Dear Monty: We have been looking to buy our first home. It is discouraging to listen to the news media. The headlines are about high interest rates, little inventory, the bubble theory and high demand.
Our issues are closer to home with the agents. With sales shrinking, one would think they would make more of an effort. For us, it is the opposite. To name a few … Returns calls: no. Buyer agency agreement on the first appointment: yes. Very pushy for an offer: yes.
Based on the short time we have been in the market, I wonder if there are more signs of poor service ahead. What are the other signs? What can we do to increase our chances of finding a home?
Monty: Artificially low mortgage interest rates created a scenario in which homebuyers could buy much larger homes. Low rates quickly created a shortage of inventory. Additionally, home sellers were discouraged from listing their homes for fear of not finding a suitable replacement. The law of supply and demand drove prices higher.
The market will change with 6% and 7% interest rates. When times are tough for agents, they often change tactics to survive. Some of their tactics are not in your best interest. Some are not in the seller’s best interest, either.
Signs to Watch For
1) They suggest you waive 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 how costly waiving it can be.
2) They want to show only their company’s listings or their own listings and/or are not very familiar with MLS inventory. These tactics suggest they want to play both sides or obtain higher commissions on internal sales. They may be filtering out other companies’ listings.
3) Saying you must act fast. If you want to walk away and think about it overnight, the house will likely still be there tomorrow.
4) The agent wants to show very few homes. They may have concluded that it will take a long time before you buy. This tactic suggests an internal focus instead of on your needs.
5) Lack of follow-up. This suggests the agent is poorly organized or lazy. It may be because of item No. 4.
6) You feel pressured to make an offer. Is the crazy market just an excuse?
7) Sketchy information. There are multiple possibilities as to why. The bottom line is that they don’t care about your needs.
8) The agent is not readily accessible. It could be a combination of Nos. 4, 5 and 6. If you have no access to them, they lose value to you.
9) They provide ineffective or harmful advice during contract negotiations. This speaks for itself.
10) You don’t find out about a listing until it already has an offer. The reason is in No. 5.
Increasing Your Chances
» Obtain a strong preapproval letter from a known mortgage lender. A prequalification letter is not good enough.
» Establish a preset time when you will look at a house each week.
» Check out for-sale-by-owner properties. Many home sellers have figured out it is not hard to sell a home.
» Establish and rank neighborhoods and concentrate your efforts on those neighborhoods.
» Enlist your family and friends to be scouts. Ask them to keep a lookout for new yard signs popping up.
» If you do not want to sign a buyer agency agreement, contact the listing agent.
— Richard Montgomery is the author of House Money: An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home. He advocates industry reform and offers readers unbiased real estate advice. Click here to ask him a question at DearMonty.com, or follow him on Twitter at @dearmonty. Click here for previous columns. The opinions expressed are his own.