Dear Monty: We were looking to buy our first home. Listening to the news media is discouraging. Headlines speak of high interest rates, low inventories, the bubble theory and strong demand.
Our problems are closer to home with the agents. With sales dropping, you’d think they’d try harder. For us, it’s the opposite. To name a few… Callbacks: No. Buyer agency agreement at the first meeting: yes. Very insistent on an offer: yes.
Given the short time we’ve been in the market, I wonder if there are more signs of bad service to come. What are the other signs? What can we do to increase our chances of finding housing?
Monty: Artificially low mortgage interest rates created a scenario where buyers could purchase much larger homes. Low rates quickly created a shortage of inventory. Additionally, home sellers have been discouraged from listing their homes for fear of not finding a suitable replacement. The law of supply and demand pushed prices up.
The market will change with interest rates of 6% and 7%. When times are tough for agents, they often change tactics to survive. Some of their tactics are not in your best interest. Some are also not in the interest of the seller.
Signs to look out for
1) They suggest you forego the home inspection. This suggestion is a bad idea. Many sellers want an inspection because it reduces their liability. There are many sad stories about the high cost of waiver.
2) They want to display only their company’s listings or their own listings and/or are not very familiar with MLS inventory. These tactics suggest they want to have it both ways or get higher inside sales commissions. They can filter listings from other businesses.
3) Saying you need to act fast. If you want to leave and think about it overnight, the house will probably still be there tomorrow.
4) The agent wants to show very few houses. They may have concluded that it will be a long time before they buy. This tactic suggests an internal focus rather than your needs.
5) Lack of follow-up. This suggests that the agent is poorly organized or lazy. It may be because of point #4.
6) You feel compelled to make an offer. Is the crazy market just an excuse?
7) Summary Information. There are several possibilities as to why. The bottom line is that they don’t care about your needs.
8) The agent is not easily accessible. It could be a combination of the numbers 4, 5 and 6. If you don’t have access to them, they lose value for you.
9) They provide ineffective or harmful advice during contract negotiations. This speaks for itself.
10) You don’t discover an ad until it already has an offer. The reason is in #5.
Increase your odds
» Obtain a strong pre-approval letter from a reputable mortgage lender. A prequalification letter is not enough.
» Establish a predefined time when you will visit a house each week.
» Discover properties for sale by owner. Many home sellers have realized that selling a home is not difficult.
» Establish and rank neighborhoods and focus your efforts on those neighborhoods.
» Enlist family and friends as scouts. Ask them to keep an eye out for new yard signs that appear.
» If you do not wish to sign a buyer’s agency contract, contact the listing agent.
— Richard Montgomery is the author of Money from Home: Insider’s Secrets to Saving Thousands of Dollars When Buying or Selling a Home. It advocates industry reform and offers readers unbiased real estate advice. Click here to ask him a question on DearMonty.com, or follow him on Twitter at @dearmonty. Click here for previous columns. The opinions expressed are his own.