Simply, to deal with the seller’s agent! But it goes beyond that of course. A good buyer’s agent with experience and market knowledge is indispensable. Think of them like a Batman with a utility belt full of useful tools. I realize you have the internet-Zillow and Realtor.com on your side, but do you really think that’s enough to get you through? Ask yourself this, if you were having surgery, could you operate on yourself with the information you found on WebMD? (I know, I know, but you get my drift)
Here are some of the benefits of a good buyer’s agent:
- Familiarity with a town or various towns.
- Familiarity with a specific home or specific homes. Agents do speak to each other throughout the course of the day. You would be surprised what comes up about a home. For example, previous inspections results, reasons why the owners are selling, how many deals have fallen through and why.
- Market knowledge, not a Zestimate! How many homes are currently for sale? How many have sold in the 30 days? How many are under contract or pending? What is the average days on the market? How many times has the home been listed? Was the home previously under contract? All great questions that a good buyer’s agent should be able to answer.
- A good buyer’s agent is going to make their clients aware of the various financing options available to them: FHA programs, buying points to reduce interest rates, mortgage interest buy down programs, getting the seller to pay closing costs or part of it or any other seller contributions, avoiding PMI, $8,000 First Time Buyer Tax Credit, Mortgage Credit Certificate .
- Referrals: A good buyer’s agent is going to have great associations with inspection companies, real estate attorneys, mortgage brokers, title companies etc.
- Experienced negotiator. Consider how many homes you have negotiated. How do you begin the negotiations? What’s an offending offending versus realistic offer? What else could be negotiated? How else could this deal be structured?
- If the listing agent is working for the seller, who’s going to protect your best interests?
Consider a transaction I was involved in this year:
The young lady was looking to stay within the Mamaroneck school system. She had a limited budget (who doesn’t?) and time was also limited. She needed to move out of current living arrangements very quickly. We eventually found a house that I was able to negotiate for 18% ($100,000) below asking price. The house was in a great location, the size was more than she needed, and overall condition was great. The house did need cosmetic work. The bottom line is that if you know the Mamaroneck / Larchmont area at all, you know that inventory is limited especially in the lower price range. The problem was the property taxes were about $15,000 per year. Again, if you’re familiar with this area, you know that this is the norm. Especially since the house was in an $800,000 neighborhood.
As every good real estate agent knows, approximately 95% of the homes in Westchester are over-assessed and therefore paying too much taxes. What this means is that the taxes currently being levied on the home were based on a much higher market value compared to current market value. Hence, the taxes can be grieved with the town. In this case, the house was being assessed at almost twice the value at which I was able to negotiate it down to. Unfortunately, the tax grieving process in Westchester is relatively simple, but time consuming. If the taxes are successfully grieved, the new taxes may not take effect for another 6 to 12 months.
Obviously, taxes were going to be a factor on whether my client was going to be able to afford the house or not. If you’re a buyer, you may also be experiencing the same thing. Here’s the plan we were able to hash out:
We asked the seller to give us a 3% seller’s concession which we were going to use for an Interest Buy-Down Program. Some banks, like Wells Fargo and Bank of America, offer these programs. We used the 3% to temporarily buy down her effective interest rate. Essentially what this means is that if she locked in her interest rate at 5% on a 30 year mortgage, and she bought down 3%, her interest rate year 1 would be 2%, year two 3%, year three 4%, and the remaining 27 years the rate would return back to the interest rate she originally locked in at-which was 5%. This program essentially reduced her mortgage payments by over $1,000 per month giving her some breathing room to grieve her taxes and have them reduced. She eventually grieved her taxes and got them reduced to approximately $11,000 before the STAR program which would have reduced her taxes by another $1,100.
Again, this type of solutions is not for everyone, but a good agent should be able to recommend other types of solutions to assist the client achieve their real estate goals. There wasn’t anything magical or under-handed about this solution. The client didn’t get any specials or discounts per say, however the client was was ultimately happy with the outcome because she would have not otherwise been able to purchase this specific house, that by the way, ended up being a great buy for the area.
