Buying a house

March 13, 2005 7:21 PM

We're looking to buy our first house. New or old? Dual agency?

My father has suggested that we buy a house that's 5-10 years old instead of buying a brand new house. His argument - if we buy a house that's brand new and look to sell it within 10 years, we won't see much appreciation on it as other houses in the area will be 'less old' and in fact, newer houses being built in the subdivision will be competitive and as such, we won't be able to make as much as if we bought a similarily priced older house.

Secondly -although there are laws in Canada surrounding dual-agency, he suggests that we let the listing agent for each house we visit be our agent for that particular house - the idea being that when both seller/buyer use a single agent the buyer would get a better deal than not.

posted by burhan to shopping (9 comments total)

I live in the US, outside of DC. So this might not apply at all.

Here, you can have a cardboard box with a door, and it will still sell for nearly as much as the houses nearby. The value of the house is based mainly on recent sale prices and tax appraisals of other houses. This is why many people will buy the worst house in a good neighborhood. Do some basic work, flip it in a few months.

Your father's advice would make sense in this market, but who knows what will happen in ten years. The biggest question - are you looking to be there in ten years, or do you think of the house as more of an investment? If A - buy the house you like. If B - find something a little more run down that you can stand living in, and deal with the repairs/upgrades as an investment.

The second question - that would usually not be a good idea in the US, but it might be completely different where you are.
posted by bh at 7:35 PM on March 13, 2005

The listing agent is legally obligated to do what's best for the seller.

A buyer's agent is legally obligated to do what's best for the buyer.

A dual agent is... confused.

I don't understand how having a dual agent would get you a better deal. I don't think that the total commission would be any less, and even if it is why would the seller be willing to take less money from you than they would otherwise get?
posted by winston at 8:36 PM on March 13, 2005

In Canada (at least in Ontario, and Alberta appears to be the same) if you let the listing agent act for you as a buyer, they have a contractual obligation to the seller to get the best price possible, and very little obligation to you (i.e. anything less than outright fraud is OK). For instance, if you tell the listing agent what you're willing to pay, they legally need to tell the seller.

As far as I know, Dual Agency (working for both at the same time) is a function of the real estate brokerage, not the agent. It arises when both the buyers agent and the sellers agent work for the same brokerage. I think a single agent can only act for one or the other. I think what your Dad is suggesting is that you can convince the listing agent to part with some of the buyers agent commission, but I have never heard of this being successful, especially in a hot market.

Based on everything I've read, you should get a buyers agent, and ensure a buyer agency agreement is executed before you make an offer. This means that your agent is contractually obligated to you, not the seller. This is a good thing, especially if you have a good agent.

A buyers agent will also find out about new listings before they appear on the Internet, which is very useful in a hot market.

On the first point, I would tend to agree with your father, but it will probably depend more on the location than on whether it is new or old.

Here in Ottawa, I've heard several horror stories about buying through the listing agent, and few happy ones. I'm not affiliated with the Real Estate Industry other than as a satisfied customer, so don't take my word as writ though.
posted by RecalcitrantYouth at 8:41 PM on March 13, 2005

look at new and old places at the same price and see how they compare.

in santiago, the difference was obvious. old places had nearly double the area for the same price, with larger rooms, higher ceilings, and real wood floors. if that's the case for you, you will soon see. if not, then it doesn't matter.
posted by andrew cooke at 5:12 AM on March 14, 2005

One reason you may want to look at a slightly older house, rather than brand new is the wear in factor. The first year after a house is built, the builder is probably in all the time fixing small things and bringing it up to spec. Even over the next year or two, little things will get noticed and fixed, and major problems like foundation settling issues or seeping basements will start to become apparent. Looking at a 5 year old house, you'll be able to see much better whether it's a good house or a moneypit of incessant repairs.
posted by jacquilynne at 8:17 AM on March 14, 2005

As someone who bought their first house in Canada a month ago, I can definitely say that the extra $1 a payment you might be paying on your mortgage is well worth it to get your very own, on your side, realtor who can show you the ropes.

They're all a little bit shady, but if you find a good one, they're worth every penny. As for new vs old, I just bought a 90 year old house, mostly due to the neighbourhood, so I'm not one to ask...
posted by sauril at 9:32 AM on March 14, 2005

What jacquilynne said. And no matter the age of the house, get a licensed inspector to, well, inspect it.
posted by deborah at 10:13 AM on March 14, 2005

New houses and old houses both have advantages, older houses often need more maintenance, but are are often much more solidly built. Also, what jacquilynne said.

Always, always, always, have your own real estate broker. Your best bet is to have a broker you like, or that someone you know recommends, and take potential properties to them.

For instance, look on real estate sites, magazines, newspapers and what have you. Find the houses you'd like to visit. Call *your* realtor and have them set up appointments/times/etc. Never, ever trust the listing agent to be working for you. They don't. They work for the seller. It's the law.
posted by dejah420 at 8:19 PM on March 14, 2005

Extremely good insight - thank you everyone!
posted by burhan at 11:23 AM on March 15, 2005