Consumer Homes.

Question:

>How much does it cost to hire a buyer’s broker? What are the terms (i.e., >length of agreement, etc.)? What’s a good way to find one?

This has been out here before…. The most common way that Buyer’s Brokers are compensated is to receive a portion of the commission that the Seller has agreed to pay. The "traditional" arrangement is that ALL brokers involved are SELLER’S Brokers, even if there is a separate LISTING Broker and SELLING Broker.  That is, all Brokers are working for the Seller, relay any info to Seller, etc. With a Buyer’s Broker, frankly, they get paid the same way.  They are just SUPPOSED to be working for the Buyer, thus are NOT supposed to disclose the buyer’s confidential info to Seller. Arrangements where someone actually pays a Buyer’s Broker out of pocket to help them look, rather than just at the closing IF they buy, are (at least around here) so rare so as to be non-existant.  So, it doesn’t cost anything up front to have a Buyer’s Broker. IMHO all brokers have incentive to close the sale more than anything. That’s just the way it is. A CMA (Comparative Mkt Analysis) is fine. If you really need to know how much it is worth, you’d need an appraiser.  But the most important thing is how much is it worth to YOU.  Look at a bunch ‘o houses.  How much are they, how much does it cost to get features you like. best of luck, -v.

Response:

We are prospective first-time homebuyers. If we see a house we like, we will have no idea how much to offer. A true buyer’s broker (i.e., one whom WE hire and pay a fee to) will be able to advise on market conditions and do a comparative market analysis. How much does it cost to hire a buyer’s broker? What are the terms (i.e., length of agreement, etc.)? What’s a good way to find one? Finally, if we cannot afford to hire a buyer’s broker, how can we educate ourselves as to how much to offer for a particular property? We’ve been told by mortgage lenders that this is a seller’s market. My girlfriend and I have been reading books on homebuying, but none seem to touch on this subject. Any advice appreciated, KC

Response:

Also schrieb Suzanne and KC: >We are prospective first-time homebuyers. If we see a house we like, we will >have no idea how much to offer.

Well, I would say that you should first find out how much you can *afford.* Do you have a preapproval from a mortgage company – not just a "prequalification" letter, but a true pre-approval? That will set an the amount of money you can borrow. That, plus whatever cash you have as a down payment, will be your upper bound on a house price. Of course, you don’t want to put everything you can purchase into a house… and generally speaking you need 10% of the purchase price as down money, so add a zero to your down amount and THAT’s how much house you can buy. (There are 5% mortgages, but I like to play it safe with the tens.)  20% down is even better, that way you don’t have to pay PMI on your mortgage. >A true buyer’s broker (i.e., one whom WE hire and pay a fee to) will be able >to advise on market conditions and do a comparative market analysis. >How much does it cost to hire a buyer’s broker? What are the terms (i.e., >length of agreement, etc.)? What’s a good way to find one?

Real estate magazines should advertise them.  Or perhaps you can check the yellow pages.  Frankly, any real estate agent can act as your agent, if you write the terms up that are agreeable to you and them. The buyers who are buying our place just engaged a local realtor as a buyers’ broker.  No biggie. >Finally, if we cannot afford to hire a buyer’s broker, how can we educate >ourselves as to how much to offer for a particular property? We’ve been told >by mortgage lenders that this is a seller’s market. My girlfriend and I have >been reading books on homebuying, but none seem to touch on this subject.

I’d start with the asking price. Then I’d crank in factors for what I DON’T like about the place, and pay myself by deducting from the price. For example, the place has wall-to-wall carpets and I’m into hardwood floors. I know the floors underneath are hardwood, because I peeked at them under the carpet, and they’ll need some beaucoup work. It might cost me several grand to get them refinished, so I take off a percentage of this. It might be on a busy road, so I might need some additional landscaping; that’ll "cost" the seller another couple grand. I keep going like that until I get to a LOWER end figure.  It’s probably ridiculously low, and I know the seller won’t even entertain such a figure.  So I just give it a gut check and bump it up till it’s absolutely the lowest I think the seller will go for. DO NOT tell the selling agent ANY of this.  He is LEGALLY REQUIRED to disclose this to the seller. After that, it’s just a matter of dickering. I’ll give you the example of our place, even though it wasn’t such a good example because we REALLY wanted to sell; we were "motivated" in the real estate parlance. (My new house is scheduled to be done 5-12 and I REALLY don’t want to carry two first mortgages.) We were asking $135K for the place. They offered us $125K, and they needed the house by the end of the month. We countered with $130 (see? We split the difference) and guaranteed them we’d be out by 3-30. They split the difference again, and we settled. Sounded like their backs were to the wall financially, and frankly I am tired of the place. So we let it go. — ALL programs are poems, it’s just that not all programmers are poets.     — Jonathan Guthrie in the scary.devil.monastery

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