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From: andrew@orca.UUCP (Andrew Klossner)
Newsgroups: net.consumers
Subject: Re: Need advice on bidding on a house
Message-ID: <1773@orca.UUCP>
Date: Fri, 27-Sep-85 17:08:23 EDT
Article-I.D.: orca.1773
Posted: Fri Sep 27 17:08:23 1985
Date-Received: Sun, 29-Sep-85 08:23:51 EDT
References: <713@whuxl.UUCP>
Organization: Tektronix, Wilsonville OR
Lines: 84

> It's that time in my life to settle down and buy a house and live
> happily ever after.  However, after dealing with a local real estate agent,
> I'm beginning to realize that buying a house is extremely stressful
> and time consuming.
> 
> First of all the prices are outrageous!  I sincerely believe, that
> real estate agents intentionally jack up the listed price of a house
> to increase their commission.

Some of this reflects the skyrocketing cost of real estate.  New Jersey
is worse than average in this.  And some of it is that you always list
a house at a higher price than you expect it to sell for.

> (1) Does anybody have a formula (or rule of thumb) for coming up with a price
> offer, based on the listing price, location and/or other factors?

First of all, never offer the listing price.  If you do this, you're a
chump.  (I did it for my first house.)  Otherwise, figure out what the
house is worth (based on the market and what you'd pay for it), then
offer a figure which is as much less than this as the listed price is
greater.  That way you and the seller can negotiate the price to the
mean, which is your estimate of its worth.

Of course, this is just a rough rule.  There may be reason to offer
much less, or much more.  Talk with your real estate salesperson and
see how desperate the sellers are; the longer the house has been on the
market, the more likely they'll take a big cut in price.  On the other
hand, if the property was recently listed and there are other buyers,
you may want to offer more.  But beware: a common, though unethical,
trick is for the salesperson to have accomplices come to the house
during an open house and pretend to be interested in purchasing it, so
as to make legitimately interested people anxious about whether they'll
be beaten out.

> (2) Is it better to deal exclusively with one realtor or use several?

First of all, Realtor is a registered trademark.  What you mean to say
is "real estate salesperson."  In general, every salesperson has access
to almost all listings, because most listings are collected into a
weekly "Multiple" (another trademark) book and distributed to everyone.
(You can ask to look through this book; it includes pictures and short
descriptions.)  I think it's better to work with a single salesperson,
except that you should NEVER consider purchasing a house using the same
salesperson that has the listing.

Remember that the salesperson is representing the seller, not the
buyer, because it's the seller that pays the commission (at least in
all the states in which I've lived, but I hear it's different
elsewhere).  So don't tell your salesperson anything that you don't
want the seller to know.  I have used this to advantage:  on a piece of
land where the asking price was $105k, I offered $55k.  (I had learned
that the sellers were pretty desperate; they were retired on a fixed
income, the property taxes had increased dramatically, they had no need
for the land, and it had been on the market for a long time, originally
listed at $190k.)  They countered at $90k.  I countered at $70k with an
8% land contract with no balloon, and told my salesperson that this
would be my last offer; I couldn't go any higher.  (In fact, I would
have gone as high as $90k.)  I'm sure that she passed this information
along; they countered at $70k and 10%, and we closed.

> (3) Should I apply for a mortgage now, before I've found a house, or wait
> until I find one?

Standard practice is for a thirty day escrow to occur between the time
you agree on the deal and the time that the transfer of title occurs.
This gives you plenty of time to secure a mortgage.  But there's no
reason not to apply for one sooner if you want.

Above all, pay heed to this rule:

HAVE A LAWYER REPRESENT YOU AT THE CLOSING.  This is in addition to the
salesperson who is (ostensibly) representing you.  Bring the laywer
into the picture as soon as you make the agreement, at the beginning of
escrow.  Have him/her look over all the papers and advise you of your
rights, your responsibilities, and what tricks to watch out for.
He/she doesn't necessarily have to be present at the closing, but if
not, and if changes are made to the papers, delay the closing until
your lawyer can examine the changes.  This will cost a couple of
hundred bucks.  I've heard of many cases in which people closed a deal
without an attorney and were sorry, but I've never heard of a person
closing with an attorney who was sorry they spent the money.

  -=- Andrew Klossner   (decvax!tektronix!tekecs!andrew)       [UUCP]
                        (tekecs!andrew.tektronix@csnet-relay)  [ARPA]


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