Loved the house, hate the agent, do I have to use him?

[zeropointzero]

Agency issues aside, Lulu ….. are you concerned about buying a house in this market environment? Care to share some other details on the potential purchase? (feel free to keep some details out, so no one else gets your dream home).

Just curious. Good luck in any event.

[lulu]

Actually, we’re very concerned about buying in this market. We’re newly married and this would be a first home for both of us so we realize we may be a little bit eager. We also have a dilemma in the mix of having to move to the area we’re looking in quite soon for school district purposes. So we’ve been weighing the pros and cons of buying or renting. Most people renting their homes understandably want a 1 year commitment though. We don’t like the idea of putting a home purchase on hold for that long though since the market is quite unpredictable right now. Greenspan says the worst is over, other economists say its just begining!! We’re planning on spending 600k-620k, we’re only submitting offers on homes that are below their comps for quick for a quick sell. Any opinions out ther on how bad buying now in this price range may affect us long term? If we’re buying 25k-35k below comps. how in the red do you think we’ll really end up being by this time next year??

[sdcellar]

I think the real thing to consider is what it would cost you to rent a comparable home. For the price range you’ve said you’re looking at, I’m guessing you could rent the same thing for around $2000 a month ($2500 tops).

It is tough to predict what’s going to happen to home prices, but it’s pretty unlikely that they’re going to start going up again any time soon, so that means they’ll be flat or declining. That latter makes renting the easy decision, but even if prices stay flat, you probably come out ahead “throwing away money” on rent rather than doing the same thing on interest, property taxes, insurance and upkeep. The only part that’s an investment is the principal you pay and that can easily be devoured if the decline continues.

[(former)FormerSanDiegan]

Lulu – “Most people renting their homes understandably want a 1 year commitment though. ”

Suppose you leave your rental 6 months early. That’ll cost you about $12,000 MAX. And that’s only if the landlord does not fill the unit with another tenant. If you break a lease you are liable only until the landlord fills the unit with a new tenant. As a landlord, I think that most will gladly get you in their rental now (slow time of year) adn allow you to break the lease in the early summer (peak season for filling rentals,) no problem. The wost case penalty for breaking the lease is only about 2% of the price range you are looking at.

Another option is to offer a hundred bucks or so extra per month for a month-to-month lease. Even if the rentals are advertised with minimum 1-year leases, you can offer 6-months and more money or month-to-month. Some landlords will go for it. Everything is negotiable. Also, FB’s who have pulled their home off the market and panning to re-list in the spring will gladly give you a month-to-month lease.

[poorgradstudent]

Even if (and it’s a pretty big if) the worst is over nationally in terms of housing, SoCal still has a ways to fall, since the bubble was bigger here than nationally due to more speculation.

That said, if you love the house and the price is right, it’s worth considering. But now is not the time to stretch your finances just to buy.

[PerryChase]

Lulu, when you say that you hate to put-off buying a house for that long (1 year), you’re acting on emotions. One year is NOT long.

Since you’re newly married, you probably have some notions of a perfect marriage that includes homeownership.

Try to think cold-hard cash and make your decision based on how much you’d save (for your family’s future) if you rented. If you’re prepared to pay $3500 in interest, property taxes and HOA each month, you can rent a much nicer house in a nicer neighborhood for the same amount.

[powayseller]

I was waiting for one of our realtors to answer this question, but they didn’t, so I will do so.

Unless you signed a contract for an agent to represent you as your buyer’s agent, you can switch agents at any time. This is something that realtors probably don’t want you to know about. Imagine the disappointment of a realtor who showed you 40 homes, just to lose your sale to another agent you picked up along the way.

Of course, if one agent has worked with you, it’s only ethical that you give him the business of the sale, in my opinion.

Beware also of low fee agents who cut costs by not taking you to showings. They try to tell you that you don’t need to be shown any homes. “Just look at them over the internet” is convenient for the agent, but doesn’t give you any idea about what the homes truly look like. Make sure your agent takes the time to show you lots and lots of homes, maybe 50-100. Only then will you know a good deal when you spot it.

[sdrealtor]

Nice advice but not necessarily right. There is something known as procurring cause. It’s pretty complex and a challenge to prove or get compensated for but nonetheless it exists.

[SD Realtor]

Hi Lulu –

I am an agent as is sdrealtor. He is right about procurring cause however it does not sound as if they would come after you in this particular case. (that is just my opinion) Similar to a listing agreement (signed between a seller and an agent) when a seller is listing a home to sell, there is a buyer broker representation agreement that does obligate a buyer to be represented by a broker. If you have not signed such a document, then it is unlikely that representation would be challenged, IMO.

On the personal side I am renting right now. The 1 year lease goes by VERY quickly. Consider that the risk of the market appreciating 1 year from now verses depreciating 1 year from now is pretty low. (At least that is my hope) Also if you have downpayment money stick it in a cd for a year and grab 5% on it. So if I were you I would not fret much about waiting.

If you do have an agent who has done work for you then “the ethical” thing to do is to work with that agent. However if you have clicked on a schedule an appt or gone to open houses and talked to agents who were holding the open house, you are definitely not obligated, especially if you did not sign any agreement for representation. As a courtesy though you may want to tell them that you are already working with someone, (and that you very much appreciate thier time to show) if you do not intend to work with them.

I have spent many weekends with clients only to get scorched by mortgage brokers or other agents. It is part of the business. While we are considered fairly useless by most on this forum, many of us are helpful and can very much help people save time, money and find/sell thier home.

SD Realtor

[powayseller]

Thanks for the procuring cause comment, although I wish someone would have explained what it is. A quick review yields this:

“The Procuring Cause Guidelines C.A.R. and SDAR adopted in the late fall of 2001 address how to determine which of the brokers involved in a transaction is responsible for its successful completion, and therefore entitled to the commission.”

Procuring cause is an uninterrupted sequence of events that results in a sale. If a realtor feels a buyer unfairly deserted him by purchasing a house via a different agent, the realtor has the burden of proof that he is entitled to the commission.

A list of Factors was developed to help decide these disputes.

The following are in favor of the 1st realtor, the one who was deserted:
* he showed the property which was purchased
* the new realtor never showed that property
* the realtor spent a lot of time generating more buyer interest in that property, discussing financing, etc.

Favoring the new realtor are these factors:
* the 1st realtor is the listing agent, and the buyer wants separate representation (in my opinion, NEVER ever let the listing agent represent you – it’s a clear conflict of interest, regardless of what the realtors tell you; they’d rather get the double commission than look out for the buyer’s best interests!)
* buyer is dissatisfied with the 1st realtor for lack of professional conduct

Read more

[sdrealtor]

Good research! It is a very gray area and tough to prove as I mentioned early. Nonetheless it does exist.

[kiki]

What about Zip realty terms and conditions:

“Client” is a User that has completed the registration process and has agreed to these Terms of Use.

Section 3. Client Agreements and Representations. ZipRealty Clients agree to the following:

3.4 Client agrees that he or she will not contact the owner/seller of any property from information gained through the website. The Client will not attempt to enter the property or speak with an owner/seller without an appointment set by ZipRealty.

It is assuming that you HAVE to use them to set up an appointment. IF you register and agree will that bind you? That is why i have not registered.

I guess you can still set an appointment and still do not use them. Although that is really wasting their time. Technically, loggin in to their site and not planning to use them to purchase is also waste of their resources. They are not like Zillow that clearly is a free service.

What do you think?

[SD Realtor]

Just my opinion Kiki but I do not believe that Zip would chase it down in court.

Like I said, I think many a Realtor has stories about buyers who have scorched them. It is just part of the business. Many seasoned agents will not even waste time showing homes unless they have a buyers representation agreement signed to remedy this.

SD Realtor

[SD Realtor]

Just my opinion Kiki but I do not believe that Zip would chase it down in court.

Like I said, I think many a Realtor has stories about buyers who have scorched them. It is just part of the business. Many seasoned agents will not even waste time showing homes unless they have a buyers representation agreement signed to remedy this.

SD Realtor

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