Depends on how much do you want the house? Is this a correct response from an agent? I found a house and want

Asked by nelson, San Diego County, CA Tue Mar 17, 2009

to make an offer. The house was priced at $299K. I asked my agent and that was her response. I was kind of dumbfounded. I thought an agent is suppose to guide me. And then she proceeded to tell me to go as high as I can since houses in the same area have higher price tag. Are you suppose to go as high as you can at first offer? I thought i t was the other way around. If I bring the highest I could then there would be no room for me to negotiate. Am I wrong at this?

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30
Voices Member, , Benton County, OR
Wed Mar 18, 2009
The agent works for you, the agent is not doing you a favor by accepting your business. It's your money, your financial obligation and your decision. Find an agent that will work for you, considering the opinion of your agent is only common sense, following it or not is your decision.

It's easy for people to tell you how expert they are at what they do, but the proof is in the results. Sit down and talk with your agent and see if you are on the same page, if not then terminate the business relationship. Review your interviewing techniques, find an agent that you feel comfortable with and who is working with you to attain your goals.

Here's the plain truth..There are excellent agents,smart agents, good agents, so-so agents, stupid agents, dishonest agents, agents that spend all their time pretending to be agents, and my favorite the agent who is always holding court to explain how they are equal to Doctors in training and have a Code of Ethics.
An agent can assist you in many ways, but what you should pay, what you should buy, price range you can afford, what you offer all should be your decision or you're not ready to buy.

Make your own decisions, Dunes
3 votes
Kari Shea, Agent, San Diego, CA
Tue Mar 17, 2009
Hi Nelson,

I can tell from your other posts that you have been grappling with your agent and the process. I so apologize on behalf of our industry that you received this response.

As for what to do, demand to see a CMA (Comparative Market Analysis). If it is a foreclosure, chances are there will be multiple offers in that price range. That may have been the basis for your agent’s response, though it is not what you needed.

Lastly, there are plenty of qualified professionals in Real Estate in San Diego. Many will pitch you for their services here. If you are not happy with your agent, ask friends or colleagues you trust for a referral. Interview people until you find one your gut says is the right person.

Best of luck to you,

Mark & Kari
3 votes
Seth Chalnic…, Agent, Cardiff, CA
Fri Mar 20, 2009
Hi Nelson,

You can simplify your scenario very easily as follows:

Re: the agent... how about just asking your current agent to void your agreement, since you are not satisfied with their level of service? If not, then just let it expire and then work with another agent who is cool with you having to go with the original agent should one of the outstanding offers get accepted.

Re: the loan... Yes the loan approval you have from Wells will still be good on the offer you made, and on any other property going forward… but you are not under any obligation to use them for either, and you can easily get re-approved within 24 hours someplace else… and probably for a more competitive rate that will save you money.

sc
Web Reference:  http://www.SethChalnick.com
2 votes
Kari Shea, Agent, San Diego, CA
Fri Mar 20, 2009
Hi Nelson,

Great to have another non-biased third party in Jefferson. Please read all of this as this is what we feel you need to know:

1. As Jefferson stated, your loan approval is good with Wells REGARDLESS of the agent you use.
2. Do you have direct contact with Wells Fargo? Do you know how the Mortgage Broker is being paid?
Just to be sure, Mortgage Brokers are paid one of two ways:
A. The lender (Wells Fargo) has a referral fee that costs you nothing
B. There are Points built into the loan to pay the Mortgage Broker, you pay for this in closing costs.
C. If you are not talking to Wells, have the Mortgage Broker supply a contact name.
D. If you are talking to Wells, ask how the Mortgage Broker is being paid
3. A Real Estate Broker is the person accountable for the agents in their office legally, ethically and for their training and development. They are accountable for all aspects of the transaction as well. Each agent is an independent contractor with their Broker and is responsible for the transaction and keeping their Broker informed of material facts. In the transaction, the Escrow company pays the commission to the Broker, who keeps some of the dollars and then pays the agent. Many agents do not keep their Broker informed and many Brokers require an extensive transaction checklist to make sure the legal requirements of the transaction are being met.
4. Now we are in the gray area of ethics and training and development, ie: depth of knowledge and how to apply that knowledge. This is where I will disagree with Jefferson for the following reasons:
A. Most Brokers are good people who care about the client first. In our opinion, the time to talk to the Broker to smooth this out or assign another agent from their office has passed UNLESS you want the house you are currently pursuing??? If so, this is the best solution, just DO NOT sign another Buyer/Broker agreement.
B. If you want to pursue a different home, get a new agent. Here's why, lets say you go to the Broker, and they assign another agent. The person they assign will know your current agent and they will talk. Most likely, you will take the blame in their discussions rather than the old agent accepting responsibility.
C. If you go the Brokers office, you can run into your old agent. Awkward for you!
5. Best to get a clean start, however, this is where it gets tricky:
A. Given your current agent found and showed you the house, their Broker (and the agent) are due the commission under California law. Crazy I know, yet true.
B. If you change agents, the old Broker still gets paid and it can put your new agent in an ethical bind if they do not know all of the facts.
C. If you go with a new agent, tell them everything. Their Broker can call the old Broker and work out the dollars to their satisfaction for that house, or any house the old agent showed you. THEIR COMPENSATION IS NOT YOUR ISSUE. Make them work it out and inform you of the outcome.

Lastly, do not concern yourself with the new agent, new Broker question. What we have said above should give you enough info to move forward. You can also click on our photo and e-mail us if you want to take the discussion off line. Some people here have done so and appreciated the independent communication. It is completely up to you.

Do not forget, a real estate purchase should be about your wishes being implemented by, and advised by, a knowledgeable agent who has YOUR interests first.

Best of luck,

Mark & Kari
2 votes
Kari Shea, Agent, San Diego, CA
Wed Mar 18, 2009
Hi Nelson,

Our apologies for not answering the second half of your question. If your current agent showed you a home and made an offer on your behalf, they are due the compensation for that purchase. The law looks at what is called "procuring cause" and your current agent would fall in that category. I know it may not seem right, that is how it is.

The lender is a completely separate issue unless your agent is a mortgage broker and they were handling both sides of the transaction? If not, the lender is your lender IF AND ONLY IF you trust them and feel they are looking out for you. If it was your current agent, there are plenty of good lenders and we would recommend a national lender like Countrywide, Wells Fargo, etc. If you have not been told so, make sure you have a pre-approval letter to submit with your offers. It goes a long way with a seller and their agent and is commonplace today.

By the way, while purchasing a home can seem stressful, it can be a joyous experience.

Regards,

Mark and Kari Shea
San Diego Real Estate Experts
Foreclosure, Short Sale & Investment Specialists,
Development Opportunities & Traditional Real Estate
2 votes
Kari Shea, Agent, San Diego, CA
Wed Mar 18, 2009
David & Dunes,

The true sad part is if the person asking the question gets turned off, they could stop monitoring the thread and miss what they wanted when they asked the question in the first place.

We appreciate your candor and work to be straight forward as well.

Regards,

Mark & Kari
2 votes
Jeff K, Home Buyer, Bristol, PA
Thu Mar 19, 2009
Hi Nelson,

Big thumbs up to Dunes. He and I aren't agents and aren't interested in a percentage of your deal in any way. We're just here to share the benefit of our experience - and want nothing more than to help out. Well ... it's also nice to feel good about helping people - so it's selfish in a little way. Sorry to hear that your current agent is not treating you well. But that is easily remedied now and you won't soon make that mistake again.

I would withdraw your prior offer (yep you can do this). I would not "reconnect with your agent to get back on the same page. Your instincts are already clear as to what you wish to do.

I would recommend that you do not sign another contract with your next agent. A good buyers agent will earn your trust and work hard for you - especially since you are a qualified buyer. I also like Wells Fargo - did my last mortgage with them and my new one. Really great rate.

If you have a little while left on your contract with your "soon-to-be-former agent" then go talk with the the broker that owns that office and get it killed. The agent broke trust with you and isn't doing their job. The broker will WANT to turn this around, and hook you up with someone else under his license that won't mess this up and treat you properly - otherwise he'll be losing his half of the buyers commission (well ... unless one of his agents has the listing of the house you want to buy).

Your pre-approval is still good - don't worry about that. This has nothing to do with your current agent.

So ... start interviewing agents and find one that "has 2 years and 1 mouth" and uses them in that proportion :-) Oh ... and then they ARE talking it should be to ask questions and understand your needs.
1 vote
nelson, Home Buyer, San Diego County, CA
Thu Mar 19, 2009
Mark and Kari:

My agent introduced us to a mortgage broker and he was the one who filled out the loan etc. but our lender is Wells Fargo. We are pre-approved and have pre-approved letter and had made an offer to one property. If we get a new agent, is that pre-approval to the loan forfeited? DO we get a new agent and a new broker?

Thank so much.
1 vote
Michael J. B…, Agent, San Diego, CA
Wed Mar 18, 2009
Nelson, it really depends on the specifics of this property.

This advice would be true if you were dealing with a foreclosure property that was new to the market, priced below other properties that had recently sold in the area (sometimes foreclosure agents price properties low to stimulate multiples), and had received multiple offers. In that case you want to come in with your "highest and best" offer.

If, however, this is a traditional sale then yes, you do want to have some room to negotiate.
1 vote
Bob Georgiou, Agent, Danville, CA
Wed Mar 18, 2009
The question does not address the demand in the neighborhood in which you are buying. How is the home positioned in the market? Low or high? IS this a multiple offer/high demand neighborhood? What is the average time on market for the neighborhood and how many days was the home on the market?

There are still neigborhoods in my area where the sellers are receiving multiple offers and that conversation is sometimes appropriate dialogue.

If your agent has 1) already called the other agent to inquire about interest and offers and 2) showed you the comparable listing, pending, and sold properties and you are "ahead" of the market the room for negotiation is very small.
Web Reference:  http://bob2sell.com
1 vote
Voices Member, , Benton County, OR
Wed Mar 18, 2009
Nelson, I'm a Non-Pro and have nothing to gain whatsoever plus I'm not known for making referrals. (No one offered me a referral fee yet : 0)

I'd start interviewing agents from this thread, I do not want to unduly influence you but you do have a number of excellent agents ( non-self-promoting and honest) that have responded and are from your area. Don't go for the hype, go for the honesty. Your decision, your choice...
1 vote
Kari Shea, Agent, San Diego, CA
Wed Mar 18, 2009
Hi Nelson,

Given you are not going to renew your contract, you can start interviewing agents now so you are prepared when the Buyer/Broker Agreement expires. We had said to follow your instinct as we use ours in our own business dealings.

Best to you,

Mark and Kari Shea
San Diego Real Estate Experts
Foreclosure, Short Sale & Investment Specialists,
Development Opportunities & Traditional Real Estate
1 vote
Seth Chalnic…, Agent, Cardiff, CA
Wed Mar 18, 2009
Find an agent who would be cool with you honoring previous commitments... and/or gauge your current agents willingness to let you out of any obligations.
Web Reference:  http://www.SethChalnick.com
1 vote
nelson, Home Buyer, San Diego County, CA
Wed Mar 18, 2009
Thank you so much for all your answers. It was very helpful. I am just waiting for my contract to expire. Somebody mentioned "to follow your gut" and I should have done that. Home buying is so stressful but my family and I are willing to start all over again and find another agent.

Would it be unethical to start interviewing new agents before my contract expires? And what will happen if a previous offer gets accepted but we are now working with a different agent/lender?


Thanks again to everybody.
1 vote
Voices Member, , Benton County, OR
Wed Mar 18, 2009
Thank-you M & K. I appreciate the comment from a source that provides answers/opinions that I have respect for.

Trulia seems to me to have a simple format.. People ask questions and other people give answers/opinions.
It's all done under the most simple of rules. Be considerate, don't self-promote and be helpful. (Community Guidelines). If these rules cannot be followed then what does that say about the rulebreaker? Do I want that person overseeing the legal paperwork? Do I believe them when they promise to guide me through a difficult process? If they can't even read the Community Guidelines and follow them, then how do I know they read my paperwork and abide by the rules.? If they will break the rules in a simple internet forum to promote themselves and hustle business then why would anyone consider them Professional or worth doing business with.
The sad part is each self-promoting, bs, agent creates more difficulties for the actual Professionals to say anything without receiving the disrespect felt towards the worthless ones.
Being a non-pro frees me up perhaps to be more blunt in my opinions, but sometimes some agents act like the consumer has something to prove to them while I always thought it was the other way around, the one selling the services has something to prove.
All that most consumers are looking for is some honesty. All most agents are looking for? Should fiqure out how to make the two coexist IMHO..

Sorry for the rant... thanks again, Dunes
1 vote
David, , La Jolla, CA
Wed Mar 18, 2009
Well said, M K...

I couldnt agree with you more...
1 vote
Kari Shea, Agent, San Diego, CA
Wed Mar 18, 2009
Hey Dunes,

Pretty much my take on the agent market. I could only hope the agents that post here were more interested in helping rather than pitching people for their business.

Also, I like there is a Thumbs Up button. However, I wish they would add a Thumbs Down button. Especially for those who do not read what others have written and give the exact same input as other writers.

Peace,

M & K
1 vote
Keith Sorem, Agent, Glendale, CA
Wed Mar 18, 2009
Nelson
Your Realtor should be able to tell you what they think the range of value is for the property.

For my buyers we take the same approach as an appraiser. We look at the recently sold properties, plus those pending and on market. I do not recommend offering high and then if the appraisal comes in low, adjusting your price to the appraisal. The reason for that is that the appraisers generally know their target price.

So it is possible that you can have an appraisal and still end up paying "more than the home is worth".

For example, look at the link below. Trulia says that the price per square foot is down over 20%. If the market is trending downward, that might mean that by using closed sales as comps the value of the subject property would be over-stated. Conversely if the market was going up, the value might be understated.

The other service I provide is that I will call the listing agent and ask a broad question, such as "tell me about the sale of this property" and you would be surprised how much information they will share with you. Information that when I am the Listing agent, I would not share...such as when they need to move, why they are selling, how much they need to net, etc.

Armed with this sort of information I will follow up with "so what length of escrow would like the sellers like?", and "What kind of offers have you had so far?", "What has the showing activity been like?"

Lastly, "what sort of an offer are you looking for?" "Do you have a preferred escrow or title company?"
"Would the sellers be okay with......?"

In example here your offer is based on:
1. market analysis
2. seller analysis
3. Listing agent analysis

Then you make an offer. My offers are complete.
Cover letter explaining the offer
Letter from buyers with photo of them
Proof of downpayment
Pre-approval letter from lender that references the subject property and offer price
Two copies of agency, one for the seller's agent to sign.
And the offer..

So when my offer comes in, it is complete, professional, and in the cover letter and in the offer we address all of the issues we uncovered in our investigation.
1 vote
Joe Mendoza, Agent, San Marcos, CA
Tue Mar 17, 2009
Hi Nelson,
You have a ton of great responses here by some really seasoned professionals and I too agree with most of them. Here's another spin, "trust your gut." I normally tell my buyers as we look at ANY home. If we walk in and you don't have that "feeling", then walk away.

So, maybe visit the property again. And, trust that feeling. On another note, say you move forward on the "higher price tag" offer. If a seller does NOT counter the "appraisal contingency," well, you have another bargaining chip DURING the transaction, YES you may even go back down!

*Remember, it is a buyer's market out there and there are many fish in the ocean!

Sincerely,
Joe Mendoza, Broker
Top 1% Nationwide
"Who's Who In Real Estate"
(619) 567-3471 Direct
(619) 246-HOME (4663) Cell
Web Reference:  http://www.JoeMendoza.com
1 vote
Dawn Lewis, Agent, San Diego, CA
Tue Mar 17, 2009
Nelson,

It really depends on the situation. Market, price range, inventory, REO, Short Sale etc etc .... all play a role.

Dawn Lewis

http://www.dawnsellssandiego.com/
1 vote
Real Estate…, , Orange, CA
Tue Mar 17, 2009
Cleve nailed your question with "We are in a unique market". There are many factors that go into determining the sales price, most of which is who is selling the home? If it is a bank owned home, and if it's been on the market for more than 30 days there may be challenges with getting financing for the home.

If you are looking for financing with a minimum down payment, this is an extremely competitive market, especially, as Cleve will tell you, in San Diego. There are a lot of investors down there right now snapping up the properties with all cash offers.

The bottom line is that you can not pay more than the home is worth. And in this market, every price is a good one right now if you plan on living in the home for 7-10 years. You will be in a very good equity position after that time in the home. The days of using your home as an ATM machine are over for many, many years to come.

Let me clarify my comment that you can not pay more than the home is worth. It is a good tactic in this market to make an aggressive offer, be the winning bid as highest and best offer then ordering an appraisal. I have experienced on many occasions the appraised value of the home coming in lower than the sales price. In the case of bank owned properties, the bank will typically reduce the final sales price to that of the appraised value. This is very common. The lender/bank will not lend more than the home is worth, and in this market - the bank (if bank owned) is happy to get full current value.

Hope this helps. Still do your homework, mostly because it's possible that the seller of the home has purposely listed the home below market to generate multiple competing offers to drive the price up. This is also a common tactic of REO banks.
1 vote
Seth Chalnic…, Agent, Cardiff, CA
Tue Mar 17, 2009
Well we need to be careful here to make sure we understand the full context. Generally speaking we are in a buyer's market and we're pretty much not doing a good job unless we expect a counter offer.

However, most of the homes for sale right now are REO's, and they are a different kind of animal. I have found that many listing agents, are currently listing their REO's very aggressively... substantially lower than the fair market value... to stimulate interest and get a bidding frenzy going. Most of these homes will go pending within a week and we'll never know the accepted offer price until after it closes… kind of a like reverse auction, or a game of poker.

Then there are REO's that sit on the market for longer than 7 days, and in these cases I have been quite successful in getting offers accepted by as much as 10% off list price.

So in a sense, it does depend on how much you want it... but that should not stop a good agent for making solid recommendations, based on empirical facts, and explained in laymen’s terms that make intuitive sense to all parties involved.
Web Reference:  http://www.SethChalnick.com
1 vote
David, , La Jolla, CA
Tue Mar 17, 2009
Nelson, buying a home is one of the most important buying decisions in ones lifetime. In all transactions, due dillegence aka investigating is the most important part of the buying process not price. Price is actually one of the last things to consider when buying a home. What you can afford will dictate price not comparables.

Once you do your investigating you will have all the infomation you need to make an educated decision. For example, who cares what price it is if you find out you live next to a sex offender or half way house? Who cares about price if the lot next door is going to be turned into a parking garage?

Buying a home is not about price. Buying a home is something much more personal than that and should be handled accordingly.

Yes, you need a realtor, but what you need first is a professional who will assist you and build a plan to create and protect your wealth.
Web Reference:  http://www.renter2buyer.net
1 vote
Catherine Ba…, Agent, Cardiff, CA
Tue Mar 17, 2009
Hi Nelson,

I usually tell my buyers that we should do a comparable market analysis of homes that have sold in the area to know what this homes market value is currently. Once I do the homework for my client and let them know what it is worth I than let them know if there is any other offers on the property (activity). If there is no other offers than I recommend if you really like the home we come in little under asking and see how much they need to sale.

If there are multiple offers on the property I usually recommend we go in at least list price and see if we can get countered. On bank owned homes you usually make your highest and best offer and the highest offer gets countered/considered.

This can be a very competive market in the lower end homes. Homes under the $475,000 in Encinitas, Carlsbad are seeing mulitple offers.

If you need a professional realtor that knows the market and the contracts, please don't hesitate to call me...Good luck! and don't get fustrated you might have to write on a few to get the one you really want.

Your Real Estate Consultant
Catherine Barden
(760)815-3866
1 vote
Cleve Shirley, Agent, La Mesa, CA
Tue Mar 17, 2009
We are in a unique market Nelson. If the property was bank owned or a short sale, then your agent may be right that you will need to come up over list price to get the house. The best thing to do is to see what houses are selling for in the area, what the inventory levels are and how long that home and other homes in the immediate area have been on the market.

A good rule of thumb for bank owned listings: if they have been on the market longer than 30 days, then you have a better chance at negotiating the price down. Because the banks strategy is to list low in order to get multiple offers, there is a good chance to lose out on a property by getting out bid. Sometimes, however, that strategy doesn't work for them.

My recommendation is to look at the data for yourself. The numbers don't lie.
1 vote
MaryEllen Ch…, Agent, Caroga Lake, NY
Tue Mar 17, 2009
Hi Nelson, you're thinking correctly... hard to go back down in bid if you go highest & best right off the bat.

It Sounds like you are working with the seller's agent, Of Course they want the most for the seller, they work for the seller and the more they sell fo,r the bigger commission!
You say the house is priced lower than others in the neighborhood- I wonder why?
Is the seller in trouble? Does the House need repairs? Will Inspections reveal why it's low priced ?

In any case the reality is How much similar neighborhood houses have SOLD for, Not How much others are For Sale for, they are still for sale and not valid comparables!
To base your offer you should use Just the SALES from last 6months.Sales data is public record so you can check what the neighborhood is selling for!

Here in NY, Buyers can have a Buyer's Agent represent them, Buyers agents work for you the Buyer's interests! Buyer's agents can legally provide the sales comparables to help you make a proper offer.
A good buyers agent will find out the sold comparables and help you so you know if you are paying the most or the least on the street! They'll stay with you through the whole transaction!

Good Luck! MaryEllen
Web Reference:  http://www.adksrealty.com
1 vote
Seth Chalnic…, Agent, Cardiff, CA
Sat Mar 21, 2009
That was a really funny post :)
Web Reference:  http://www.SethChalnick.com
0 votes
David, , La Jolla, CA
Sat Mar 21, 2009
Is it me or does this thread seem to be going around in circles..

Nelson, call one of these agents directly and get the show on the road.... You got lots of great advice hear... and now its time to take action and use it to your advantage...
0 votes
Kari Shea, Agent, San Diego, CA
Sat Mar 21, 2009
Hi Nelson,

We received your message through Trulia, however, when I replied it came back "address does not exist" from yahoo.

Please e-mail me directly from yahoo to mark.kari@shea-realestate.com to see if that helps.

Our apologies,

Mark & Kari
0 votes
Voices Member, , Benton County, OR
Fri Mar 20, 2009
Nelson, I hope you don't mind if I add one more opinion to the mix.

The advice you just received from M & K was excellent advice. I'd just like to say that as a buyer you have your own personal goals, interests, and idea of what a great deal for you would be. You are also the only person who actually knows the truth of what you can afford. IMO this means that the ideal business arrangement for you is to work with someone you feel completely comfortable sharing your true goals with.
There are many ways to find the right deal for you and the true value of a good agent is being able to use their knowledge to help you decide where and how you want to look. This will never work if you are not comfortable enough in your selection of an agent to share your true goals or commitment to the transaction.
Two years, Three years, Ten years from now you want to look back and know the agent you selected helped you protect yourself and navigate through an unstable market.

Think of your work, when you work with someone you like and trust I would ask what gets accomplished compared to working with someone you're not sure of? Now figure your going to have to bet $299,000 on which one accomplishes more.
It's not Rocket science...Know what you want..Know what you can afford...Know your market..Know your Agent...Know you need to listen and you need to speak...Know it's your decision and your selection...Know we would always like to hear how the process is working for you and we Know you will make the right choices. I wish you the best, Dunes
0 votes
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