Buyer’s agent question

[edna_mode]

Hi all, I was wondering what the proper etiquette is about working with a buyer’s agent. Does one sign a contract? Is one expected to work exclusively with that one agent? For a fixed time, or indefinitely? Would it be better to get preapproved before looking around? Does one get more satisfying results with a fixed affordability in mind first, or figuring out what kind of housing stock is available first?

I do have some idea of what I think I’m willing to borrow, but judging from all the howls of laughter from the buyers who keep looking about how long this process takes, should I just add $50K to my first guesstimate of how much I’m willing to pay and hope that accelerates my search?

And finally, in this market, what are the best 10 (or so) questions to interview an agent? I’d be interested in short sales, foreclosures as well as traditional sales.

[sdduuuude]

All good questions, methinks. Likely no one person will answer them all. I’ll hit a couple of them.

Definitely get pre-approved.

One piece of advice I would give is – know up-front how much you want them to do for you. Do you want to surf redfin and only have them let you into the property ? Do you want them to preview everything an only call you when they see something you like ? Depends on how busy you are, how well you know the areas, etc.

Some things you would want to know about your agent:
1) Do people who have used them in the past recommend them? Only interview agents that are recommended to you. Don’t pick them out of a phone book or bench ad.

2)How many transactions do they have under their belt ? How many as a buyer? How many as a seller?

3) Let them know you are interviewing several agents and ask if they are they willing to reduce the commission, especially if they are only there to let you into the house.

4) Can you use your own mortgage agent, escrow agent, inspector, etc if you wanted? Agents always want you to work with someone they recommend. Sometimes it is for good reasons, but sometimes there are incentives to the agent so you don’t necessarily get the right one for you. Even if you don’t intend to use your own, ask if you can. If not, ask who they recommend and check up on them.

Suggest you consider the “spectrum” of real estate agents as such: On one end are those who just want to get you into a house. They are great at keeping the process smooth, not ruffling feathers, avoiding pitfalls, closing the deal.

Then, there are the fighters. They work to get you the best situation. They worry about negotiating position as well as the house itself. Occasionally they risk not getting a deal done in order to push the seller a little harder. Consider where you want to be in that range.

Typically, first-time buyers really like the first type of agent because they make everything easy but it isn’t always best.

[edna_mode]

Thanks for the answer, sduuuude. Are you recommending I get pre-approved before engaging a realtor? I thought that such things had an expiration date, and if I am going to be looking for a long time, wouldn’t that be nonproductive? Or is the intention to figure out how much ballpark a lender will commit to lending me (because then when I found something, I’d have to pre-approve again)?

[SD Realtor]

Making sure your financial plans are in order is essential to do prior to searching for a home. Understanding what sort of requirements you will need for your lender is important. This includes w2 requirements, (being able to show proof of w2 income for 2 years) or (being able to show self employment income for 2 years) if you have a downpayment making sure it is seasoned, etc… Getting preapproved before you start your search will help define your parameters so you do not waste you time, or your realtors time searching for a home only to find there are mitigating circumstances that will prevent you from buying it. Understanding the cost of your loan (how much closing costs will be approximately) is also important. Preapproval letters indeed do expire after a short time. Some listing agents are okay with a preapp letter that is less then 90 days old, some want one that is less then 30 days old. It all varies. Answering your question, yes getting preapproved for a given amount now will help you realize how much lenders are willing to commit to you. Understand this value will vary as interest rates change but unless those changes are substantial, that amount will not change a whole lot.

Also understanding exactly what your house payment will be including insurance, property taxes and any other homeowner expense is important before you do your search as well.

Once you have all of the financial stuff in order and estimated you can then start to look for a home with the confidence that there will be no surprises down the road.

[edna_mode]

What is the current standard time limit for seasoning of funds, and what is the size of additional deposits that would trigger a request to justify the size?

I intend to report a minimum of accounts for pre-approval…I need to know at which point I should stop depositing greater than $X before Y date…

[SD Realtor]

Seasoning is usually 60 days. Why would you want to put a limit of what you report. Again, talk to a qualified mortgage broker rather then an internet posting site. The more that you can also prove to a lender that you have as reserves the better off it is as well.

Lenders don’t report your application data to the irs.

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