Reprinted from The Washington Times
By Ellen Paris
Special to the Washington Times
The Washington area’s home-buying market is in full swing again. History is repeating itself. As in the heady days of the middle to late ’80s, the selling is fast and furious. Well-priced homes in good condition often sell in a day or two.
Some sellers are even receiving several offers for their properties, leading to bidding wars.
Buyers can easily make mistakes in this kind of market. Some can cost them money, while others may cost them their dream home. Certain strategies can help buyers avoid these mistakes if they know about them ahead of time.
One essential step is for buyers to work with an experienced real estate agent. Good agents know the market, including the inventory and values. They often know about properties that come up for sale even before the homes are advertised and go into the multiple-listing service.
“Believing you get a lower price by buying a home through the Realtor who is listing the property is a mistake,” explains Casey Margenau, a Realtor with RE/MAX Distinctive Real Estate in McLean and one of Northern Virginia’s top producers. He lists scores of properties each year.
“A listing agent’s commission includes a fee for a buyer’s agent and is still earned if you buy from the listing agent,” he says.
A significant portion of the inventory on the market, especially in Northern Virginia, is made up of new homes. Many buyers make big mistakes by buying directly from a builder, thinking they don’t need their own real estate agent to represent them.
“Builders love a buyer who is not represented by a Realtor for many reasons,” says Mr. Margenau, who is experienced in new-home sales. In that situation, the builder controls the sale, and the buyer negotiates his offer with the builder’s sales agents, which is usually an uneven match.
Beau Brincefield, an Alexandria real estate lawyer and author of Brincefield’s Guide to Buying a Home says: “The typical form contracts used by builders are heavily slanted and very favorable to the seller-builder. Three major areas in builder contracts to watch out for are: deposits, delivery dates, and specifications and substitutions.”
Mr. Brincefield warns: “Any deposits or other advanced payments which you are required to make under contract should be placed in a separate escrow account that is not under the builder’s control. It’s not just small builders who have financial problems. Some of the country’s biggest home builders have gone under, leaving homes unfinished and leaving finished homes with major liens against them.”
Buying a home is both a financial and an emotional decision. It’s easy to get off track and lose sight of your original needs.
“Buyers get too emotional, especially when they see beautifully decorated new model homes. And that’s when a real estate agent can keep them focused on what they set out to buy” says Maggie DelGallo, owner-broker of Home Buyers Guardian Metro Realty of Reston and Sterling.
A common mistake buyers make is buying for today and not for their future needs. This also means thinking about the new home’s resale potential. The buyers may think this is a forever home, but the unexpected happens, and they may have to sell that home much sooner than they originally planned.
“Even if you don’t have children, you have to check out the area’s school districts for performance, because that is what the future buyers of your home will be looking at” she says.
The market is different for home buyers today than it was last year.
If you do have children and are relocating to a new school district, she says, make sure that the schools in the new district have the kind of curriculum and activities your children will find interesting.
For example, if your son is a champion swimmer and his new school lacks an active or competitive swim team, the home you selected may not be the home for your family.
If you’re buying into either a condominium or homeowners association, Donna Mason, a lawyer at Segan, Mason & Mason in Annandale, advises buyers to “make sure to get the association’s disclosure package early on in the transaction so you can make sure there are no special assessments coming up or covenant violations that would affect you.”
State laws require that such documents be delivered to the buyer within a certain time period once a contract is written and presented. After reviewing the package, the buyer has the option of rejecting the contract if he or she doesn’t like what’s in the documents.
Getting pre-approved with a lender for a mortgage before you go out looking is essential in today’s market.
“I see sellers not wanting to accept any contracts that have financing contingencies. Why should they essentially take the home off the market while they wait to find out if this buyer can get a loan to buy their home? In this market, they just don’t have to do this” says Toby Rhodes, owner-broker of Coldwell Banker Realty Pros. His company has seven offices in the District and Maryland.
Mr. Rhodes also is seeing buyers out there looking who haven’t sold their present homes.
“This market is so fast-paced that most sellers won’t deal with a home-sale contingency. If you sell your home and don’t find another one right away, you can always go into a rental if you have to,” he says.
Potential buyers naturally want to look around for a while before making such a big decision. In this market, however, single-family homes are selling so fast that buyers do not have the luxury of time in making their decisions, Mr. Rhodes says.
“Some buyers won’t make a fast decision and think they have to look for months. Then, finally, after losing out on two or three homes, they realize that if they find the perfect home, then they have to make an offer on it quickly &emdash; and usually for full price in this market,” he says.
The balance of power definitely has shifted from buyer to seller in the past six months.
“It used to be that you needed an aggressive agent to sell your home. Now it’s the buyers who need aggressive agents to get the property they want,” says Dorry Kee, an associate broker with RE/MAX Elite Properties.
Since this is a seller’s market, the seller can pick and choose his buyer. If the seller has several offers coming in, and all are equal, he may just choose the offer that seems the friendliest, says Ruth Dickie, president of the Greater Capital Area Association of Realtors and managing broker of Long & Foster Realtor’s Bethesda Hampden Square office.
“Sellers take great pride in their homes, and we have had sellers that refuse to accept an offer because the way it was written sounded hostile” she says. “I’ve seen situations where a seller with multiple offers takes the one that sounds like the buyers will be the most reasonable ones to deal with.”
The market is different for home buyers today than it was last year. They can’t afford to make mistakes.
Reprinted from The Washington Times, Friday March 26, 1999.