Saturday, December 15, 2012

What do First Time Home Buyers Know that Eludes Many Second Time Home Buyers

Most first time home buyers know that they need some help to buy their first home, but many "second time home buyers" who may not have had a great experience with their first Realtor (who may have been a "first-timer" himself) will often figure that they can do a better job on their own--without a Realtor. Well, in Texas, you were probably better off than you realize, even with your first time Realtor than you will be now on your own. That's not to excuse or mitigate any bad experiences you may have had or the feeling that you expected more, but doing a Real Estate transaction in Texas "Un-protected" can be a big risk. Why do I say that? Two reasons.

In Texas, if you decide to negotiate a deal off of the yard sign with the listing agent for that home, the listing agent only has to tell you what they know to be a fact about the house. They can not raise red flags, give you opinions about possible issues, or speculate about things that may be wrong with the house, the location or price of the house. Said in another way--they do not represent you and your best interests for this house--not today; not ever. They have an obligation to the seller. Even if they help you fill out an offer on the contract document, they still don't represent you for this house. They can not represent both the buyer and the seller for the same property at the same time.

The second reason why you are shooting yourself in the foot when you go out on your own without a Realtor to represent you in Texas: One word: Non-disclosure State. Okay--two words. Texas is a Non-disclosure state, so no matter how hard you try, you can not get sold MLS data for houses in Texas--not even from the tax records. The numbers that you are seeing in the county tax record are not sold sales data. This information is a spread sheet appraisal of the houses in the area. But only in a very small percentage of cases where the seller volunteered information to the county is true sold data available and you don't know which records are those records and which ones are guess-work from the county spread sheet appraisers. 

So, you may negotiate a great deal on a house with the listing agent and still pay too much. You may feel like they are your friend and that you are smarter about Real Estate than the listing agent, but I am here to tell you that this is their business--I don't imagine you would feel the same way if this were your business. And in markets like Austin today, you may negotiate your deal and think that you are going to make a great deal, only to lose the deal to someone else who was also interested in the house, all because you did not understand what the market conditions are right now for the community and the area. Someone with a more experienced Realtor than you beat you out of the house. Maybe you are okay with that, but I can tell you that after you have lost 2 or 3 deals for houses that you really liked, you may change your mind.

One last dimension to this story. I hear the second-timers say "I have done this before. I know what I am doing and I will save the Realtor's commission by negotiating my own deal. No you won't. You just think you saved the Realtor's commission, but the total commission was already set in the listing agreement to cover both Realtors. You just made sure the listing agent got all of the commission for the deal and you still did not address the other issues above.

Great houses in Greater Austin are selling in about 1-14 days right now. The good ones are selling faster than you can write an offer in some cases. Many cases. Some are sitting on the market for a very long time--and not selling. And there is a reason for that, too. A good reason. So, do you wait a couple of weeks to see if a house is good enough to sell during the fist week or two? Do you jump in quickly and hope that you can guess the value correctly and hope that you don't pay too much or negotiate too hard and lose it? Or do you hire an experienced Realtor to help you sort through the complexity of a home purchase, contract, strategic negotiation, mortgage loan, title, inspect and all the details that follow from making this important decision?

Here are some great articles to read about the Austin market right now.

Tim's Top 10 Rules of Austin Real Estate for 2012

How to Find the Right home

Mid Nov Market Report

Five Principles of Buying Real Estate in Austin

Can you get a better deal by going directly to the seller?


3 comments:

  1. Buying your first home will be of great experience time..and is a very exciting process. As a first time home buyer you can take expert advice.
    Newbuy

    ReplyDelete
  2. I think you define good content your blog about first time home buyers thank you.

    ReplyDelete

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