) decision making that reflects different priorities.
While I try to never underestimate the stupidity of humanity, I think that the drawn out nature of a real estate purchase (combined with the major market adjustments of the last couple of years) tends to limit truly snap decision making. I have had clients cancel purchases when they sat down and realized that the property they had just gotten under contract would not work for them. That's why it pays to have a 30 or 45 day escrow and to go back and look a few times. Most people who end up in a bad situation are pissed off that they paid too much or got a bad loan rather than the property itself.

On this issue you are totally right.

Of course buyers can be idiots - I never said otherwise. The topic is buyer's agents. In my opinion, a buyer's agent trying to "sell" a house to someone would usually find that it backfires. The buyers may or may not be idiots, but they generally know what they want and don't want, and you'd have to be pretty stupid to have someone manipulate you into "wanting" a house.

Or maybe I just have more faith in humanity than I should.

As per my experience never go with listing agent unless you are a realtor.