Mueller Austin Homes

From time to time, I come across buyers or sellers who are going it alone – performing real estate transactions without advice from a Realtor ® or real estate agent. Their motive is usually to attempt to save the money on hiring a professional to represent them. From what I’ve seen so far, it can be like trying to do your friend’s dental work with lots of good intentions, a hammer, and no real training. You might save a bit of money, but you end up with a bloody mess. And your friend may sue you when he looks in a mirror.

Last week, I had a call from a distressed buyer. He had seen a website which allowed him to hire a Realtor ® to represent him in the purchase of a home he’d already located and get a rebate from the Realtor ® at closing. The theory goes that using popular property search tools online, an educated buyer can locate their own property, and simply work with a Realtor ® on contract negotiation and closing. The Realtor ® then gives a rebate to the hard working client at closing.

Sound good? It misses a few points. The first is that there is information that members of the local real estate boards are party to that consumers are not which are useful in the search process. How long has the property been on the market, what does it look like inside, what was the selling price of the comparable properties (there is public domain record of a home’s sales price in Texas). The second is that a competent local Realtor ® will have insight into the market, pricing, and various economic factors – they’ll have access to tools like the new ABoR market analysis tool (available in August 2008), and be able to give advice on each property identified.

And this is where the discount buyer was fretting. He didn’t know if the houses were appreciating, depreciating or what he should offer. He didn’t know the market conditions, average days on market. He wanted help with a pricing strategy. He wanted to know how long it would take to close, and if he could get out of his current apartment in time. He was stressed, and about to leap into making probably the largest purchase of his life. In trying to save money, he was about to risk an awful lot of money by betting on what might have been the wrong horse.

I pride myself on earning my fees, as I’m sure many Realtors ® do. I can save a buyer from choosing an inappropriate home, and help them negotiate a great deal on a home that’s right for them. It’s what I do every day. I can understand the desire to save money, and heck, I’m from England where bad teeth apparently abound, but I’m not going to do a friend’s root canal to save him a buck or two.

Another situation was when a friend called me up and asked what forms he should use to buy a home without a Realtor ®. I told him that there are some Texas Real Estate Commission promulgated forms, that he could download. There’s a disclaimer on the TREC web site where you get the forms, and having seen some well-written contracts and some poorly written ones, I think it’s accurate; you can fill the forms in yourself, but there are terms which have distinct advantages to one side or another. Filling in the forms and agreeing a contract which doesn’t say what you think it says can lead to disaster.

Checking the wrong box can easily cost a buyer their earnest money or worse if things don’t go according to plan. There are many terms to a contract beyond sales price and close date – good advice from a professional who has spent a minimum of 210 classroom hours studying real estate and who writes contracts every day is easily worth the fees of a Realtor ® in my opinion. The United States has 70% of the world’s lawyers, and when you sign your name on a contract, there can be extremely serious consequences.

Sure, I can tell you that the most common situations require a Third Party Financing Addendum, and a One to Four Family Residential Contract (Resale), and that you need a legal description which you might find in the tax record. But I’ve seen a check box in the wrong place on the third party financing contingency which has cost a buyer close to $20,000 when their loan couldn’t be underwritten, and they were locked into the contract.

To round it off, before I became a Realtor ®, I had no idea how much was involved in protecting a client and giving them great advice during a transaction, and how many complex scenarios could arise. And as they say, the most expensive advice is free advice, so make sure you’re properly represented by a licensed professional where it counts – whether a real estate agent, a dentist or a CPA!

Garreth Wilcock blogs about real estate in Central Texas, where he earns his fees and gives the best real estate advice he can!