How do you buy a house? It may sound dumb to ask this question, but it is a legitimate question. Where to start? What should you look for? What should you avoid? Who’s going to represent you? Financing? Escrow? Inspections? Closing? See, there’s a lot to it and even if you’ve done it several times before, there are always new twists and pitfalls and even benefits that you’ll want to consider.
The first step to buying a home is to start out with a wish list. A list of “must haves” and “would like to haves.” Obvious? Perhaps, but every search should start with the basics. I’m currently working with a client, who after looking at a home they were attracted to said, “We’re going to talk it over and review our list.” I can’t begin to tell you how impressed I was by this. This couple has bought and sold several homes with me over the past decade and a half and yet with all that experience, they knew that part of the process had to be to analyze what that particular home had to offer and contrast it with their wish list. Turned out, that while it was a really nice home, it didn’t have the 3 car garage that they, with two high school aged kids, deemed a critical feature. It also wasn’t quite in the neighborhood they wanted, but because it was so nice, they were tempted. The list kept them on track.
Next, prioritize your wish list. Is having a certain school a deal breaker or is it a flexible? Do you have to have a view or a pool? Not all amenities are created equal, nor cost the same and only you know what is most important to you. A view for example may not be a priority but it is the most expensive amenity. So if you find yourself trying to understand why a certain view property costs more per foot than another, factor in the view. If having a view is a “want” rather than a “must have,” you might consider a less expensive home that doesn’t have a view if you’re not willing to pay the view premium. Your list may evolve as you get into the process, but having a list is the best place to start.
Now it’s time to choose your Realtor. Do you hire someone who has handled your family’s real estate for a generation or maybe one of the moms from the kid’s preschool. Maybe it’s someone from church or temple or maybe even from little league. Realtors can be found just about anywhere. There’s a joke I like to tell prospective clients, “Do you know what the difference between a California driver’s license and a California real estate license? Not everyone in California has a driver’s license.” It’s silly but it’s not entirely unfounded. It’s just not that difficult to begin the practice of selling real estate. But few things are more important to the process than the real estate professional you hire. By the way, there is a very strange dynamic in play here: as a buyer, you hire the Realtor that is going to represent you, but you don’t actually pay them anything. This is because commissions are customarily paid by the seller, not the buyer. While this is clearly cost effective if you are a buyer, can you imagine hiring an attorney to represent you and your interests without giving them compensation for their work? And would that attorney truly represent your best interests if they were not being paid by you, rather by the person on the other side of the negotiating table? It is for this reason that you have to develop a strong bond with the agent you have chosen. I tell all my clients that I work for them; that they control all the decisions and the only decision I control is whether I will decide to take them on as clients. This is often shocking to them but because I am going to “help” them find a home and often perform an exhaustive search without any compensation, trust cuts both ways. They have to trust me to do right by them and I have to trust them that they don’t screw me over. Let me explain…
In 2010 I was interviewed by a late 30-ish engineer and his wife to represent them in their home purchase. They liked me and I them, and we agreed to work together. This was when there were tons of properties on the market so we were looking at a lot of different homes. Eventually we bid on a foreclosed home they really wanted but we lost out in a multiple offer. Unfortunately they didn’t listen to my advice and didn’t bid enough despite my urging to bid more. They were very disappointed and they blamed me. Still, we continued to work together but now distrust had started to bloom. By spring 2011 we had still not found a satisfactory home. Then I sent them a home that was just beyond their affordability and suddenly I stopped getting return calls. As it turned out they decided that the best way to bridge the gap between what they could spend and what the home cost, was to go directly to the listing agent and get a rebate for a portion of the buyer’s agent commission. They reasoned that the listing agent would be willing to split the buyer’s agent commission with them since the agent would now be representing both sides. Because I had only sent them the home, not actually shown them the home, the other agent had no idea that they were working with me and cut a deal with the engineer. So after many, many months and literally dozens of homes, I was not compensated for my hard work and patience, counsel and insight. As you can see, in the buyer-agent relationship, that trust thing swings both ways.
Communication between buyer and Realtor is a critical component of buying a home. I tell all my clients that their feedback is essential to me if I am to help find them the right home. They need to be honest and clue me in to what they like and don’t like. If a buyer isn’t forthright with what they want or are willing to pay or perhaps because they lack confidence in identifying what they want, in the worst case they end up with something they don’t like or at best cause both of us to waste a tremendous amount of time and energy before finally figuring it out. This leads to frustration and dissatisfaction with the process, your choice of Realtor and often can cause both you and the Realtor to throw in the towel. Remember, no closing means no home for you and no Realtor compensation for me. If the Realtor isn’t tuned in to “what’s important to you,” success for everyone can be elusive. Communication between buyer and buyer’s agent is of paramount importance for any successful home search.
There are many other parts to this process like inspection, financing, closing etc. But identifying what you want vs. must have; finding a Realtor you trust and maintaining an open and honest channel of communication with that Realtor, is the recipe for successfully finding your dream home. Now if you’ll excuse me, I have to call a client I showed a gorgeous view home to yesterday and see if this might be “the one.”