austin texas real estate

10 Things Your Realtor Had BETTER Be Doing For You if You're Buying a Home

The Austin, Texas real estate market is constantly changing. There are always shifts in Austin neighborhoods, home prices, appreciation rates, mortgage rates and terms...the list goes on and on.

To succeed in buying real estate, you've got to make sure you have the right team helping you. So if you're going to buy a home soon, here are just a few of the things (in our humble opinion!) your agent had BETTER be doing for you:

1. Your Realtor must make sure you're getting the best deal on your home loan.

That ticking time bomb you've been hearing across the country (usually grimly referred to as the "mortgage meltdown" on the TV news) all has to do with "adjustable-rate loans" that are turning sour even as we speak. Borrowers who took out these loans are now watching their lower "teaser rates" expire and re-set, causing their monthly house payments to jump considerably. In the new year, your Realtor should make sure to advise you against signing up for these adjustable loans, considering the fact that current rates on fixed-interest loans (when the interest rate always stays the same) are already low.

Tip: When applying for a mortgage, ask your loan officer for a Good Faith Estimate ("GFE") and then ask your Realtor to look it over. Experienced Realtors see so many of these GFE's, they can often tell you whether your lender is charging you too much in fees or if the interest rate they're quoting you is too high.

2. Your Realtor must be willing and able to analyze recent home sales in any particular neighborhood before you ever make an offer on a property.

Making an offer on a house without first looking at recent sales data from the neighborhood just doesn't make any sense. Yet we see Realtors do this with their clients all the time. What's the average price per square foot in the neighborhood? How long has the property you're interested in been on the market, and how does that compare with the average time all houses have taken to sell in the same area? When negotiating to purchase a property, this kind of knowledge is power. And any licensed Realtor should be able to get it for you and help you understand it.

Tip: Ask your Realtor to give you an up-to-date Comparative Market Analysis ("CMA") print-out for the neighborhood(s) you're interested in. Here at our office, we can even e-mail these charts to you.

3. In 2008, your Realtor must be able to tell you which areas of Austin have a better chance of increasing in value.

Be careful with this one! This one tip alone could make a huge financial difference for you once you’re ready to sell your property years down the road. After several years in the real estate business, we’ve seen clear signs of which areas of the city and suburbs have been doing well with appreciation, and which aren’t. And these aren’t just our opinions – we can show you the numbers to back our opinions up. Of course, we can’t guarantee what will happen with home values in the future. But as you prepare to begin searching for homes, has your Realtor even offered to go over this important data?

Tip: If you know which neighborhood(s) you like, ask your Realtor to run a 5-year report indicating the average listing and sale prices for the area. If you’re torn between a few areas, these numbers might make your final decision easier.

Short sales, in our opinion, are currently among the shrewdest home bargains to be found in the area. They're also becoming much more common these days. The problem is, many Realtors don't even know what a "short sale" is, much less how to handle them! To say it quickly, short sales are also known as “pre-foreclosure” sales, where an owner is behind on payments, and his lender has agreed to accept a deal where a new buyer purchases the property for less than what is owed on the loan. Lenders are agreeing to more short sales these days, because it’s cheaper and easier for them than foreclosing. But carrying out such a transaction takes patience and experience.

Tip: Home sellers who list their properties for sale when they’re behind on mortgage or tax payments are going to become more common in 2008 and beyond. When you find a property you like, make sure your Realtor checks that the owner is current on his mortgage and tax obligations. We’ve seen cases where properties that weren’t advertised as short sales turned out to be just that! And take our word for it – a home seller’s previously-unknown delinquencies can cause major headaches at the closing table!

5. Your agent should be talking less and listening more.

Lots of agents love the sound of their own voices. The problem is, what you want can often get lost in all the noise. If you say you want to stay within a certain monthly payment range, is your agent actually showing you homes that will keep you in that range? If you say you only want to consider homes with certain features, is your agent making sure not to waste your time by showing you what you clearly said you didn’t want?

Tip: If you aren’t comfortable with the service and advice you’re getting from a Realtor, change Realtors. You’re making too big a purchase to keep hanging on to an agent who doesn’t seem to be paying attention to what you want.

6. When preparing to negotiate on your behalf, your agent should be talking to you about asking the seller for things you didn’t even know to ask for.

When trying to figure out what to include in an opening offer for a property, price is just a small piece of the overall puzzle. Your agent should also be advising you whether to ask for the seller to pay for your closing costs, or whether to ask the seller to throw in certain other “extras.”

Tip: If you plan to purchase a property for as little down as possible, ask your loan officer what the maximum “seller contribution” can be for the type of loan you’re getting. This figure – usually expressed as a percentage of the sale price – is the maximum amount your lender will allow a seller to contribute toward your costs at closing. It’s a good number to know in advance!

7. Your agent should give you a list of some of the best, toughest home inspectors in town.

Please, please, please don’t skip the crucial step of getting your home inspected before you buy the property. And better yet, make sure the home inspector you use to look over the property is thorough…and tough! This is the single most effective way to avoid a “money pit” situation down the road, and yet we see so many home buyers who simply choose to skip it, especially when purchasing a new home. You’d be surprised what an inspector can find even if a property is brand new.

Tip: If you plan to buy a brand new home, get a good home inspector to go through the property and give you a written report right before your first builder “walk-through.” The builder’s superintendent will usually be more willing to make changes or repairs if there’s a licensed home inspector who cites the problems in writing.

8. If you’re thinking about buying a brand new home, your Realtor should meet with you (somewhere off site!) to discuss negotiation strategy before you ever enter the model home.

In 2008 and beyond, local home builders will be fighting tooth and nail for your business. But in our experience, once you’re in the door, you’ll only get a great deal if the builder actually believes they need to fight for your business. It’s funny the way that works! This is where having a Realtor on your new home deal can save you thousands. The truth is, most reputable builders in town would rather you have an agent, as it reduces their own liability. And having your own Realtor won’t cost you an extra dime, since agents are usually paid from the builder’s marketing budget.

Tip: Already know which builder or new home subdivision you like? Run it by your Realtor and ask them for advice, past home sales data and other current info.

9. When showing properties, your buyer’s agent should be pointing out negatives as well as positives.

If you’re only hearing good things about every property your agent is showing you, watch out. Any good, experienced agent should be able and willing to point out any drawbacks to a property. Perhaps the property backs up to a busy road or a mosquito-infested drainage pond. Or maybe you need to know that the owner’s decision to convert the garage into a game room won’t be helpful when you try to sell the property in the future (many buyers decide against houses that don’t have garages).

Tip: A real estate agent is always happy to show you properties you’re excited about, but if your Realtor never offers any constructive feedback about the potential drawbacks of certain properties, they’re not doing their most important job, which is protecting your best interests.

10. Your agent should go with you to the closing, and should be able to help you understand every document you’ll be asked to sign.

Sure, most agents do come to the closing with their clients. But not all of them have a clear understanding of a HUD-1 Settlement Statement, much less the difference between a Note and a Deed of Trust. Make sure your agent can help you understand the general meaning of each document an escrow officer puts in front of you.

Tip: Some buyers end up taking hours at the closing table to read over each and every document. Give yourself more time to review what you’ll be signing by asking your Realtor to arrange for the escrow officer to send to you via e-mail copies of the closing documents in advance. This can usually be arranged to happen the day before you’re scheduled to close.