Dear Michael: We are renting a home, which we pay over $3,000 per month, we want to put this amount towards a mortgage instead of rent but unfortunately prices are now so high that we can no longer afford buying. How do you suggest we take advantage of buying a house? I’m sure that you come across this all the time…
Answer: This is a common problem. Many buyers are now priced out of this market. Unfortunately if you are looking to buy a home and cannot afford current prices you will have no choice but to make some type of compromise. A) You may have to consider a move out of the area where homes are more affordable. This may mean a longer commute, a change of school for your kids or being further away from friends and family. This will be a difficult decision. B) You can start looking at condos as an alternative to a house. You will have to live in an HOA community with a monthly fee but this will allow you to stay in the same area: Eventually when you have built enough equity, you can sell your condo and move to a house. Condo’s generally cost less than homes. C) You can sit tight and hope for the market to decrease or even stabilize. Historically after a market collapse such as the one we encountered in 2007-2011 when prices finally rebound they increase to higher levels than the post collapsed years.
Dear Michael: I am interested in buying a home. I have been in contact with the listing agent for the past week. Should I allow the listing real estate agent represent me as well?
Answer: What you are talking about is called Agency. There are three types of agency relationships: buyer agency, seller agency and dual agency. 1) The buyers agency discusses how the agent is to be compensated for the work he/she is doing for the buyer. 2) The Sellers Agency agreement is covered within the listing agreement and the agent is compensated by the seller for his/her seller representation. Through the listing agreement the seller and his/her agent will have discussed the terms of the agreement including what the seller is willing to accept for the property and compensation trough commission to the listing firm and how it is divided between Brokers. 3) Dual agency which is what you are referring to can come in two forms. First: is when the brokerage firm has the listing and has a different agent then the listing agent representing a buyer within the same Brokerage. The second is when the listing agent brings a contract to the seller and represents the buyer as well. Dual agency at the brokerage level as far as having agents within a company bring their buyers to see a listing represented by the same company should not cause any awareness. When a listing agent offers or is offered by the buyer to represent both sides of the transaction, caution is advised. Real estate transactions should remain fair and impartial as well as giving all parties to the transaction an equal chance of getting the highest and best value on their purchase. It takes great skills for an agent to represent both parties and remain fair in a real estate transaction. You can have a great experience with dual agency representation as long as the agent representing both buyer and seller is ethical and also looks out for your best interest.
Dear Michael: My home was appraised for less than the accepted price. This is causing a problem with the sale. How I can get the accepted price rather than the appraised value?
Answer: The appraised value is not always the same price as the market value. The appraised value of a home is what appraisers determine the home is worth based on sales of comparable homes in the area. These figures are facts. The accepted price is how much a buyer is willing to pay for your house. This is based on facts and emotions. The right buyer may decide to pay more than the comparable value for your home just because they feel it’s the right home for them. I suggest you request an appraisal review. The buyer’s lender will send a new appraiser for a second opinion. The results may come in at your accepted price but if the results stay the same, then you have little choice: You can reduce your sales price to the appraised value, or negotiate a new purchase price where you and the buyer find common ground, or cancel the purchase with this buyer. If canceling is your outcome, I suggest you re-list your home focusing much attention to the terms of the loan and appraisal of your next offer.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can email Michael with your questions at homes@agentmichael.com.
