Buyer Brokers: Ten Money-Saving Tips
Joseph Eamon Cummins is an award-winning writer and a specialist in psychology and human learning. A former licensed real estate agent, he spent three years researching and writing the clear, lively text for Not One Dollar More! Learn more
Homebuying: Ten Money-Saving Tips
According to statistics, approximately one in eight families will pick up and move in the next twelve months. Many will do so to buy a home.If you are in this group your goal might be your first home or your fifth. Perhaps baby is on the way and will demand more space. Maybe an extra bedrooms is needed for a growing child. Or, it might be, simply, that you just feel you need a change.
Whatever your motivation, homebuying can not be taken lightly, even with interest rates near historical lows. Nor can the task be left to the real estate agent who, after all, is charged with representing the best interests of the seller and cannot serve two masters at the same time. The fact is, that unless you hire an exclusive buyer broker, you will be the only one looking out for your best interests, a factor that will be critical all through the home buying process.
So, how do you avoid overpaying and still get the home you want for the lowest possible price and on the best terms? Engaging your own exclusive buyer broker is one answer - and potentially a good one. But that's not always feasible because buyer broker services are still not available everywhere. Either way, you have some learning to do before you are ready to dive in.
In the three years I spent researching Not One Dollar More! How to Save $3,000 to $30,000 Buying Your Next Home, I found homebuyers in all parts of the country made common mistakes and fell into similar traps. The most disturbing part of all this is that such mistakes cost buyers thousands of dollars, yet buyers never discover they made them. In one extreme example, I watched a middle-age businessman pay $280,000 for a home when the seller would have accepted $180,000 at the same time on the same day (that's all the property was worth). This is an exception, of course. But, I found too that buyers who considered themselves 'experienced' generally fared no better than first-timers.
I have condensed these mistakes into ten easy-to-remember tips that will help you foresee problems and save money. The tips that follow can be used as handy self-defense measures when you are 'out there' hoping to avoid overpaying and trying hard to negotiate the best deal.
I am going to assume that you already have your eye on a nice neighborhood, have an adequate downpayment, and know what you can afford. You're probably feeling excited and a little nervous, yet you are sure you are ready for the task. But are you?
If you are like the majority of buyers, you're probably not - not yet. You'll be ready when you possess the know-how of the 'smart' buyer, the practical information and insights that can save you thousands of dollars when you have them, and cost you just as much when you don't.
These ten tips are presented here as memory aids. They're short so that you'll recall them easily and use them 'on the street'. (I recommend too that you seek the advice of a good real estate attorney before beginning your search. Unfair as it may seem, only the buyer is unrepresented in typical home purchases.)
TIP ONE: It's a game! Understand that behind all the pleasantries, the agent and the seller are trying to get the highest price out of you! Don't blame the agent; that's her legal duty, something every good agent takes seriously.
TIP TWO: Facts & information! To negotiate a good deal, you'll need details of home sales prices and the local market - before you jump in. You can get this from local papers, call-up services, and any broker's office.
TIP THREE: Fish for financing! Get a mortgage yourself, or with the help of a buyer broker or mortgage broker, but not through the realty agent or his referral. Do this before you start looking, and don't accept the first loan you are offered. While 'thinking it over' push other lenders for a better deal. They are more flexible than they'll tell you.
TIP FOUR: Paint a picture! Before you shop, buy a notebook and write down what you must have and what you would like in a home. This will help enormously later when you are under pressure (as you will be).
TIP FIVE: Zip your lip! Don't reveal personal financial information. Give the agent a conservative price range, not your maximum figure. For example, stating a budget of '$90-95,000' is OK when, perhaps, you can afford $105,000. Also, when possible, conceal any pressure you are under. But most of all, when you fall in love with a home bite your tongue; keep your excitement to yourself. Think of it as a poker game.
TIP SIX: Ooohh & aaahh! Show some interest in each home you are shown, even those of minimum appeal to you. Then, when the right one comes along your true depth of interest won't be blatant (an advantage to you in the negotiation).
TIP SEVEN: Creep & Crawl! Delay. Waver. Pout. Let yourself be 'talked into' making an offer. And make it low - at least 15% below the asking price. Then, if necessary, creep up. Your first offer will dictate what you pay in the end!
TIP EIGHT: No quickies! When you are pushed to act quickly - brake hard! What's behind the urgency? Find out. It could save you big dollars. Ask specific questions and demand specific answers, not opinions or generalizations or kick-back questions.
TIP NINE: Check it out! Hire a professional home inspector to check the home and the systems inside and outside. Ask the seller to fix the problems found. Or, look for a price reduction in lieu. If the problems are serious, consider walking away.
TIP TEN: Negotiate! This is the key to a good deal. It doesn't require you to be aggressive or unpleasant. In fact, hardballing and bickering do not work. The best type of negotiation is quiet, contains no conflict, and can save you considerable money. (Six negotiation tactics are covered in Not One Dollar More!).
© Joseph Eamon Cummins 1999. One time web posting rights given to HSH Inc 11/99
Joseph Eamon Cummins is an award-winning writer and a specialist in psychology and human learning. A former licensed real estate agent, he spent three years researching and writing the clear, lively text for Not One Dollar More!
The author's work is regularly featured in national magazines such as Money, Home, Business Week, Money World, and Kiplinger's, among others. He has appeared on CNBC, NBC, CBS, and other national TV and radio networks, and is on Money Magazine's 'Panel of Experts'.
A member of The Author's Guild in New York City and a former affiliate of American Psychological Assn., he has held faculty positions at a number of universities, and has produced acclaimed television documentaries.
Since it first appeared, Not One Dollar More! has been hailed as a classic, and has won for the author a score of superlative honors and reviews.