Where to start buying a specific house?

December 4, 2008 2:55 PM

We found a house we want to buy, how to get the ball rolling?

So there's this house in Sacramento, CA that we found via intensive website skimming. Our finances are in order, we can meet the asking price, we've read the advice and helper books. We want to launch fighters.

Sill we're having trouble finding where to start putting things into motion. Do we need our own real estate agent who then interfaces with the selling agent? Where do we find such people, how do you really "interview" them? Should we ever personally deal with the guy on the sign in the yard? When can we see the inside of it? The books and other help threads don't really seem to be damn clear.

This is our first house, it seems like we might have skipped a step and need to go back, but we're not sure to where. We're first-time buyers and don't really have any experienced friends or relatives around to give us guidance.

So AskMe, please help a couple beyond the help of a For Dummies book.

posted by fleacircus to home & garden (9 comments total)

I'd recommend seeking out an agent. Real estate agents will not charge you anything when you're buying a house, and they are very helpful in navigating the morass of paperwork. They will also handle all of the bidding and counter-bidding legwork.
posted by mcstayinskool at 3:09 PM on December 4, 2008

Any realtor can let you in to see the house. Usually pretty quickly if you already have a relationship.

You can either call the selling agent and deal directly with them or get your own realtor. Keep in mind though that the selling agent, has the seller in mind so they may not give the best advice and can't negotiate for you. We got our realtor through a friend reference. He was great, talked down price after inspection, gave us good advice, generally looked out for OUR best interests.

Are you pre-approved? If not, I would recommend doing so before you make an offer. In this market, I would not accept a buyer that wasn't pre-approved. Your realtor or friends can recco a mortgage broker or you can check out your bank.

Generally the process is this:
1. Find a realtor
2. Get pre-approved
3. Look at houses
4. Make an offer
5. Negotiate
6. Inspection
7. Negotiate
8. Finalize loan details with loan officer
9. Close
posted by pokeedog at 3:09 PM on December 4, 2008 [4 favorites has favorites]

It may be different where you live, but in a lot of places, you can buy a house without a buyers agent. Generally real estate agents get a 6% commission, paid by the seller. If you find the house yourself, then the sellers agent typically keeps the whole fee, if you have an agent of your own, the fee gets split down the middle.

It seems excessive for an (buyers or sellers) agent to collect half the commission on a house you found yourself. There are various options for working around that issue, like RedFin.com. Or you could see if you could negotiate a flat fee with an agent before telling them what property you are interested in. You might also find a real estate attorney who could handle the escrow process. They might be able to help you with the other directly, or point you to someone who can. They can probably also recommend an inspector.
posted by Good Brain at 3:59 PM on December 4, 2008

Pokeedog has it down pretty well.

(I'm a real estate broker in Missouri, laws vary state-to-state, so these are general suggestions).

Your best bet is to get a buyer's agent. A personal recommendation is best, ask people in the area who has helped them in real estate transactions. Depending on the area, agents that work specifically as Buyer's agents can sometimes be on the less experienced end of real estate, but not always.

If the home is listed with a real estate agent currently (as you stated - the seller's agent) then that home seller is paying anywhere from 4-7% commission no matter what you do. There are variables to the equation, but it generally won't depend on how you approach a deal. With that being the case, a buyer's agent will specifically represent you in the transaction, and will negotiate for you to get the best deal on your end. A lot of people question the legitimacy of this because if the house sells for more money, then your buyer's agent also makes more money off the deal. While that is true, a real estate agent is legally bound to represent your interests, and if they are any good at all they would much rather get you a good deal and have you recommend them to 10 other people after the home is sold.

The reason you don't want to negotiate directly with the seller's agent is because in no way can it benefit you. A seller's agent always wants the client to call them directly for two reasons:

1. They keep the entire commission. Instead of splitting 6%, they keep all 6%. Rarely there are listing deals that vary ("If I, the seller's agent, sell the home on my own, I'll only charge you 5%"), but at no point does it benefit you, the buyer.

2. Buyers don't generally know the market, values, inspections, and procedures like real estate agents do. Not to say you couldn't learn these things and negotiate just as well (or better) than an agent, but that's why they are out there. If you offer $250,000 with or without an agent and they accept your offer, that is what you are paying.

Pre-approve through a bank or mortgage broker, rates are good but it is still much tougher than it was 2-3 years ago. Lenders are actually expecting down payments *gasp*, and the ability to pay the mortgage in full each month.

As an answer to Good Brain's suggestion of not working with a buyer's agent: Those are great points for a "For Sale By Owner" home that isn't listed, but none of those points will help you lower the price of the home. No reasonable agent would accept a "flat fee" buyer's agency, because it just means the seller's agent would keep even more of the commission. A real estate attorney is a great resource to have, but again, will not lower that commission that is already agreed upon between the seller and listing agent. Your best bet is to use that half-commission that is already in place to hire your own buyers agent.

Inspect, inspect, inspect. It costs you a bit up front, but is well worth it before you get into a home. Make sure your agent fully explains the steps involved - don't accept "Well, that's the way its always done" as an answer to your questions. Find out the scenarios for your decisions in the home buying process. MefiMail me if you have any questions.
posted by shinynewnick at 8:43 PM on December 4, 2008

I know you said you found the perfect house. That's great. But just so you know, it appears more than likely that you're going to start seeing mortgage rates for first-time home buyers go through the floors as they try and lure buyers back to the tables and get rid of some of the excess supply. I'm talking 30-year, fixed rate loans at 4.5%.

To put this in perspective, they haven't been this low since I don't even know when. Certainly before the 1960s. I know the prime rate got to nearly 4.5% in the early 70s, but a real 30-year FRM was still hovering a couple % points higher.

Anyway, keep it in mind.
posted by Civil_Disobedient at 11:54 PM on December 4, 2008

Sure, find a realtor. Browse through your local real estate ads to see what realtors are the most active in your local market - pick one of those. Make sure that you are pre-approved for financing and that you have money for a down payment - the days of 100% financing are over. Make an offer, have any appliances or other things you want written into the offer. Negotiate. Settle on a price but make this contingent on the inspection. Get the inspection. Negotiate again if there are any MAJOR issues. Work with your loan officer and title company, set a date for closing, prepare to sign your name 1,569 times. Move in!
posted by Ostara at 7:16 AM on December 5, 2008

I see no reason to get a realtor when you've already found the house that you want. My husband and I recently did something similar, and it went like this:

1. Found house.
2. House happened to have an open house that weekend, so we went.
3. Got pre-approved for a mortgage.
4. Called the realtor and asked to see the house again.
5. Saw house again.
6. Called the owners of the house that night and said we were interested, and discussed the price with them. They offered to come down 3% if they didn't have to pay an agent for us, as well.
7. A day later, we called them back and offered $X. They called us later that evening and said okay, what about $Y? We counter-offered on the spot and settled for something that was between $X and $Y. This wasn't a formal agreement, and we still could have lost the house, but it meant that we knew that when we called their realtor, she couldn't try to drive up the price.
8. Called their realtor and said that we'd made a verbal offer to the homeowners, and they had accepted it. Asked for her fax number so that we could fax over our formal offer.
9. We faxed it over, she called them to verify that it was, in fact, what we had agreed on. She verified that they were accepting our offer, and we set a date to sign the purchase agreement.
10. We signed the agreement, which gave us ten or fourteen days to have inspections done.
11. Inspections were done.
12. Mortgage paperwork was finalized.
13. Reams upon reams of paper were signed, finalizing everything and making the house officially ours.

We bought the house in September, so it wasn't like we did all of this in an awesome economic climate or anything. I have to say that talking directly to the owners of the house was the best thing we did. Negotiating directly with them was far less stressful for us than it might have been otherwise, and we became friends, to some extent. They were glad that the house was going to people who loved it as much as they did, and we got the benefit of several hours of them talking about the quirks of the house--this door sticks, you'll want to do this to keep ants away, et cetera.

We figured out escrow and everything on our own, and it wasn't especially difficult. (Please note that I am saying that it wasn't especially difficult, and I can barely balance a checkbook--math and finance are definitely not my strong point.) Your lender should be willing to explain things to you as you go, and the seller's realtor will probably be able to give you tips, too. It's in everyone's best interest to close this sale--their realtor won't get paid if the house doesn't sell, your lender won't get paid if the deal doesn't close--so people are pretty willing, in my experience, to be supportive.
posted by meghanmiller at 9:47 AM on December 5, 2008

Thanks guys all these answers were helpful. It turns out the house is bank-owned, and the selling agent hasn't returned phone calls or email. So we've found a buying agent who seems okay and we'll get a look inside the house this Sunday. Thanks everyone!
posted by fleacircus at 1:12 PM on December 5, 2008

So that house had problems, then we got outbid on the next (even dreamier) dream house, and the backup house was gone by the time we got to it, and now finally we're closing on a house we like.

We did find a decent agent, and it was nice to have pokeedog's timeline in mind to keep the panic and confusion to a minimum.
posted by fleacircus at 11:28 AM on January 13