Dear Michael: We are renting a home which we pay over $4,000 per month. We want to put this amount towards a mortgage instead of rent, but unfortunately prices are now so high that we no longer qualify for the mortgage. How do you suggest that we can take advantage of buying a house? I’m sure that you come across this all the time….
Answer: You are not the only ones facing this challenge. Buyers who have been looking at purchasing a house and started their search a few years ago are now priced out of this market. Unfortunately if you are looking to buy a home 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 the kids or even being further away from friends and family. Only you can make this 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 could 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. History has shown us that after a market crash such as the one of 2007-2011 when prices finally rebounded they increased to higher levels than the post crash years. In other words, prices should continue to increase until the next market collapse which on-one can predict.
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. The Buyers Agency discusses how the agent is to be compensated for the work he/she is doing for the buyer. The Sellers Agency agreement is covered within the listing agreement. Obviously, 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. Compensation trough commission to the listing firm and how it is divided is also covered in the agreement. Dual Agency which is what you are referring too can come in two forms. The 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 himself 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 problems or raise any eyebrows. But, when a listing agent offers to represent both sides of the transaction, caution is advised as no party should go unrepresented. That is how real estate transactions can remain fair and impartial as well as giving all parties to the transaction an equal chance of getting the highest and best value for their dollar. 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 the buyer and seller is ethical and also looks out for your best interest.
Dear Michael: My neighbor and I have comparable homes built in 2006. He just listed his for a lower price than mine. I am not sure how this will affect my home. Can you please let me know what I can do to compete with him?
Answer: Unfortunately there is only one thing you can do. Price your home at the same or at a lower value then his…You may not like my suggestion but this is the only honest recommendation I can give you. If your house is not selling in this current market it could very well be that it is overpriced! If you don’t want to lower your price you can hope that your neighbor’s home sells quickly so you no longer have to compete. Only problem is that if a prospective buyer looks at the comparable he/she may conclude that your home is currently overpriced. Your other option is to take your property off the market and analyze the activity on your neighbor’s property which will help you determine where you need to be.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com