Home buyers can not successfully purchase a home without understanding how the industry  works.   The sad fact is, most buyers don’t identify the illusions  they must deal with.  When  a buyer learns that  most real estate agents  will tell buyers what they want to hear instead of what they should be hearing that buyer  has reached a stage of awareness that most buyers never reach.  Real estate agents are trained to be sales people.   The process starts with the first phone call or meeting at a house.  The focus is always on the good features of the house or what all the  agent will do for you.  This focus keeps the buyer from seeing any undesirable  features of the house.  The agent’s goal is to get the buyer interested and to quickly  obtain a contract on the home.  It is amassing how often these agent  will inform the  buyer that there is another offer pending.  Oh, really?  Do you wonder why?

While the history of the industry is interesting, what you need to know  are the illusions.  Most states have real estate laws that are quite similar.  Therefore, this information will be general, applying to all states,  however minor differences may exist.  The National Association of Realtors  (NAR) is heavily involved in the creation of laws.  This involvement comes about through their leadership and funding (NAR has 1,000,000 plus members who pay dues of approximately $80,000,000  annually.)   Real estate associations at the state level with NAR‘s funding lobby for legislative changes which have a negative impact on all consumers..  Is this involvement good for the home buying consumer?  Definitely not!

Every real estate broker and agent that wants access to the services of multiple listing services must be a member of NAR and their state association, there are some exceptions brought about by court cases.  The millions of dollars  paid in dues gives NAR and state associations power to control the industry.   The control benefit’s the major real estate brokers.  Through out  the country  laws have been created  which put home buyers at a disadvantage.  These laws are  driven by the desire of the brokers to want both sides of the commissions (listing  and selling) the broker collects from the seller when a home is sold.

The history reveals that agents have always made buyers feel that  they (the agent) was working for the buyer.  A study conducted by the  American Consumer Federation in the late 70’s showed that 75 % of the home buyers thought the agent helping them find a home was working for them, when in fact they were legally bound to work only for the seller.

In the mid 80’s a few real estate brokers started serving only buyers.  These  firms were known as exclusive buyer brokers.  The major brokers knew this concept would  be popular with home buyers and they began to push for legislation that would allow their firms to offer buyer agent service on in-house sales ( this is when their firm list the home and also secures the buyer for the property.)   The legislation created what has been classified as a

1. Lead buyer (client) through a pre-planning session
2. Assist buyer with identifying the basic and desired needs for the new home
3. Assist buyer with selecting the appropriate house plan
4. Assist buyer with lot selection
5. Lead the interviews for builder selection
6. Check references on builders
7. Educate buyer on loan options and assist with loan shopping
8. Negotiate contract
9. Join buyers and/or inspector to monitor construction
10. Coordinate all changes and disputes
11. Assist buyers with final walk-through
12 Review contract and all price changes
13. Attend closing
14. Be available to do follow-up on punch list itemsRemember, your exclusive buyer agent is to be working for you as a consultant. A consultant’s role is to lead, conduct research, and advise. Consultants should not tell you what to do. They should assist you with decision making.

Disadvantages of Hiring a Non-Exclusive Buyer Agent
First of all, don’t be tricked into believing you have an exclusive buyer agent when it is possible you do not. Traditional brokerages that list homes for sale use exclusive buyer agency agreements. These exclusive agreements bind the buyers to using only the broker identified in the agreement to purchase the home. You have not hired an exclusive buyer agent if the brokerage lists homes for sale and/or markets new home developments. These buyer agency agreements also will include an option to change their status to that of a designated buyer agent, dual agent, facilitator, and/or a transaction broker. Do not accept any of these options. If you  must use an agent from a traditional brokerage, have these options deleted from the agreement.

What you will normally find with non-exclusive buyer agents is that the agent will not be able to break from the habit of trying to sell you a home. That is not the desired behavior of an agent who should be representing you. In addition, most agents working for traditional brokers will not be able to perform all of the duties described in the above job description. Their brokers do not want to assume liability for responsibilities associated with some of these tasks. Conflict of interest is another concern. It is possible that the agent has developed a client relationship with the builder. In these situations, the loyalty is most likely going to go to the builder because the builder may be providing an ongoing stream of income for the agent. Remember, money talks.

BEWARE! Many buyers reveal that they never saw or heard from their non-exclusive buyer agent after the contract was signed.

Who should represent YOU, the buyer?

Important!
When choosing an agent, keep in mind the practice law firms went to years ago because of the conflict that arose when firms attempted to represent the opposing parties. They learned they could not adequately serve both parties, therefore, such practice is no longer permitted. Are real estate businesses any different? No! They can no more adequately serve both parties, buyers and sellers, than law firms could serve opposing clients. However, lobbyists for the real estate industry have been instrumental in creating legislation that legalizes the practice of serving both the buyer and seller for in-house transactions. That practice is called designated buyer agency, dual agency, facilitator, or transaction brokerage. Is this practice good for the real estate consumer? Not really. However, it is better for the buyer than buying a home directly from an agent who represents the seller. Whenever possible, the buyer should seek representation from an exclusive buyer agent – one who is not affiliated with a brokerage that lists homes for sale. To find an exclusive buyer agent, click here.

If the agent is working under a “dual agency” or “transaction broker” classification, the agent does not represent either party. In most states, it is required that the home buyer sign a buyer agency agreement with the agent/brokerage firm to secure representation.

When you have an exclusive buyer agent representing you, that agent has fiduciary duties to you and only you. These are statutory duties to you, the client. Regardless of whether the duties owed in a particular state are traditional, common-law fiduciary duties or are statutorily defined, they are still owed to the client. These duties include:

• Undivided loyalty: The buyer agent is prohibited from advancing any interests adverse to the client’s interest or conducting the clients business in such a way as to benefit the seller or his/her own interest.
• Obedience: The buyer agent is required to act, following and abiding all lawful instructions, subject to the clients control, but not exceeding the scope of authority conferred by the client.
• Reasonable care and diligence: The buyer agent is required to protect the client from foreseeable risks of harm, recommending that the client obtain expert advice or assistance when the clients needs are outside the scope of the agents expertise.
• Confidentiality: The buyer agent is prohibited from communicating personal information about the client which would put the client at a disadvantage with others involved with any transaction.
• Full disclosure: The agent is required to disclose affirmatively and honestly all information concerning the transaction and property that might affect the decisions a client makes. The agent must always tell the client what he/she knows.
• Accounting: The agent is required to safeguard money or property held on behalf of the client.

The agent for the seller has these same fiduciary duties to his/her client, the seller.

Creating a buyer agency representation
A buyer agency representation can be created by a written agreement or an unintentional, accidental, or inadvertent series of actions. For your protection, the buyer should always obtain a written agreement that details the conditions of the buyer representation . The agreement should identify the parties to the agreement, starting and ending dates, description and location of home desired, and how the agent is to be compensated. Other details, such as the agent’s duties and buyer’s responsibilities, and whether the agreement is an exclusive agreement (which prohibits you from purchasing a home through another agent or FSBO property), are common in most agreements. If the buyer agent is associated with a broker who lists homes for sale, the agreement will address the option to switch from buyer agency to designated buyer agency, dual agency, transaction broker, and/or facilitator.

To find an exclusive buyer agent, click here.

Self evaluation on home buyer representation

1. The agent who can serve a buyer without the conflicts caused by the broker serving both sellers and
buyers is:
____ a. Designated buyer agent
____ b. Exclusive buyer agent
____ c. Transaction broker/facilitator
2. To ensure the proper buyer representation, the buyer should have a written buyer agency agreement.
____ True ____ False
Answers: 1. (b) 2. (true)

Is it the “American Dream” to own a home? For most adults it is. When we focus on the dream it become the thoughts of having a place of our own. A home that you can put your own creativity in: beautiful wall paper, painted walls of your choice, new carpet, maybe some hardwood floors, tile the bathroom, build a deck, and plant trees, bushes and flowers. Whatever it is you do, you take pride in doing it.

Other than the opportunity to put your creativity into a home of your own, there are several financial incentives in home ownership. These benefits include tax advantages and equity growth.

Tax Advantages
* Annually the home owner is allowed to deduct the interest and real estate taxes when filing their federal and state tax return when itemizing deductions. Example: On a purchase of a $250,000 home with a 6.00 % interest rate for a $200,000 loan the following annual deductions would be realistic for the first few years of the loan:
Interest $12,000
Tax 3,750
If you were in a 15% tax bracket the Annual savings would be $2,362.50

* When selling a home, as long as you have lived in the home two of the last five years you can take capital gains of a minimum of $250,000 if you are single or $500,000 if married without paying any income taxes on the gain.

Equity Growth
At a 5% annual appreciation rate on a $250,000 home in ten years the home would have a value of $407,220, a gain of $157,220 and this could be tax free if you sold the property.

Self evaluation on Benefits of Buying a home

1. Home owners may deduct the following home expenses on their personal
tax return:
_____ a. Interest
_____ b. Tax
_____ c. Maintenance
2. Capital gains are tax fee on gains up to $250,000 when a home is sold
providing:
_____ a. The owner has lived in the home for 5 years.
_____ b. The owner has lived in the home 3 of the last 5 years.
_____ c. The owner has lived in the home 2 of the last 5 years.
3. Annual appreciation of 5% on a $250,000 home would accumulate in
ten years to:
_____ a. $50,000
_____ b. $100,000
_____ c. Over $150,000
Answers: 1. (a & b) 2. ( c ) 3. ( c )

If you want the best buyer agent – Click on Find a Buyer Agent – NHBA will secure you an exclusive buyer agent.  Exclusive buyer agents work only for homebuyers, never sellers.  You will want their service even if buying from a for-sale-by-owner.  Never talk to or buy from the agent at an open house or who has their name on the real estate sign/ad.  Avoid real estate agents that claim to be your buyer agent and proceed to use all their sales training to sell you the 1^st or 2^nd home they show.

For the Best Service or Questions Call

866-950-3335

Many people become interested in building a new home when they see a floor plan they like in a new homes magazine. Wherever the interest starts, it is important to do a thorough search of plans that will accommodate all or most of your needs. Before searching for plans, a necessary step is to identify all of your basic and desired needs for the home.

Among the many sources for plans, an Internet search is the best place to start. Many of the builders in your community will have Web sites on which they will display floor plans for all of the homes they have under construction. Some great resources on the Internet are architectural firms that specialize in residential home designs. Some of these companies have thousands of plans, and many are displayed on their Web sites. Other sources include searches at public libraries, book stores and retailers such as Home Depot and Lowe’s. Some communities have home builder associations that promote new home “parades.” Many of the associations publish booklets that will contain hundreds of home plans.

After you have identified a plan you think will meet your needs and your budget, it is time to search new home developments for similar plans. You will want to continue this search until you have found a home close enough to the plan you have selected to be able to visualize your plan when built. If you do not find adequate plans, you can draw out the plan on a ¼-inch to one-foot scale and also find furniture drawings with the same scale so that you can determine how furnishings will fit in the plan. To get a proper feel for the size of the home, you might even want to find an open patch of ground and stake out the floor plan in full scale. When you draw a line between the stakes, you can begin to place furniture sizes by outlining the size of furniture items with lime. This is a very practical step that will allow you to walk through the rooms and get a real feel for the floor plan.

After selecting a plan that fits your needs, your difficult task will be to find a builder who builds a similar plan. If you can do this, you may avoid the expense of hiring an architect to develop the drawing and specifications for your plan. An alternative is to hire an architect to design a plan for you. These plans will be expensive, however, you will be able to have several builders bid on building your plan, and you may find that when builders know they are competing with others for the job, the total cost for your home will be much lower. If you find a plan on one of the architectural firm Web sites that meets your needs, you will be able to purchase the plans at cost much lower than having an architect develop your plan.