When it comes to real estate, ignorance is not bliss. The last sentence you ever want to hear yourself say after signing a deal is, “I should have known that.”
That’s why you need to assemble the best experts possible for your real estate team. Your crack team can even help you hit a few home runs.
Even if you fancy yourself a real estate maven, trying to do everything yourself is a fool’s errand. With so many moving parts to juggle in today’s market — fluctuating home values, mortgages, tax and legal issues, title insurance, escrows, pest control, financing, etc. — you’ll negotiate these potential minefields far better, knowing you always have a great line-up of experts to lean on for advice and direction.
Here is a suggested roster of key players when buying a house, to help you build a winning real estate team:
Real Estate Agent
Your agent is your captain. He or she must be knowledgeable, personable, patient, reliable, trustworthy, honest, direct, motivated, a solid negotiator and totally committed to your success.
This leader also will have his or her own network of connections or a mini-team of problem-solvers ready to serve you. “You want somebody you can call at 11 on a Sunday night who can give you the name of a guy who can come out the next day to fix your broken towel rack or door knob. You want someone who has those resources at their fingertips and never sounds put out when you call them,” said Leslie Ingham, a Rancho Cucamonga, Calif., homeowner.
To find such a saint, ask friends, business associates, members of organizations you belong to, and professionals in related fields that you use. Also, drop in at a few open houses in areas where you would like to live. The agents you meet will likely have a good knowledge of the neighborhood and perhaps possess exactly the qualities and style you’re looking for.
When you have three strong candidates, interview each one. Ask each agent to bring along a list of every property the agent listed or sold during the preceding 12 months. This activity list is gold because it will show the kinds of properties, including sales prices, the agent has represented. If, for example, the agent has been selling million-dollar properties, and you’ve only budgeted $300,000 for your home, you might not receive the agent’s full attention. You’re just an anchovy in a sea of bigger fish.
Additionally, ask how long they have been an agent, if they work full-time, if they have a specialty (foreclosures, short-sales, property type, etc.) and professional designations to match. Also inquire about their team. The last thing you want to deal with is one of their assistants you can’t stand.
From their activity sheet, also ask if you can spot check their references, which, when you meet or call them, will trigger a new set of questions. Above all — after asking these references if their agent followed through on their promises, explained the buying process clearly, met deadlines and represented their interests to the best of their ability — ask would they use the agent again. This is the ultimate test of customer satisfaction.
A good agent is worth every penny of his or her commission, but all commissions are negotiable. They usually range between 4 and 7 percent. Perhaps, your first agreement might be for 6 percent, but in subsequent deals, the commission might be 5 percent because you’re a repeat client. Unlike lawyers, real estate agents don’t bill by the hour. Rather, agents are more like icebergs, with much of their activity occurring out of view. It’s said that good agents spend at least nine hours working behind the scenes for for every hour spent in the presence of clients. So you want a busy, competent agent, but also one who has the time to serve you well.
Real Estate Broker
When you’re selecting your agent, you’re also selecting your broker. It’s a package deal. If your deal sails through, you might never meet this person. However, should something go awry, you want to know your broker has your back and your agent’s, too, with a deep bench of business, legal and educational resources that either of you can readily access. The broker should be the acknowledged backstop of your team, with just the right combination of street and book smarts to give you the winning edge.
If you can’t pay, you can’t play, but even if you can’t purchase the home with all cash, you can at least finance it with help from a good lender. If you have solid credit and you’re gainfully employed, lenders will knock down your door. Start your inquiries with the financial institution with whom you already have a relationship, typically your local savings branch, money-center bank, or credit union before expanding your search to include mortgage brokers (independent contractors who offer the loan products of multiple lenders, called wholesalers) and mortgage bankers (who use their own or borrowed capital to originate and service the loan in their own name). Whomever you ultimately select will have the breadth of knowledge and experience to match you with exactly the best loan product for your need.
An old real estate rule of thumb says buy the worst house on the best block, then fix it up to live in or sell. But you could be Einstein and not know all the serious defects hiding in a home. Leaky pipes, faulty wiring, uneven floors, termite-infested siding. Indeed, according to HouseMaster, a major U.S. home inspection company, 40 percent of previously owned homes on the market have at least least one major defect.
Any one of these defects could cost you thousands of dollars in repairs, turning your bargain into a bust. So in your defense, hire a qualified inspector who will examine your potential home from foundation to roof. Members of the American Society of Home Inspectors (ASHI) must have performed 250 property inspections, so the organization is a good source for referrals. Your real agent should be another good source, but remember that many home inspectors rely on agents for business, so there could be a conflict of interest.
If your broker is your backstop, your escrow officer is the umpire, the neutral third party that receives and disburses money or documents for the primary transacting parties. They are the bridge that gulfs the natural distrust between buyer and seller. Strictly speaking, they’re not on anybody’s team, but you need a good one on yours to ensure every detail of every transaction is buttoned up correctly to everyone’s satisfaction. Real estate is a document-driven enterprise!
Financial or Tax Advisor
A home is an asset, like stocks, bonds or precious metals. If you’re buying, you need to understand how a home purchase will impact your overall finances. If you’re selling, you need to know, among other things, if the sale will trigger a taxable event, such as a capital gain. The sooner you can integrate your advisor into your team the better; otherwise you could be paying more than your fair share of taxes.
You need a lawyer who specializes in real estate, not your next-door neighbor who handled your divorce. Their input will not be needed in every transaction, but it’s good to know you have one poised to come off the bench when his or her specialization is needed.
A real estate purchase is a team sport requiring the expertise and coordinated efforts of many different experts, each bringing a different set of skills to the game. To save money, you could, perhaps, trim your roster, but ask yourself, do you really want your house inspector or termite man giving you tax advice.
Remember, the New York Yankees didn’t win 27 World Series championships by cutting corners.