Buying Real Estate

Buying residential real estate,

Buying residential real estate can be an exhilarating experience and as evidenced on popular media such as HGTV is a much anticipated and important step in life.  Buying real estate can be a lot of fun, but can easily become stressful.  Here is a list of tips on how to make your buying of residential real estate experience, both enjoyable and successful. 

10 Tips to a successful home buying experience

  1. Determine what you feel "comfortable" affording, get prequalified with a lender for that amount and don't look at homes priced above your prequalified limit.
  2. Write a pros and cons list of no more than 5 items in each column of what is important to you and what you're sure you don't want.  If you go longer than 5, you'll end up being too picky and likely become frustrated that you're not finding or avoiding everything you wanted to.  No home will be perfect, instead look for the home that meets 80% of your pros and avoids 80% of your cons.
  3. Retain a PRS agent to represent you as a buyer.  PRS agents are trained to not be pushy and to look after your best interests.  They will also be able to provide you counsel on market conditions, what a "good value" is for the home you're interested in and can help facilitate your purchase by recommending good sources for financing, inspections and closings/title companies.
  4. Don't look at "everything" on the market.  If you have a good agent, they will filter out the homes that don't meet your criteria.  It is not uncommon for a good agent to narrow down the list to 3 homes based on your criteria and for you to love one of the first 3.  Having less to show you, can be a sign that the agent both knows what they're doing and value your time by bringing you the best options up front. 
  5. Always hire a professional property inspector to inspect the home.  Even if they find the home is in great condition and needs no improvements, you'll have the peace of mind.  If they do find items that need to be addressed, then you can weigh your options on how to be have them taken care of.  In some cases, this could be the seller fixing the item prior to close, or providing a discount of sorts to compensate for the repairs.
  6. Don't just go to one lender because you bank there.  Different banks have different fees.  We recommend asking 3 lenders for a good faith estimate of costs.  A simple way to compare who's giving you the best overall deal is to look at the APR, which factors both the cost of the lender's fees and the interest rate on the loan.  Whoever is giving you the best APR, is usually your best option, provided they are trustworthy and reliable of course.
  7. Don't look at more than 5 homes every 3 days.  If you look at too many, it's difficult to remember all the pros and cons of each listing.  Have your agent filter down the results you send them from your own search to what they think will be your top options and then proceed with deliberation.  If you love a home on the first day of showings, don't hesitate to move on it.  Hesitating is the number one reason buyer's lose out on the property they fall in love with.
  8. Don't look until you're ready to buy.  If you're not ready to buy, it's okay to search on our site, but when you starting looking at homes, make sure you're ready to roll.  Otherwise you're wasting your time, your agent's time and the home seller's time.  A good rule of thumb is the golden rule of doing unto others as you'd have them do unto you.  If you decide not to purchase after looking at available options, even though you had the intention of purchasing when you set out, it's appropriate to compensate the brokerage that spent time trying to find you something.  If you're unsure, and you've been working with a brokerage for over a week, usually a minimum of $500 for their time is appropriate.  It's not required, but agents have families they are trying to feed too and are not paid a salary or hourly wage.  Some buyer rep agreements require this.  Be fair to them and they will go the extra mile for you. 
  9. Look at specifications, not just pictures.  Sometimes a great house can be hidden behind terrible pictures.  Only a small percentage of agents know how to take quality pictures of a home.  If you can't see what a home looks like from the pictures, but the specs are in line with what you're looking for, go visit the property.  You may find a hidden gem that others missed because they focused too much on pictures over specifications.
  10. Use a buyer's agent.  Except in cases where you have an established relationship of trust and feel competent determining where you need to be on price, it is good to use an agent that is not the listing agent.  Be aware that the entire brokerage represents a seller, not just an agent.  You do have options to have an assigned limited dual agent within the same office, but when the agent first discusses agency options, take care to learn what the representations entail.  If they are the listing agent and you don't know them from Adam, you can bet they are more interested in the seller's position than yours.  If you don't know or trust any buyer's agents, then interview several until you feel comfortable with one.  PRS provides high quality buyer's agents for all types of acquisitions. 


Investment and Commercial Buyers

Residential buyers have a lot of built in protections via state and federal protection laws and requirements.  Investors and Businesses however have to live by the rule of Caveat Emptor (buyer beware).  If it isn't readily apparent and obvious, it should be noted that not all realtors know what they are doing when it comes to investment and commercial acquisitions and dispositions.  Nor do all commercial investment agents know everything about all types of commercial real estate.  For example, industrial buyers have very unique needs with load bearing weight measurements on floors, ceiling heights, loading docks, electrical capabilities, etc., but not be as picky on site selection as a retail or professional office client.  Retail may need specific demographics surrounding their location, with traffic counts and positive or negative locational externalities playing a big role in site selection.  There are many types of lease structures as well, so understanding the difference between a NNN vs. a gross or percentage lease and the specific modifications to each is critical.

Here are 5 suggestions when looking for a commercial or investment agent:

  1. Look at their experience.  Are they a designated CCIM (certified commercial investment member) agent, or do they have a similar education or back ground?  (see for more info)
  2. What types of real estate do they specialize in?  Nobody specializes in everything, though sometimes in smaller demographic areas, commercial agents tend to be more diverse due to lack of options and agents.
  3. Establish a plan.  Whether your investing or looking for a location for your business, establish a logical basis for determining both investment type and location.  This will help your agent in finding real estate that is going to meet your needs.  If you don't know what rate of return you want, ask your agent to help you establish your own discount rate.  if they don't know what a discount rate is, proceed with caution.
  4. Don't use a seller's analysis of performance.  Especially critical for investment, investors should establish their own detailed analysis of expected performance from the property.  Talk to commercial property managers or agents to verify that you've made reasonable assumptions on expenses and income.  Be 20% optimistic, 20% pessimistic and 60% realistic when inputing assumptions into your analysis.
  5. Commercial and investment lending is not nearly as standard as residential.  Using an agent that has good connections and knowledge in this arena can be the difference of hundreds of thousands of dollars.  Shop commercial lenders and let them have a bidding war to get you the best terms.
  6. Use Mark Bitton from PRS to represent you in your next commercial or investment acquisition.  Mark is a CCIM Designee with over 11 years in the industry and is widely respected among hundreds of clients for his high quality and dedicated analysis approach to investments.  Mark also facilitates and sponsors group acquisitions.