Home Business & Finance Financing your condo, co-op, or townhouse
What to Look for in a Property and How to Find the One That's Right for You
Okay, I admit it. That's a bold claim. The “right property” is a moving target. It may even be an unachievable goal because with nearly any property there is something that could be improved upon. Better view, nicer lighting, more amenities. But before we get into the financing aspects, let's look at a few ways to help find the best property for you. We'll look at the different types of properties and the differences between buying new from a developer or builder and buying from an individual.
First though, one of the most common questions people ask when first starting to look is, “Do I need to use a real estate agent to help me find the right property?”
USING A REALTOR
Heck yes. And why wouldn't you? Maybe you think that hiring and paying for a Realtor is expensive and unnecessary. But in reality, it's not you who compensate your Realtor when she works with you in finding a new condo. It's the seller of the property who pays your Realtor.
When a Realtor lists a property (which means putting it up for sale), the Realtor will also post how much she will pay another Realtor for bringing a buyer to the closing table. Typically, the split is 50/50 between the listing agent and the buying agent.
For instance, a condo is listed at $300,000 and the seller is willing to pay the listing agent 5 percent of the sales price to market and sell the home. That's $15,000. Now, the listing agent may split that fee 50/50, so the buyer's agent gets $7,500.
That means you don't pay an agent to help you — the seller does.
If a Realtor who works every single day in the real estate market knows the hot spots, knows the bargains, knows what holds value and can help you negotiate the sales price, then why wouldn't you use a Realtor? If s free!
Realtors can specialize in certain areas of the city. Or a Realtor may have a run of recent sales in a downtown market full of condos and can keep you from overpaying by suggesting a reasonable offer to make. Not only do you want a Realtor who specializes in certain geographic areas, you want one who specializes in the condos, co-ops, or townhouses within those areas. Don't bring a Realtor from the north side of town if you want to live on the south side.
A Realtor can also give you the inside scoop on a complex — things the general public may not know, such as how long a property was on the market before it sold, or whether the sellers are offering any additional incentives to buy (such as helping pay for dosing costs or paying off an assessment). Well discuss closing costs in more detail in chapter 6.
Now that you know what a Realtor can do for you, how do you find a good one? After all, not every Realtor can be the best on the block. Some don't work full time. Some are new to the business.
The first thing you should do is get referrals from friends and neighbors. You need someone who has been in the industry for several years; they're the ones with the best contacts. You need someone who's serious about the business and has a good history of working with buyers.
You also want to work with a Realtor you feel comfortable with — one you can relate to. I have associations with different Realtors to whom I refer buyers. But I don't make referrals randomly; if s not just a simple rotation through my Rolodex. For example, I have a good friend — a Realtor to whom I send absolutely every one of my first-time homebuyers. That's because he relates to them well, and he does a lot of business in the first-timer market. Other referrals may go to Realtors who specialize in luxury condos for older buyers.
Make sure you interview several candidates. They will also want to meet with you and find out what you're looking for regarding price range, amenities, and other features (such as being close to the baseball stadium or public transportation).
Realtors tend to specialize, and it's relatively easy to find one who specializes in condos. The best Realtors have the most listings and negotiate the most sales. So, unless you happen to know one, how do you find a top Realtor?
Visit a real estate office's website, where you can view their listings online. Look for the Realtors who have the most listings. Those are the top Realtors in that office.
Perform this exercise at a few Realtor websites. The names of the best Realtors will be prominent. Those are the ones you need to call.
Should you ignore someone who isn't the top-listed Realtor in the office? Of course not, but you don't want anyone who has been in the business for only a couple of years. Those agents haven't negotiated as many contracts as the more seasoned pros. The first few years of an agent's real estate career will determine whether he or she can make it in the industry or not. Agents get paid on straight commission; if they don't sell they don't eat. When you are talking with an agent who has 10 or more years' experience in real estate, you can trust that she is serious about the business and savvy enough to have weathered the various ups and downs of real estate cycles.
If real estate agents can survive a period when homes aren't selling, and make it to the next boom, they are not only good at real estate, but good at managing their business as well. If they weren't performing for their clients — again and again — they wouldn't have lasted this long.
A Realtor is also your personal adviser in a real estate transaction. He is there to help you negotiate your way through the offer stage, and more particularly to protect you when you navigate the sales contract.
Real estate contracts will vary by state. If you've never seen one, you can probably imagine that they're chock full of lawyer language, drawn up by attorneys whose job it is to protect the buyers and sellers as they come to an agreement.
If you were on your own — without a Realtor — and you made an offer, you'd make that offer to the listing agent (the seller's Realtor). The listing agent will fill out the contract for you, but he or she has absolutely no loyalty to you whatsoever. A listing agent's legal, binding obligation is to get the best deal for his or her client.
For instance, you make an offer, the seller accepts it, and in the sales contract there is a little box that says, “Buyer to Pay Title Insurance.” The box is checked. You go along your merry way — only to find out that paying for title insurance isn't customary where you live, and the seller just hit you with an additional $2,000 in closing charges! Believe it or not, this happens every day.
On the other hand, if you had a Realtor working with you that wouldn't have happened. In all likelihood, the initial offer would have said something to the effect of, “Here's our offer at $300,000 and seller to pay all buyer's closing costs!”
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