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Annie, Home Buyer in Frederick, MD

I'm a first-time home buyer (come this spring). Will this help or hurt my negotiating position? Why?

Asked by Annie, Frederick, MD Mon Jan 28, 2008

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I am a California Realtor.. I love my job because I look at my job as a teaching position. Clients dont always understand what is going on so it is my job to educate my clients. There are no smoke and mirrors in my business. I give all the information I can to my client to allow them to make informed decisions. I owe my clients the best I can of a honest and fair business practice so they can make an informed deal. A good Realtor will know who is a reputible loan officer. That same Realtor will watch to make sure that your loan is not costing you too much. As a Realtor, I will watch the loan officer thoughout the process and if my clients are being charged too much, I may want to get my clients to see another loan officer who will not charge the fees or rates. Protecting my client is the most important part of my job. I will always ask if the client is a first time home buyer. I always want to be sure that the new client is already pre qualified for his or her loan. The reason for that is because if a special home comes along at a great deal, I wouldnt want my client to loose out. Sometimes you can take a client out for a couple of times before they find a home that they love. Making the mistake of not having that client pre qualied can be devistating to my client. In our area, the client can get ( based on credit and income) as much as $115,000 towards the down payment and closing cost towards the purchase of a home. For my client, this same them money every month. In addition to what I am doing for my client, I educate them as to what home owners insurance vs mortgage insurance, what income taxes are vs home owners taxes and supplimental home owners taxes are. I advise them what mortgage insurance are and what kind of loans they come with. I feel if a client hears what things are then they understand more. I am a giant advocate of making sure that the client gets a home inspection and home warrenty so that my client is assured that they will have as much protection that can be afforded to have. Right now, prices of homes are historically low. Now is the time for buyers to purchase homes.
0 votes Thank Flag Link Sun Feb 3, 2008
I would like to address another aspect of this question, which you may not have considered, and that is, "Will being a first-time home buyer help or hurt my financing?"

As a veteran mortgage insider and author of Mortgage Rip-Offs and Money Savers (Wiley), I have to warn you against saying something to your loan officer that puts you in a vulnerable position for being taken advantage of. Here's what I mean...

Do NOT say something like, "I'm new at this, so I need your guidance." To do so will be like holding up a big sign that says, "Charge me more." And believe me, they will charge you more.

Instead, be a savvy borrower by asking one smart question that will get you your best deal.

And even though you're a first-time home buyer, you are a savvy, smart borrower because you've done your research, you know what's fair and what's not, and you're not doing meaningless things like calling a long list and asking what's your interest rate? (That approach just leads you to the biggest liar. It's like holding up a sign that says, "I don't know what I'm doing.")

I can't post my entire book here, but I hope this helps. Oh yes, the smart question. Ask, "Will you please give me a Good Faith Estimate for a 30-year fixed rate loan at $300,000?" (Or whatever loan you need.) You must get 2-3 GFEs on the same day and compare the entire loan.

-- Carolyn Warren, author, Mortgage Rip-Offs and Money Savers
0 votes Thank Flag Link Fri Feb 1, 2008
HOWEVER I would like to add something that I think everyone left out, and I should know because I am also a first time home buyer about the close on our home.

Being a first time home buyer in this market is a PLUS.... for the simple fact that you will have no home contingency on your offer
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:::waving::: I said that!
0 votes Thank Flag Link Wed Jan 30, 2008
Just happened to be playing around on trulia and ran across this question. I will echo everyone elses posts and say yes do your homework and get a good agent.

HOWEVER I would like to add something that I think everyone left out, and I should know because I am also a first time home buyer about the close on our home.

Being a first time home buyer in this market is a PLUS.... for the simple fact that you will have no home contingency on your offer. When you write an offer and attach a pre-approval from a lender the seller won't have to worry about you selling your home, for their's to sell as well. Think about it this way, a seller receives an offer from two people one who already owns a home and one who is a first time home buyer. They are both offering the same amount of money with pre-approvals, but one person has a home contingency on their offer, and we are currently in a pretty slow and stale market. The seller will be MUCH more apt to deal with the first time home buyer. In fact I would bet many sellers would rather accept a slightly lower offer with no home contingency attached.

Good luck!
0 votes Thank Flag Link Tue Jan 29, 2008
As a first time home buyer, choose your agent carefully for skill, dedication to you, and knowledge. If you have a great agent, this will help you. Ulitmately, it is you who will determine what offer you make and what counteroffer you deliver. If your offer/counteroffer indicate you will rollover, it will hurt you in negotiations. Your agent can do much to protect your position, but you are working with your agent as a partner.
0 votes Thank Flag Link Tue Jan 29, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Hi Annie, reading through all these answers it might be easy to loose an important point, so I want to make it again for you - you have nothing to sell. This will improve your position from the very beginning. Please do use an experienced Buyer's Agent - this will not cost you anything and will help you in two ways. First, you will not be dealing directly with a seller or seller's agent, so any inexperience or nervousness you are feeling will be impossible to detect. Second, an experienced agent has been through negotiations many, many times and will be able to advise and guide you. They can help you through all phases of the process - finding a house that fits your needs, negotiating a fair price, making sure you meet the deadlines built into the contract, repair requests from the inspection - the list of where your inexperience could be a potential liability and where an experienced agent can keep you from miss stepping is endless. There are lots of great ways to find an agent - through friends and relatives, visiting open houses in your area, ask your lender who they regularly work with...lots of great suggestions here. Hiki is making a valid point - in every industry there are unethical people. But in this industry more than most - the vast majority of REALTORS has their clients best interests at heart - if we didn't take that seriously, we would not be in business very long. Best wishes on your search! Stacey
0 votes Thank Flag Link Tue Jan 29, 2008
First time versus ten times doesn't really matter to a seller. What they look at is your credit score, percent down and your pre-approval letter. If you have good credit, get a copy of your credit report to submit with your offer. If you have $60,000 in the bank and you are putting $30,000 down, make a copy of your bank statement that shows you have more money then you need to close escrow. You should also write a letter with your offer talking about yourself & what you like about the property.

Make sure you are starting to look at property now so that come spring time you will be educated as to what a good deal is. Go out every Sunday and look at properties in your area and then watch what they sell for.

Goog Luck!
0 votes Thank Flag Link Tue Jan 29, 2008
To Annie:

If you have the best buyer agent who can tell the real best price of the home and do everything for you along the process, yes, then you are no different from the best investor. Everything you need is just to get pre-approval for the home price at 10% or 20% down.

When you really need to participate into the negotiation, my opinion is to get help from self-learning, agents and friends. Because that makes the difference between a first-time and non-first-time.

To JR

I never meant buyer agents are always chasing their profits. But some do. And some are just not as good as the experts here.

I didn't mean listing agents are unethical. But some do.

I couldn't tell what are the problems of the seller or the listing agents because the seller is totally behind the face of the agent. Sorry for the agents who work for bad sellers.

The weak position of a first-time buyer is that he/she couldn't tell what the difference of an honest agent from an unethical one.

That is why I suggested to consult friends. That is "the wisdom of the crowd".

About negotiation, even good agent could have her misses. Sometimes agent's market analysis is inaccurate because two blocks away can put huge price difference in metro area.

To give you an example:
I found a wonderful condo listed at about $400K. My agent showed me market analysis and said it would be an incredible deal at $380K. Then a friend told me that condo is absolutely overpriced. I gave an offer and had a few counters in the past 2 months. Last week the listing agent contacted us again and tried to negotiate from $377K.
0 votes Thank Flag Link Tue Jan 29, 2008
Annie,

Presuming that you plan to hire the professional services of an experienced and knowledgeable Realtor in your area and that you get pre-approved for financing through a reputable lender, I see no reason to believe that being a first-time home buyer would be a negative thing or somehow hurt your negotiating position or leverage. Now, if you are thinking that you will try to represent yourself and deal directly with a seller or listing agent, then you may be about to open pandora's box... Best wishes in buying your first home - Ted
0 votes Thank Flag Link Tue Jan 29, 2008
TED SHOOP, Real Estate Pro in Buford, GA
MVP'08
Contact
BTW, some tricks that a seller can use to hide flaws of the house:

* put up drywalls in a basement without doing any insulation or fixing the loose bricks of the foundation
* put clutters in the areas which are likely to have problems

Those are places which inspectors won't reach.
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I don't know about that. I had an inspector who made the seller empty an entire garage stuffed from floor to ceiling with clutter, otherwise he wouldn't do the termite inspection. Without a termite inspection the bank will not give a mortgage and there will be no sale. As far as basement insulation, did they tell you it was insulated? It's up to you and the inspector to do due diligence if they did.
0 votes Thank Flag Link Tue Jan 29, 2008
Hiki wrote:
To answer your question, you can see the discussion here
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I'm sorry, Hiki, you said the seller and realtor did unethical things. Your post there deals with the seller.

Hiki wrote:
There are many other unreasonable requests:
- the listing agent asked me to postpone the inspection because he will be out of town. that wasted 3 days of my inspection contingency
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The listing agent does not need to be there. The selling agent can attend with you and the inspector. There is a whole thread about that too. Many listing agents don't go to the inspection.

Hiki Wrote:
- check from me must be overnight mail to them, but refund check from them is regular mail even without a tracking number
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May be annoying, but not unethical. It's important your check arrive in a timely manner.

Hiki wrote:
- the seller countered my offer and asked me to sign it in 2 hours at 8am in the morning.
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Could be an unreasonable request. Would need more info.

Hiki wrote:
- the seller agreed to repair anything found from inspection before we agreed on a price. Then after the inspection, more than $10K of problems were found. The listing agent told me the seller won't lower any dollor and won't fix 90% of the problems.
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This is why I get EVERYTHING in writing. Your agent should have requested that.

Hiki wrote:
- ... there are too many things I feel uncomfortable about. My agent and friends told me they are unreasonable.
~~~~~~~~~~~~~~~~~~
Then it sounds as if your agent gave you good advice. You made a blanket statement however. When we break it down, it's a little different.
0 votes Thank Flag Link Tue Jan 29, 2008
BTW, some tricks that a seller can use to hide flaws of the house:

* put up drywalls in a basement without doing any insulation or fixing the loose bricks of the foundation
* put clutters in the areas which are likely to have problems

Those are places which inspectors won't reach.

Of course there are other tricks which an good inspection can help to discover.
0 votes Thank Flag Link Tue Jan 29, 2008
Hi J R,

To answer your question, you can see the discussion here
http://www.trulia.com/voices/Home_Buying/The_seller_couldn_t…

You are in a hot market holding hot listings, of course, the sellers have all the negociation power.

I am in a cold market. I gave offers to overpriced listings which have been sitting on market 3+ months. However, I don't feel any good in the transaction. A first-time buyer doesn't know what are reasonable until he learns from friends and experts, or hard lessons.

There are many other unreasonable requests:
- the listing agent asked me to postpone the inspection because he will be out of town. that wasted 3 days of my inspection contingency
- check from me must be overnight mail to them, but refund check from them is regular mail even without a tracking number
- the seller countered my offer and asked me to sign it in 2 hours at 8am in the morning.
- the seller agreed to repair anything found from inspection before we agreed on a price. Then after the inspection, more than $10K of problems were found. The listing agent told me the seller won't lower any dollor and won't fix 90% of the problems.
- ... there are too many things I feel uncomfortable about. My agent and friends told me they are unreasonable.
0 votes Thank Flag Link Tue Jan 29, 2008
Annie:

Is your negotiating position going to be hurt because you're a novice? Probably. Probably it will hurt you to be female too.

But as a negotiator, you shouldn't worry about things you can't change.

What can you change? Your consumer behavior.

The strongest thing you can do to bolster your negotiating position is to fall in love with two, count 'em two, homes.

Why? because negotiations are going to be either easy or difficult.

If they turn out to be difficult, and you love just ONE house, you have a psychologically loaded choice - "I buy house A on the seller's terms and become a homeowner, or I stick to my guns and don't buy it. But then I've FAILED to become a homeowner."

If they turn out to be difficult and you love TWO houses, your choice becomes "I buy house A on the seller's terms and become the homeowner of house A, or I could buy house B over here .. ."

See how much better that is?

Good luck!

Alison Rogers
author, "Diary of a Real Estate Rookie"
Insider Real Estate Tips with a Twist of Humor: http://tinyurl.com/2ag28z
Web Reference: http://tinyurl.com/2ag28z
0 votes Thank Flag Link Tue Jan 29, 2008
Hiki:
I am a buyer. I met some nasty sellers/listing agents who tried to make advantages of me in every step of home buying. They hide flaws of the property, make unreasonable requests, hit you hard in negotiation, etc. I wasted a lot of time and money to deal with those bad people.
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Can you elaborate on what actions these unethical agents did. How did they hide flaws, what flaws, and what unreasonable requests did they make? How did you lose money dealing with those "bad people". What expenses did you have?

YOu also say [[Be tough in negotiation. Dare to walk away. ]]. So you advise being tough, but you did not like it when the other side was tough?

You also advise: [[The listing agents are good at praising the market. They try to make buyers feel like missing a good deal. However, most of them will be on market for months and years if they don't drop prices.]]. I just finished up a bidding war on one of my listings. I sold one house in 2 weeks this past November, and had customers make offers on both New Year's Eve and Christmas eve. So right now the market is pretty active where I am for homes that are priced right, as my listings are. Homes don't sit on the market for months unless they are overpriced. But then I don't take overpriced listings.
0 votes Thank Flag Link Tue Jan 29, 2008
Should have no effect, in fact, there is no reason for the listing agent to know that you are a first time home buyer. Just hire a good agent to represent you and you'll avoid most of the problems hiki ran into. And get pre-approved so that you know the price range you can buy in.

Although, it's the listing agent's job to get the best deal for the seller, so it should be expected that the listing agent will praise the property they are selling while not focusing on negative points (ones that don't have to be disclosed.)
0 votes Thank Flag Link Mon Jan 28, 2008
Yes, it will.

I am a buyer. I met some nasty sellers/listing agents who tried to make advantages of me in every step of home buying. They hide flaws of the property, make unreasonable requests, hit you hard in negotiation, etc. I wasted a lot of time and money to deal with those bad people.

You really need a very experienced buyer agent. You also need a group of friends who are familiar with local home buying. Since they don't gain from your home purchase, their opinions are very objective. You need to consult them at any time when you are not sure about something. Try to read more home buying tips before entering the process.

Be tough in negotiation. Dare to walk away. You have nothing to lose if you don't pay. (Though you might lose money on inspection, it is a drop of the sea for the home price.)

I walked away from several homes after I gave offer and did hard negotiation. No regrets.

The listing agents are good at praising the market. They try to make buyers feel like missing a good deal. However, most of them will be on market for months and years if they don't drop prices.
0 votes Thank Flag Link Mon Jan 28, 2008
Assuming you are prequalified, it will help because you have no house to sell first.
0 votes Thank Flag Link Mon Jan 28, 2008
It will probably neither help nor hurt. First of all, the seller (or their agent) should not know you are a first-timer. Hire a good buyer's agent who will keep that info confidential (and keep the listing agent from asking you personal questions). If you volunteered that info, it could help you only in the sense the seller would have more faith the purchase will go through. That is to say, they will not worried that you have a home to sell (in this rough market) before you have the money to buy their home. All in all, it does not matter that much, or as much as being able to close quickly, having solid financing in place, putting more money down, etc. Its tough to generalize but I have helped buyers for 7 years so I hope that helps. Good luck!
Web Reference: http://1sthomegroup.com
0 votes Thank Flag Link Mon Jan 28, 2008
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