CONCERNS IN PREPARATION TO BUY

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Face it, the purchase of real estate is a stressful ordeal, and one that should not be undertaken alone. Having an agent to exclusively represent you can alleviate much of that stress. Among the typical considerations surrounding the purchase of any real estate:

Being informed: Perhaps most important to any potential buyer is knowing your rights as you enter into a position to buy, and the best way to do that is to develop a mutually trusting relationship with your agent. Once that relationship has been established and you are familiar with and fully understand all of the standard agency disclosure forms (*), you will have confidence that any and all questions regarding your buying experience will be answered to the fullest extent possible.

Needs and wants: Knowing what you need versus what you want is crucial in determining what types of real estate to seriously consider.

Finances: You should get your financial picture in order as soon as possible. Have a clear picture of your credit situation so as to know what you can and cannot afford.

Mortgage process: Be aware of the mortgage process (LINK TO BASIC STEPS AT BANK) before entering seriously into the real estate market. Getting pre-qualified by a mortgage lender will work toward strengthening your offer once you find the ideal real estate.

TYPICAL RIGORS OF BUYING A HOME

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Alleviating financial concerns: How much can you afford? Are you getting a fair deal? What are the hidden costs? How much will you be spending in the first year after you buy your home?

Finding the proper location: Things to consider include: how far you are willing to commute; how far you are willing to be from family; area schools; area shopping; and significant amenities such as pool, tennis, golf, security, etc.

Distinguishing between types of housing: Familiarizing yourself with the types of housing available – single family, townhouse or condominium – can only simplify the process.

Inspecting the home: Typically, you should have either two or three separate inspections of the home you are interested in purchasing. The first should be your own basic inspecting, the second a professional inspection by a reputable inspection agency. In the case of using a government loan to purchase the home, the third inspection should come at the time of the appraisal.

Among the things to look out for: foundation cracks, roof condition, inside and outside leaks, dampness, adequate insulation, interior roof structure (attic), general quality and workmanship, apparent energy efficiency, electrical and/or plumbing malfunctions, appliance condition, heating/cooling system, exterior condition, lot drainage, encroachment of trees on the roof or foundation.

 

AGENCY RELATIONSHIPS (*)

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A common misconception of buyers is that a typical real estate agent is there to represent him or her as a buyer. The reality of the situation is that traditional real estate agents are, in fact, agents of the seller, required by law to obtain the highest possible price and the best possible terms for that seller.

The various agency relationships are as follows:

Seller agency: Unless otherwise specified, this is the most likely role of any real estate agent – there to work on behalf of the seller.

Sub-agency: This relationship develops when a buyer enlists the services of a selling broker separate from the listing broker. The selling broker, then, is acting as a sub-agent of the listing broker. Again, both brokers will typically be working as agents of the seller, unless otherwise specified.

Dual agency: A dual agency relationship is based on one agent representing both the buyer and the seller. In such a case, certain privileged information cannot be disclosed to one side without the express permission of the other. The dual agency has been outlawed in some states, as it tends to limit full disclosure.
Buyer agency: The buyer’s agent strictly represents the interests of the buyer. Buyers who are seeking full representation would be well advised to insist on this form of agency.

 

WAYS TO STRETCH DOLLARS

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Representation: The best way to make your money work for you is to, first and foremost, obtain the proper representation and use it to your benefit. An agent you trust is a valuable commodity. He or she is an expert in the field, and is there to help you get the best possible deal.

Interest rate: Between you and your agent, do a thorough check of interest rates before deciding on one.

Creative financing: There are various ways of stretching your dollars that can be worked out with the seller. Leasing with the option to buy, financing through the seller, and certain fees (association dues for the first year, closing costs) paid by the owner are a few of the methods. Anything you can negotiate with the seller before making your purchase is fair game.

 

KINDS OF FINANCING

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Whether it is through a private mortgage company or a local or regional lender, there are generally three types of loans: conventional, Federal Housing Authority (FHA), and Veterans Administration (VA) for active and retired members of the United States armed forces.

Conventional: A conventional loan is one not insured by either the FHA or guaranteed by the Veterans Administration. Conventional loans can have any of the following rate structures: fixed-rate, in which the buyer makes equal monthly payments over the course of the loan; adjustable-rate, in which the interest rate is adjustable through the life of the loan; and buydown, in which a buyer can temporarily or permanently lower the interest rate by paying additional points at the loan closing.

FHA: A Federal Housing Administration loan, designed to help first-time owners and low- to middle-class buyers, typically requires a relatively low down payment, and tends to be somewhat forgiving of bankruptcy. The maximum loan amount, however, is usually capped lower than on a conventional loan. FHA loans are not available for investor loans – buying a property as an investment rather than as a primary dwelling. As is true of the conventional loan, a FHA loan can be structured as a fixed rate, adjustable rate or buydown.

VA: Veterans Administration loans were created to help military veterans purchase homes. Generally, there is no down payment required, the interest rate is typically less than those of conventional loans, and the bankruptcy policy is relatively forgiving. As is the case with the FHA loan, the maximum mortgage amount is usually lower than with a conventional loan, and the purchase must be a primary residence, not an investment property. VA loans are available at a fixed rate only.

 

BASIC STEPS AT THE BANK

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Primary residence: The home at which a buyer intends to spend the majority of his or her time. The use of conventional, FHA and VA loans can be used for the purchase of a primary residence.

Summer residence: Upon loan approval, the title insurance is ordered and the closing scheduled. Hazard insurance should be ordered, if it hasn’t been done already.

Income Property: A real estate purchase made as an investment, not as a primary residence. As is true with a summer residence, FHA and VA loans are not available for income properties.

Again, good representation is in the key to being thorough and thereby avoiding the common pitfalls associated with buying real estate. Buyers should overlook nothing along the way, and a good agent can help to make sure that, indeed, no stone is left unturned.

Among the common pitfalls:

Emotional attachment: Try to stay emotionally detached from any real estate before buying. If you decide too early in the process that you love the tennis court or the swimming pool, you are more likely to overlook the cracked foundation or the faulty roof.

Overspending: Another reason not to become emotionally attached. If you can live without the property in question, you have infinitely more leverage than if your mind is made up before you make your first offer.

Under-researching: Know the area where you intend to buy, including such things as: the service value for your tax dollar; the local schooling alternatives; where your road ends up; the prosperity of the town; the density of traffic on your road; and the general characteristics of your neighborhood.

 

SUMMARY

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With so much to consider regarding the purchase of real estate, the process can quickly become overwhelming for the average buyer. From the search to the financing to the home inspection and everything in between, the best you can do as a buyer is to arm yourself with knowledge … and an agent with whom you are comfortable.

Knowing your rights and your options regarding the process starts with knowing the difference between types of agencies. While the seller agent, sub-agent and dual agent all typically have ties to the selling broker, a buyer has no such concern when dealing with an exclusive buyer agent, one whose legal responsibility is to the buyer and the buyer alone.

The bottom line for any buyer: Do your research, and choose your agent carefully.

(*) The following is a breakdown of agency relationships, as outlined in the standard form of disclosure of agency relationships in real estate brokerage by the New Hampshire Association of Realtors:

General: An agent is one who acts on behalf of another (the principal or client) and owes the client certain fiduciary duties. These duties are to (a) account for client funds; (b) exercise care and competence; (c) maintain the client’s confidentiality; (d) complete the agreed-upon tasks with diligence; (e) disclose all information relevant to the transaction as required by law to the client; (f) treat the client with fairness, honesty, and in good faith; (g) exercise loyalty toward the client; and (h) exercise obedience to the client’s instructions within the context of the agreed-upon services. These duties may be modified only by written agreement of the parties.

Seller agency: Sellers may list their properties for sale with a real estate agent. A seller’s agent has the duties, as defined by law, of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence and accounting and a duty to represent the seller’s interests in the sale of the property; this generally means a duty to market the property to find a buyer willing to pay the highest price on the most advantageous terms as quickly as possible. The seller’s agent also has a duty to disclose to the seller any pertinent information including information received from the buyer or from any other source. The seller’s agent can assist a buyer in locating a property, preparing a contract or obtaining financing. Seller’s agents are required by law to present properties honestly and accurately.

Sub-agency: A real estate broker, acting as agent for the seller or buyer, must represent the client’s best interest in the transaction. Traditionally, both the listing broker and the selling broker (who work with the buyer), were acting as agents for the seller. This is called a sub-agency relationship, in which the selling agent also owes fiduciary duties to the seller. In this case, the buyer is a customer, but not a client. As a customer in the traditional sub-agency relationship, the buyer must be treated with honesty, fairness and in good faith, but is not entitled to the full fiduciary duties of an agency relationship.

Buyer agency: A real estate broker who acts as a buyer’s agent, or buyer’s broker, owes certain fiduciary duties to the buyer. The buyer’s broker will represent the best interests of the buyer as client. This relationship may be further defined in an agreement between the broker and the buyer. In a buyer agency relationship the buyer must generally make a commitment to the agent, which is defined in the buyer agency agreement.

Dual agency: If a buyer’s broker represents a buyer in a transaction involving a property which is listed by that same broker, or by that broker’s company, then a dual agency situation exists. In a dual agency situation, the full range of agency duties cannot be delivered to both parties. These agency duties will be modified by agreement, so that neither client will be given an unfair advantage. Dual agency must be disclosed and agreed to in writing by both clients. A disclosed dual agent may not disclose confidential information regarding the:

ONLINE RESOURCES

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www.peekaboo.net/nhlaw/real.html 
www.ourfamilyplace.com/homebuyer
www.homemortgageguide.com/

 

HISTORY OF COMPANY

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A former New Hampshire high school principal, Bill McLean had been in the appraisal business for nearly a decade when he began investigating an eastwardly moving trend – buyer agencies – in the mid-1990s. These agencies, McLean learned, were in place to act as an advocate for the buyer in a real estate world which, to that point, tended to favor the seller.

Traditional real estate offices, after all, are sellers’ agents, bound by law to get the best possible price for the person selling the home or property. A prospective buyer walking into a real estate office, then, is not necessarily receiving the best possible representation. The sellers’ agent, after all, is looking out for the seller.

So who’s looking out for the buyer? That’s where buyer agencies – specifically the Exclusive Buyer Agency – now enters the picture.

Having appraised thousands of homes in the New Hampshire Lakes Region, McLean knew home and property values as well as anyone. Realizing that such an ability to critically examine those values translated well to being an advocate for buyers in the area, the Exclusive Buyer Agency was born in Gilford, NH in 1994.

Buyer representation

Whether it’s for a home, property or business, the Exclusive Buyer Agency will represent a buyer for the purchase of real estate anywhere in New Hampshire. EBA is online with the Multiple Listing Services (MLS), providing the same complete and detailed list of available properties that any real estate office would provide.

Referrals

If Bill McLean and his Gilford office cannot find the real estate a buyer is looking for, they know who can. Whether it be in New Hampshire or nationwide, exclusive buyer agents work in conjunction with one another to best serve the client in his or her search.

"For sale by owner"

Whereas traditional real estate offices do not have access to listings of properties for sale by owner, the Exclusive Buyer Agency does, allowing the buyer the most comprehensive list of available properties.

Auction representation

Buyers unfamiliar with or intimated by the process of auctions will be happy to know that the Exclusive Buyer Agency will send an agent– either as a companion to the buyer or alone– as representation for the buyer to real estate auctions.

Exclusive Representation

The number one benefit to a buyer is stated in the name, Exclusive Buyer Agency. No longer does a buyer have to worry about the potential conflict of interest that comes with buying from a traditional real estate agent, who is legally obligated to get the best possible deal for the seller. Exclusive buyer agents are just that: “agents” who “exclusively” represent the “buyer.” There is no conflict. There is no bias.

Lower Purchase Price

Research has shown that it works. Publications such as Smart Money, The Wall Street Journal, Money magazine, and Kiplinger’s, along with a number of major relocation companies nationwide have reported that working with an exclusive buyer agency typically results in a lower purchase price.

No Extra Costs

As far as cost to the buyer, it’s the same as working with a typical co-brokering agent, no more and no less expensive. While the Exclusive Buyer Agency will offer the buyer the option of a retainer fee, it’s not necessary. Typically, the agency is paid as a percentage of the gross sale, just as a real estate office would be paid.

Property Inspections

With the McLean background in appraisals, the agency is well-connected with the availability of property inspections in the Lakes Region of New Hampshire. The company’s expertise in this area translates into a variety of property inspection options for the buyers.

The Obvious Choice

Considering the facts – that the Exclusive Buyers Agency offers exclusive representation, typically resulting in a lower purchase price, and at the same cost as a traditional real estate agent – why would any savvy buyer choose any other way? The simple answer: They wouldn’t.

What is the NHAEBA?

The New Hampshire Association of Exclusive Buyer Agents is the umbrella organization of exclusive buyer agencies throughout New Hampshire and has been the parent company for Gilford’s Exclusive Buyer Agency since the beginning.

The benefit, naturally, is that for Lakes Region buyers seeking real estate from Keene to Portsmouth, Salem to Berlin, or anywhere in between, there is an exclusive buyer agent for them.

How do we get started?

Getting started with the Exclusive Buyer Agency is as simple as making a phone call or sending an email. Once prospective buyers have done the research and decided that there is simply no reason not to be represented to an exclusive buyer agent, McLean says, “our best ad is the Yellow Pages.”  Contact Us