Your Real Estate team

The Team and the Players
You don't have to become an expert in property values, mortgages, tax and real estate law, title insurance, escrow, pest-control work, and construction techniques in order to play the house-buying game well. Instead, you can hire people who've already mastered the skills that you lack. Home buying is a team sport. Your job is to lead and coach the team, not play every position. After you assemble a winning team, your players should give you solid advice so you can make brilliant decisions.

Because you probably don't have an unlimited budget, you need to determine which experts are absolutely necessary and which tasks you can handle yourself. You are the one who must determine how competent or challenged you feel with the various aspects of the home-buying process.

The players
Here's an overview of the possible players on your team:

You: You are the most important player on your team. Sooner or later, another player is bound to drop the ball or fail to satisfy your needs. You have every right to politely, yet forcefully, insist that this person make things right. Remember that you hire the players on your team; they work for you.

Real estate agent: Because the house that you're getting ready to buy is probably one of your largest investments, you want to protect your interests by having someone on your team who knows property values. Your agent's primary mission is to help you find your dream home, tell you what your home is worth and then negotiate on your behalf to get the best deal.

Real estate brokerage: All states issue two different real estate licenses: one for salespeople (agents) and one for brokers. Real estate brokers must satisfy more stringent educational and experience standards than agents do. If your real estate agent is not an independent broker or the broker for a real estate office, the agent must be supervised by a broker who's responsible for everything that your agent does or fails to do within the course and scope of the duties of a real estate sales professional. In a crisis, your transaction's success may depend on back-up support from your agent's broker.

Lender: Because most folks can't pay all cash for their homes, you probably need a loan to buy your dream house. A good lender offers competitively priced loans and may even be able to help you select the best type of loan from the financial minefield of loan programs available today.

Property inspectors: A house's physical condition greatly affects its value. Your dream home should be thoroughly inspected from roof to foundation before you purchase it to ensure that you actually get what you think you're buying.
Closing officer: Mutual distrust is the underlying rule of every real estate deal. You and the seller need a neutral third party, a closing officer, who'll handle funds and paperwork related to the transaction without playing favorites. The closing officer is the home-buying game's referee.

Financial and tax advisors: Before you buy a home, you should understand how the purchase will fit into the context of your overall financial situation. You should address the issues of what your financial goals are and, given those goals, how much house you can afford.

Lawyer: You may or may not need a lawyer on your team, depending on your contract's complexity, where your dream home is located, and your personal comfort level. The purchase agreement you sign when buying a home is a legally binding contract. If you have any questions about your contract's legality, put a lawyer who specializes in real estate law on your team.

Each player brings a different skill into the game. Assemble a great team, and they will guide you through any situation that may arise during your transaction. Keep in mind that good players act as advisors -- not decision makers. Decision making is your job. After all, it's your money on the line.

The Perfect Agent
"What's it worth?" The wrong answer to this question can cost you big bucks! Worse yet, there's no simple answer to this deceptively simple question because home prices aren't precise. Houses sell for fair market value, which is whatever buyers offer and sellers accept. Fair market value is not a specific number; it's a price range.

A good agent can be the foundation of your real estate team. An agent can help you find a home that meets your needs, negotiate for that home on your behalf, supervise property inspections, and coordinate the closing. Agents often have useful leads for mortgage loans. A good agent's negotiating skills and knowledge of property values can save you thousands of dollars.
Recognizing the attributes of the best agents
All the best agents have certain important qualities in common:

They educate you: Your agent knows the buying process and carefully explains each step so that you understand exactly what's happening at all times. Agents should be patient, not pushy.
They enable you to make good decisions: Your agent always explains what your options are so that you can make wise decisions regarding your best course of action. They advise you if they think that you should add other experts (property inspectors, lawyers, and so on) to your team -- experts don't threaten a good agent.
They voluntarily limit themselves geographically and by property type: Good agents know that trying to be all things to all people invariably results in mediocre service. Even though real estate laws are the same throughout your state, different areas within the state generally have radically different market conditions, local zoning ordinances, and building code restrictions.
They have contacts: Folks prefer doing business with people they know, respect, and trust. You can make use of your agent's working relationships with local lenders, property inspectors, lawyers, title officers, insurance agents, government officials, and other real estate agents.
They have time for you: Success is a two-edged sword. An agent who is already working with several other buyers and sellers probably doesn't have enough surplus time to serve you properly. Occasional scheduling conflicts are unavoidable. If,however, you often find your needs being neglected because your agent's time is over committed, get a new agent.

Your Agent and You
After working so hard to find a great agent, it would be a shame to inadvertently ruin the relationship. Good buyer/agent relationships are based upon pillars of mutual loyalty and trust that develop over time.

More isn't always better One common fallacy is thinking that five agents will be five times better than one agent. The more agents you work with, the better your chances of quickly finding your dream home. Things don't work that way in the real world.

One good agent can quickly show you every home on the market that meets your price, neighborhood, size, and condition specifications. If none of the houses is what you want, good agents keep looking until the right home hits the market. They don't limit their searches to houses listed by their office. Whether you work with one agent or one hundred, you'll see the same houses.

Agents know that they won't get paid if you don't buy. That risk comes with the job. What agents hate is losing a sale after months of hard work because they called you shortly after another agent called you about the same house. That risk is unnecessary.

Don't be surprised, however, if good agents in the same area opt out of a horse race. Their odds of getting paid for their work increase dramatically when they spend their time on buyers who work exclusively with them. Loyalty begets loyalty.

Another fallacy is viewing your agent as your adversary. Some buyers think that the less their agent knows about them, the better. Such buyers believe that, after agents know why they want to buy and how much cash they have, the agents will somehow magically manipulate them into spending more than they can afford.

Good agents ask such questions because they need to be sure that you're financially qualified in order to avoid wasting your time and theirs by showing you property that you can't afford. If your agent knows that you're under deadline pressure to buy, she'll give your house hunt top priority.

Good agents won't betray your trust. They know that if they take care of you, the commission takes care of itself.

Good agents know that you have the power to impact their careers. If they please you, you'll be a source of glowing referrals for them.

Other Key Advisors

Home Inspectors
A home's price is directly related to its physical condition. Homes in top shape sell for top dollar. Fixer-uppers sell at greatly reduced prices because whoever buys them must spend money on repairs to get them back into pristine condition.

You can't know how much work a house may need just by looking at it. You can't see whether the roof leaks, the electrical system is shockingly defective, the plumbing is shot, the furnace's heat exchanger is cracked, the chimney is loose, or termites are feasting on the woodwork. Invisible defects like these cost major money to repair.

Because you don't want to inadvertently become the owner of a home with such expensive hidden problems, you need property inspectors on your team. None of the other players on your team are qualified to advise you about a house's physical condition or the cost of necessary corrective work.

Finding a home inspector
A Home Inspection is a very important part of the home buying process. Home inspections generally provide buyers with information about the property's major systems including, although not limited to, heating, air conditioning, plumbing and electrical systems, foundation and structure, roof and flashing and possible environmental conditions affecting the property. Expect to receive a written report from the home inspector. Choosing a qualified individual to perform the inspection can be a daunting task. The following is a list of items that should be taken into account when choosing a Home Inspector:

Ask the Home Inspection Company to provide proof of Errors and Omissions Insurance Coverage
Ask the Home Inspection Company to provide proof of Public Liability Insurance Coverage.
Obtain the name of any professional organizations the company or individual are members of and follow up with that organization.

Finding financial and tax advisors
If you want to hire a financial or tax advisor, interview several before you select one. Check with your agent, banker, lawyer, business associates, and friends for referrals. As is the case with selecting your agent, you should get client references from each tax advisor and call the references.

Here are the qualities to look for in a good financial or tax advisor:

Does the advisor work full time in this occupation? The realm of personal finances and taxes is too vast for you to trust a part-timer. You need the services of a full-time professional.
Does the advisor speak your language? Good advisors can explain your options in simple terms. If you don't understand exactly what the tax advisor is saying, ask for clarification. If you still don't understand, get another tax advisor.
Is the advisor objective? Hire someone who works solely by the hour and doesn't have a vested interest in the advice that they give you. Never blindly follow the advice of experts because you're in awe of their expertise.
What is the advisor's fee schedule? Hourly fees vary widely. Don't pick someone strictly on a cost-per-hour basis. Furthermore, the quality of the seasoned veteran's advice may be superior to the quality of the novice's advice.
Is the tax advisor a Certified Public Accountant (CPA) or Enrolled Agent (EA)? These professional designations indicate that the tax advisor has satisfied special education and experience requirements and has passed a rigorous licensing exam. A CPA does general accounting and prepares tax returns. An EA focuses specifically on taxation
Does the tax advisor have experience with real estate transactions? Tax practice, like law or medicine, is an extremely broad field. You need a tax advisor whose clients have tax problems like yours.

Understanding Agency

Single agency
In this form of representation, a Broker/Licensee represents one of the two parties (seller or buyer) in the transaction and will play one of two roles:

Seller's Agent: In this type of agency, a Broker/Licensee works solely for the seller.

Buyer's Agent: In this type of agency, a Broker/Licensee works solely for the buyer. A Buyer's Agent represents only the buyer even if the seller pays a portion or all of the commission.

Dual agency
Dual Agency is the most confusing and least understood form of agency. In this form of representation, the Broker/Licensee represents both the seller and buyer equally.Although this is allowed by law, the confusion begins because logically, a Licensee can't represent your best interests as a seller (for instance, getting the highest price possible) while representing the buyer's best interests (getting the lowest price possible) at the same time.

The most common type of Dual Agency involves two different Licensees who both work for the same Broker. For example, you list your home with Sarah, a Prudential Fox & Roach licensee who agrees to be your exclusive agent. Unknown to you and Sarah, Betty Buyer met Bob, who is also a licensee from Prudential Fox & Roach. Betty liked Bob's style and asked him to represent her exclusively as a buyer's agent. Bob enthusiastically accepted. So far, so good! You have Sarah, your exclusive agent, and Betty has Bob, her exclusive agent. Everything is fine, until Bob shows Betty your house. Betty loves it and instructs Bob to write up an offer on it immediately.

At the moment Betty decides to look at your house, the agency relationships that you and Betty have with your respective agents change. Like it or not, Sarah suddenly represents both you and Betty. Similarly, Bob becomes your agent as well as Betty's agent.

Why? Even though two different agents are involved in the transaction, both agents work for the same real estate broker - Prudential Fox & Roach. Prudential Fox & Roach and the licensees represent the seller and the buyer as soon as the property is shown. That's dual agency. Because Prudential Fox & Roach is a large brokerage operation with many offices and licensees, your odds of experiencing dual agency are high.

Pennsylvania, New Jersey and Delaware all permit dual agency relationships as long as the agency status is disclosed in advance, and confirmed by both parties, in writing. Undisclosed dual agency occurs if the seller and buyer have not been advised about or consented to Dual Agency and can be used as grounds to have a purchase agreement revoked and may permit the injured parties to seek recovery against (that is, sue) the Broker.

Designated agency - available in Pennsylvania only
Designated Agency allows individual licensees to maintain their exclusive status of representation with a seller and buyer, even when both parties are represented by the same Broker.

In this type of relationship, the individual Licensees each represent one of the two parties to the transaction, work for the same Broker and each plays one of the following roles:

Seller's Agent: In this type of agency, a Broker/Licensee works solely for the seller.

Buyer's Agent: In this type of agency, a Broker/Licensee works solely for the buyer. A Buyer's Agent represents only the buyer even if the seller pays a portion or all of the commission.
While the licensees remain in the exclusive relationships with you, the Broker will act as the dual agent in this type of relationship, and is responsible to oversee the activities of the Licensees involved in the transaction. Again, consent in writing is required.

In the event a single licensee represents both the seller and the buyer in a transaction, the agency relationship will change and the Licensee will act as a dual agent as described above. Written consent of the parties is required for this change to occur.

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