Friday, August 15, 2008

What Buyers Should Expect from a Real Estate Agent

Buying a home is a very personal decision and you need to feel confident that your best interests are at heart. Here is what you should expect of your Realtor:

1. Preview homes. You can communicate what you want from a logical standpoint, but your agent should also see homes with you to find out what appeals to you on a visceral level. Then, he/she should be willing to do some of the leg work for you by previewing homes on Broker’s tour.

2. Educate. Beyond looking at houses, spending some “face-to-face” time learning about the market and the process is important. Our market is very unique and there is often a bell curve with new buyers. Some savvy buyers get their offer accepted on the first home that interests them. Other buyers need to write a few offers to understand our market, particularly if there is competition in their chosen area and price range. A good agent can shorten this learning curve and help you feel ready for that first house.

3. Navigate new financing options. With more banks pulling out of the wholesale market, it often makes sense to look for loans in more places. Your Realtor can help navigate the waters. Appraisals have also become a bigger issue than they have been in the past. Now the pendulum has swung so far north that houses we know to have solid value fail to appraise. If there isn’t a good comparable within ¼ mile and within the last three months (as is often the case with our inventory) the appraiser may have a problem. Your Realtor needs to know what is happening in the lending market and what the potential pitfalls are. It may make sense in some instances to have the loan/appraisal contingency run for the entire length of the transaction.

4. Know the local jurisdiction. There is a pile of paperwork involved in buying a home. Some is standard for all of California. Some ordinances are specific to each city. For instance, Berkeley has a Residential Energy Conservation Ordinance (RECO), a sewer lateral ordinance, rent control and a seismic rebate program. You need an agent who is knowledgeable in the area want to purchase in to make sure none of this is overlooked.

5. Know the land. Are there issues/concerns that are specific to the home's topographical location? Is it in an area with known soils issues? Is it built over/near a culverted creek?

6. Know the housing stock. There are also potential issues specific to our older housing stock. Could there be a buried oil tank from an old heating system? Were the proper permits taken out and finalized for any improvements? Are there any hazardous materials present such as asbestos? Can the old foundation accept bolts for seismic retrofitting?

7. Negotiate the best price and terms. With good negotiating skills you can get a better price for the house. By knowing what to look for in inspections, a good agent can limit future surprises and mitigate the expense by negotiating for repairs during the transaction.

8. Manage a smooth transaction. When your offer is accepted your agent guides the transaction to closing and coordinates inspections, manages the escrow, and maintains the time-line.

9. After sale follow-up. Most good agents are available after escrow closes for advice and resources.

In short, it is a complicated process. You are best represented by a diligent, accessible, knowledgeable agent. This is the biggest purchase most people will make in their lives and you should search to find the best representation. A good agent can buy you peace of mind.

Friday, August 8, 2008

Get an Interest Free Home Loan from Uncle Sam

SFGate 8/3/08, How Home Purchase Federal Tax Credit Works:

(08-03) 04:00 PDT Washington -- Anybody who's been sitting on the sidelines hesitant to jump into real estate until conditions settle down should know these dates: April 9, 2008, through June 30, 2009.

They mark the eligibility time to qualify for the home purchase tax credit created by the massive housing bill approved by Congress. If you have not owned a house during the past three years - or are considering buying your first home - and can go to closing before the end of next June, you may be eligible for up to a $7,500 credit against your federal taxes for 2008 or 2009 ($3,750 if you file taxes as a single person).

In order to stimulate the national housing market, Congress is offering this incentive to encourage buyers to buy before the June 2009 deadline. It is money you will need to pay back. Still, time is money and since you can use it now and pay it back in the future without any interest or fees; there is real value to the credit.

At its core, the new tax credit functions very much like an interest-free loan for up to $7,500. You pay the principal back in increments over time, but there's no interest charge to you.

Rob Dietz, an economist for the National Association of Home Builders, says the new credit not only will pull first-time buyers into the market, but also have a powerful multiplier effect, as thousands of sellers of these credit-assisted houses go out and purchase replacement homes for themselves - extending the impact of the credit into the move-up segment.

How do you claim the credit? If you pass the eligibility tests and buy before June 30, you simply request the credit on your tax return for either 2008 or 2009, which will be modified for that purpose. Even if you purchase in 2009, you can take the credit against your 2008 taxes by filing an amended return.

For an overview of the credit see the SFGate article (click here), or go to