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Buying a Home in a Buyer's Market

When is the best time to buy a house? With many markets reporting an abundance of homes for sale, and interest rates remaining at near historic lows, now might be one of the best times in recent memory. While today’s real estate market does offer advantages to buyers, consumers still need to be savvy in order to get the best deal they can.

Following are some things that I, as a real estate professional, believe every homebuyer should keep in mind:

Don’t Try to ‘Time’ the Market. When home prices are lower, it is very tempting for potential buyers to try to wait as long as possible in the hopes that prices will decline even further. This strategy can be detrimental because when there is high inventory, smart sellers price their homes properly – not according to past sales but according to current conditions – so their homes will sell in a timely fashion. Once a home is priced accurately in any current market, buyers will make offers.

Shop Around; But, Don’t Wait Too Long. The increased inventory gives homebuyers a great opportunity to compare homes that meet their needs. However, this does not mean that homebuyers should procrastinate. If you find a house you love, put in your bid and negotiate. Don’t provide an opportunity for another buyer to make an offer.

Rates are Important; but Secondary. Studies reveal that the majority of people move based on lifestyle changes such as new job, marriage, divorce or family expansion. Pay attention to the mortgage rates and recognize that the rate will impact your payment. However, more important than the rate is the need to purchase a home. Renting is the equivalent of throwing money away each month.

Negotiate on the Incentives. Sellers eager to move their homes may offer you a variety of incentives such as closing costs, repair escrows, and home warranties. If you accept an incentive, make sure it makes sense for you. Instead of these options, you may opt to have the seller make one or two repairs prior to closing. Of course, you can always ask the seller to simply deduct the amount in question from the list price.

Buying in Baltimore Snapshot

Buying your first home can and selling of real estate is a complex matter, whether in Baltimore or any other part of the country. At first it might seem to buyers that by searching for homes online or attending local open houses you can quickly find the right home at the right price.

But, you will soon find a basic rule in the Baltimore real estate is that all properties are unique. Homes in Baltimore City differ from Baltimore County and so do contract terms, financing options, inspection requirements and closing costs. No two transactions are alike. Amidst this maze of forms, financing alternatives, inspections, appraisals, pricing options and negotiating, it makes sense to work with a Baltimore real estate professional.

The following chart provides an over view of all the steps in a Baltimore home purchase.

Depending on the property you select, the ordering of the steps may differ, but all of the steps must be completed prior to settling on the purchase of your new home.

Buying in Baltimore

The following chart provides an over view of all the steps in a Baltimore home purchase.

Depending on the property you select, the ordering of the steps may differ, but all of the steps must be completed prior to settling on the purchase of your new home.

Working with Agents -- 3 Things Buyers Don't Know

Regardless of whether you work with me or another Baltimore Realtor®, there are 3 important things to keep in mind:

Agent Loyalty: It is important to understand who real estate agents represent. In every Maryland real estate transaction, each real estate agent has a client – either the Buyer or the Seller. The agent is responsible for using their professional real estate knowledge to represent their client. When you contact an agent with a sign on a home for sale, this agent is representing the Seller. This agent is obligated not to disclose confidential information about their client. As a Buyer, you should retain a Buyer’s agent to represent you in the transaction.

Agent Fees: Agents are paid according to brokerage fee agreements with their Buyers. When you select a buyer agent, you will sign a buyer representation agreement. Signing the agreement creates a relationship between you and your agent. The agreement explains the agent’s duties and obligations to you and vice versa. The Seller may make a contribution to cover a portion or this entire fee. When looking at homes which appear in the Multiple List Service, the Seller lists the fee that they are offering, if any, with each home.

Procuring Cause: Agents are paid for helping Buyers find their new home. In most cases, this payment is earned when the agent introduces you to the home that you will purchase. While the agent is considered having earned the fee at this stage in the transaction, payment to the agent is deferred until the entire purchase process is completed.

How Does My Real Estate Agent Get Paid?

The real estate commission is an amount, usually a percentage of the property sales price, which is collected by a real estate professional as a fee for helping buyers identify a desired property for purchase and more importantly, structure the terms of the transaction.

There is no standard commission rate. Commissions are not set by law, but are negotiated, and may vary depending on services, customer needs, and company policy. In general, Baltimore area buyer agent commission agents charge between 2.5% and 3.5% of the property sales price.

The following is a list of many of the services regularly provided by me to help my clients feel comfortable with the process of finding and purchasing a home. Please do not hesitate to ask me to help you perform any of the below listed services:

Pre-Purchase

Provide ideas for alternate methods of finance or purchase.
Review your financial and personal plans as they relate to real estate.
Assist in developing a prioritized list of home selection criteria.
Provide a sample copy of the purchase agreement for you to study.
Provide a list of neighborhoods in your price range.
Explain how the Realtor Multiple Listing System (MLS) works.
Arrange to show the homes you pre-select.
Explain real estate terminology throughout the home buying process.

Offer Presentation & Contract Negotiation

Make sure that events and conditions agreed upon in the contract can be realistically performed within time limits provided.
Explain how offers to purchase property are presented.
Recalculate costs and monthly payments, in the event of a counter offer from the seller.

Home Inspections & Transaction Processing

If requested, provide a list of reputable companies for home and environmental inspection.
Help interpret which report items are relatively minor and which require further clarification.
Re-negotiate with seller to pay for items shown to be deficient in reports.
Arrange for repairs, as necessary.
Gather information about any items disclosed which may be of concern.
Rewrite the contract, as needed.
Obtain a receipt or deposit the purchaser’s contract deposit.
Closely follow deadlines listed in the contract. Errors in timing can nullify the agreement.
Work with lender to provide information and approvals as stipulated.
Provide regular updates on the closing progress to buyer, as required.
Explain the provisions of and order a Home Warranty Plan, if requested.
Explain Home Owner’s insurance requirements.

Pre-Settlement Activities

Provide a list of reputable moving companies, as requested.
Help buyer locate temporary housing, as needed.
Coordinate move out by seller and move in by buyer.
Conduct a final “walk through” property inspection to assure that nothing significant has changed since the Purchase Agreement was signed.
Make arrangements to rectify any problems discovered during walk through.
Provide written explanation of the various ways to hold title to real property.

Questions? Just Ask!

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Why You Need A Baltimore Realtor®

As a first-time Baltimore buyer, purchasing a home is certainly one of the most rewarding experiences you will ever have; it's also one of the most challenging.

When you’re buying for the first time, the process may seem overwhelming. And even if you’ve been through it several times, every move is different and presents new challenges. One clear advantage of enlisting the help of a Baltimore Realtor® is simply that you don’t have to “go it alone.”

Here are the top advantages most first-time Baltimore buyers derive from working with an agent:

Help Determine Affordability: Once you’ve made the decision to purchase, figuring out what type of home you can afford based upon your available down payment and desired payment range is not always evident. A knowledgeable agent can help you begin your search

LocateHomes: Homes are for sale all over Baltimore, an agent is the best point-of-access for all homes and can arrange showings for preferred homes, homes for sale by owners, and homes which may not yet have been listed with an agent.

Assist in Narrowing the Search: Even though you may know the style and location of the home you wish to purchase, every home is not appropriate for every Buyer’s loan type or down payment capabilities.

Offer Market Information: Another advantage is that real estate agents are a valuable source of information about market trends, neighborhoods and especially information about homes for sale throughout the areas in which you're interested.

Navigatethe Process: A good agent has the training, the know-how, and the experience to help you through each step of the process and to make the process of finding, buying, and moving into your new home as smooth, quick, and enjoyable as it can be.