Real Estate agents/offers/financing ect

[paulsharvey]

So, me and wife have been casually looking to upgrade house/property for probably 5 years, and getting a bit beyond casual now. We have lived in same house for almost 17 year, and a Lot has changed. There was no such thing as a buyers agent back then, and now it seems to be the norm. My understanding (correct me if wrong, I'm happy to learn) the seller typically pays 2.5% to the buyers agent at closing, and the buyers agent doesn't cost the seller? Let's say, I have my eye on a property that fits the major bullet points, and price range (vacant wooded parcel, 6.5 acres), should I contact a buyers agent? I've only bought 1 house in my life, and I was overwhelmed, the stuff I had to come out of pocket for that I didn't expect. I know a buyers agent can help in the search.

My thought right now, is buy the property with a land loan now; get construction loan when ready, and either site built/modular/nice mobile home; preferably with a single closing construction to permanent loan. Down payment is a big issue, also, credit is lower mid to upper low, but nothing specifically bad on it.

One of the big catches, we don't want to sell our current home, until we have a move in ready new home. We have decent equity in this one, but not a good way to use that.

 

[ericm979]

We used a buyers agent to buy a couple houses a few decades ago. It was worth it then and I'd use one now too. The buyer's agent knows the area and the market and can give you a lot of advice. And then they do the negotiating with the seller's realtor for you. The first house we bought the seller's agent was a real jerk. Our agent handled it much better than I would have (I'd have walked out. He was really awful). The seller tried to pull some BS on us as well and our agent knew it was BS and how to deal with it. Totally worth it.

In CA the total realtor fee is 6% max and the buyer's agent typically gets 2.5% but it can vary a bit. I see it listed on many listings now. It may be different in your state.

Buying a second home you'll pay a bit more for the loan. The same is true of the land + construction loan vs a traditional loan for land with a house on it. The more unusual it is, the more it costs.

The market's down some now in most places because loan rates are higher than they have been for a long time. (thanks Fed!). It's a decent time to buy if you can afford to. With rates up there should be less competition for contractors.

 

[2manyrocks]

A good buyer's agent can be of considerable help. I'd be leery however because the recent slow down in real estate transactions means some realtors are hungry and might push towards a purchase that they shouldn't.

If you sign a contract with a buyer's agent that happens to be an exclusive contract, you could owe them their fee even if you find a property on your own and they don't lift a finger. You need to clearly understand the terms of the contract with them.

There has been a huge runup in real estate prices since 2019. Mortgage rates for many are now over 8% and likely headed higher. Sooner or later, something is going to prick a hole in this pricing bubble because wages have not kept pace with the pace of real estate prices. Between these high real estate prices and 8% mortgage loans, property taxes, and insurance, the monthly payment for real estate has gotten pretty high, and that is why the present prices levels are unsustainable, IMPO.

 

[paulsharvey]

Oh I agree 100%, but at the same time, you can't sit still forever. The house we are in was never a forever home, but although the wife complains, it had a been a good place that fit our needs. When we started talking about a new place, we had no idea how much things had shot up, even in a relatively low income rural area. We haven't seen anything that meets our bullet points, in our price range
1) 5 acres min (I really would like more than 5, maybe 10+, but its probably not in the cards)
2) on/near water (pond, lake, creek, stones throw to public ramp, im on board with this, but wife is the driving one on that point)
3) same county, preferably same schools
4) 3/2 min; 4/2.5 would be nice; either site build to new mobile/modular (wife doesn't want to go mobile, but she's not dead set against it, but "I don't want a rectangle doublewide"
5) 24/7/365 roads. I dont mind dirt roads, but paved is nice; but at the same time, I dont want to have to worry about it raining 2" and wife can't make it home cause the road is That bad

So, to get what we want, I think we have to look at land/house as separate items

Current house is 1300 sq ft, 3/2 double wide on 2 acres, and with 2 adults, 3 kids, tractor, buggy, garden, chickens, privacy woods, ect; its shrinking daily

 

[2manyrocks]

Something to consider is whether the property you want to buy really fits your situation. If something comes on the market that really suits you and you know you're going to be able to enjoy it for the rest of your life, it would be less painful to ride through any downward prices that might or might not happen after you buy.

However, if you buy something that doesn't tick all of your boxes and you find yourself wanting to sell it to get something more desirable, you could be tied up in what you bought for a while if your equity position goes negative when the market turns down.

Generally, listings are down and that is what is holding prices up for now, but you might have more affordable choices coming.

 

[newbury]

If you are relatively clueless about the intricacies of real estate a buyers agent might be worth the money.
For our last (hopefully) purchase we tried to use a buyers agent. My wife is a retired Lawyer from US Army Corps of Engineers so she knew the intricacies.
We tried several agents over the course of about 3 years trying to buy a "fixer upper" house & land within a reasonable distance of her mom in Northeast Mississippi. They were all abject failures.
They constantly pushed us to the top of our price range ($350K) on relatively new housing. The one house we settled on that agent was lax and did not get paperwork forwarded in time before a deadline and it was going to cost us a couple of thousand to "restart" the paperwork. Her comment was "sorry".
We ended up finding a property ourselves, for half of our upper limit with an additional 70 acres available for well under market value.

Remember - most of them still make $$ based on a % of the sale, so there is little if any value in finding property for less then the maximum $$ they can suck out of you.

 

[NorTracNY]

If you're just looking for land, I'd just use a real-estate attorney. Agents have zero ethics (that's for a good one). We started with an agent, and as a buyer's agent, they have ZERO of your interest in mind. They make money based upon percentage of what you will spend. Land is very cheap relative to a house, so they really won't do anything for you as they will see you as a client that will only get them less than a quarter what another would.

In case there are agents here, I make my comments based upon a relative who use to be an agent and got out do to no ethics, and my own experience.

 

[Omega Woods]

As stated above, if you find a piece of land that you want to buy, I would talk to a real-estate lawyer instead of an agent. Generally speaking, with notable exceptions, real estate agents know how to sell new and pre-existing homes. If the land you find is listed with a real estate company and the price is fair, just use the listing company to complete the purchase. If you don't trust them for whatever reason, get a lawyer to look over the contracts.

May I ask what your current situation is compared to what you're looking for ultimately? How much land do you have now? Any chance of upgrading your current home into something closer to perfect? If you want to stay in the same county and school district, looking at how to improve what you have may be a better strategy than taking an 8% mortgage.

 

[paulsharvey]

We currently have a 1994 double wide 3/2 (1300 sf) on 2 acres, bought in 2008. Got some decent equity, but nothing crazy. We bought this place when we where single income, and 1 kid, so typical starter house.

I had considered A: have a new home built or a modular set up; But we would be throwing a lot of value away, and still have a very small property in a rapidly growing neighborhood...

B: adding on, but see same probelms as above. Also, it's not so much it doesn't have enough rooms, more a matter of all of them are small, closets are tiny, no in home storage, ect. Also, it's a real pain to do while you live in the home.

C: more wife's comment than a plan, renting out this house, there is good cash flow between mortage vs rent rates; but honestly, we both work full time, and I don't really want to be a land lord

D: asking if my mom would sell us a chunk of hers, but 1)that's an award conversation, 2)don't want to live next to family; 3)youngest daughter would change schools

As background, I moved a Lot as a kid, and Hated it, never 100% settled, and although kids are tough, I don't want to do that to them. Also, oldest is (currently) planning to move out in next year to go to college, but don't want to assume that won't change, but either way, within a couple years, it will only be 2 daughters still at home

 

[Omega Woods]

I see. Sorry, I didn't read post #4 carefully enough. If you have 2 acres and want 5+ then there's not much to do except find a bigger place.

Since your original question was regarding buyer's agents, I'll give my opinion on that. Ninety percent of what 90% of buyer's agents do these days can be replaced with an internet search. You have a pretty clear picture of what you want and you can pretty easily determine whether your parameters are met by searching the same data streams the buyer's agents are going to search. Depending on what you're looking for, it may take a long time to find it in a price range you're willing to stay within. That's the nature of the game. If you find one that meets all your needs, then contact the listing agent quickly and get a showing. Good ones don't last long in many places.

Having said that, I have found two or three properties through agents I trust, generally from small agencies with solid insight into the local markets. It doesn't hurt to ask around for agents that people like and trust. If you find a good one, then you can give them your wish list and parameters and let them do some work. If they bring you a good property, then they've earned their money. If they're hungry, they'll poke around without a written buyer's agency contract.

Best of luck to you!

 

[2manyrocks]

a) ending up with two homes on two acres could be hard to resell later unless your neighborhood is such that you could subdivide your 2 acres into two tracts and the resulting two properties would be appealing and more valuable to buyers in your market. However, you don't want to spend money building or adding something that ends up costing you money or makes it harder to resell what you already have. That is, if buyers in your market expect to see a home on at least 2 acres and now you're trying to sell two homes each on 1 acre, that might not be good. It depends on what you have and what your local market is.

If you really want 5 acres, there's no way to turn 2 acres into 5 acres unless those 2 acres are very valuable and can be sold to buy 5 acres somewhere else. Whatever you do, you don't want to do something now that ties your hands later and actually prevents you from getting where you want to be.

b) Generally, I suspect what you feel is 2 adults + 3 older children in 1,300 SF is just too tight.

My wife's parents raised a son and two daughters in a house about the size of yours on roughly the same acres. We kid about it, but my mother in law has a reputation for keeping her house just so and isn't reluctant to get rid of any clutter. After the children moved out, the house was big enough for my wife's parents, and my mother in law continues to live there after my father in law passed.

Some possible strategies are to decrease clutter, and consider adding to or rearranging the space you already have to make it more useable. However, if you just know you aren't going to stay there, also consider whether the same money could be better spent on paint, flooring, and kitchen updates to make your home more appealing for resale. It depends on what you have and what your local market is.

c) one bad tenant can really set you back if they quit paying rent, trash your house, and meanwhile you have to keep paying the mortgage while you go to court to kick them out. Managing tenants requires a certain set of skills and there is risk if you don't screen out the bad ones.

d) presumably your Mom would sell something at a favorable price and you wouldn't incur a realtor's fee. I don't know your family circumstances. Could be that your Mom may need your help in her older years and being close by would help? Can't speak to the schools issue except to say some schools are good and some schools you don't want your kids to go near. If you just want 5 acres, maybe your Mom would sell them to you, and you don't necessarily have to live there if you're mainly interested in the land.

One thing you may not want is for your Mom to think you aren't interested and then she sells it to someone else.

 

[Torvy]

Buyer's agents are not new at all (at least 40+ years). Some states have rules that dictate that all realtors technically work for the seller (since the seller is paying them). In those cases there are limits as to what the realtor may point out to the buyer (legally and ethically).

Normally there is an even split of the commission between agents when the buyer uses their own. Some agents will give the seller a break if they get both ends. Lots of variation. Used to be 6% was standard, but markets dictate wide swings.

 

[paulsharvey]

"One thing you may not want is for your Mom to think you aren't interested and then she sells it to someone else."

She sold off 28 acres about a year ago, and I was really tempted. I just don't like the whole business-family thing. As the buyer, you want to offer the bare minimum to get something; as a family member you want them to get a fair price; also family very well might want to offer you a better price, even when they could really use the money. I "think" she's still sitting on roughly 32 acres, and maybe I should ask if she would ever want to divide it again...

 

[Omega Woods]

"One thing you may not want is for your Mom to think you aren't interested and then she sells it to someone else."

She sold off 28 acres about a year ago, and I was really tempted. I just don't like the whole business-family thing. As the buyer, you want to offer the bare minimum to get something; as a family member you want them to get a fair price; also family very well might want to offer you a better price, even when they could really use the money. I "think" she's still sitting on roughly 32 acres, and maybe I should ask if she would ever want to divide it again...

If your mom is selling off bits and you want to buy land in your area, this sounds like a good avenue to pursue. If you agree to a price, it could be a win-win for everyone.

 

[Torvy]

If your mom is selling off bits and you want to buy land in your area, this sounds like a good avenue to pursue. If you agree to a price, it could be a win-win for everyone.

Mom could sell it to you without a realtor and she could save the commission.

Everyone's different, but if one of my kids wanted to buy some of our land, I'd definitely give them a family discount.

 

[2manyrocks]

I'd bet your Mom wouldn't want to sell to anyone else if she only knew you were interested. If her property gets listed for sale, then you are competing against anybody and everybody. Your Mom probably cares more for you than whatever money she might get from selling her property.

I don't know your Mom's situation or health, but the day could come when she might really need you nearby to take care of her and help her stay in her own home as long as possible. It's not good for you or for her if she needs you close by, but you end up somewhere else because you guys didn't discuss things.

And besides that, it could be that it would be better for her and for you if you were making payments to her instead of to some mortgage company.

 

[etpm]

Way back in 1995 my wife and I were looking for land. She thought 5 acres would be plenty, while I wanted 10 minimum. We argued about this until we were shown a square 5 acre meadow. Then it was 10 acres minimum. We bought a 10 acre parcel. It had a bunch of trash on it, 95 tires, several cars, and a condemmed cabin. I hauled off 12 tons of scrap metal. The cabin we had burned by the local fire department as a practice burn. All the crap was only on about 1/3 of an acre, the rest was wooded and trash free. We were poor at the time and we were able to get more land because we could and did haul off all that junk. I suggest you get as much land as possible. Maybe sweat equity could pay off for you like it did for us. We sometimes wish we had 20 acres but we now have a beautiful chunk of land and a beautiful house, a wonderful home that we plan to die in.
Eric

 

[EddieWalker]

I used to flip houses and I got to know quite a few local realtors. In my opinion, the majority of them are worthless. They will say anything to their clients to get them to buy a place that they know nothing about. They will agree to anything to get you to sign a contract to list your place. Very few will tell you upfront what's wrong with your place, or talk you out of buying a property. I'm still amazed at how many people I know of Facebook that have bounced from job to job over the years will become Real Estate Agents, and then start posting how they are experts in a certain aspect of Real Estate all of a sudden. Most are lucky if they sell a couple houses a year.

If you decide to hire somebody, be sure to do some research beforehand. Do not hire a friend or family member, or somebodies spouse that needs the work. Hire somebody that has been doing this for a number of years, and somebody that closed dozens of homes every year. The good ones are doing a house a week. They will have a team, which could be good or bad, but when they sell that many homes, they know what they are doing. Don't be upset if they tell you something you don't want to hear.

If it was me, I would search online to see what's out there. If something interests you, I would call the listing agent and schedule a time to look at the land. Then I would check out that agents website, see how many listings they have and how long they have been doing this. Legally, the agent has to represent the property owner, but they also know more about that listing then any other agent, and you might find it worthwhile to work with that agent to get it done. Twice the commission is a big motivating factor in getting a property sold!!!

When I have a client that wants to sell or buy a place, I give them a few names to consider, but I also tell them to talk to at leave five different agents before committing to one of them. More is even better. Just be sure to NOT hire anybody until you have talked to all of them. Most rely on being friendly and super nice when meeting you to get hired, but that's not what you want. You're not looking for a friend, you need somebody to do a job for you.

And lastly, never fall in love with a property until you actually own it. If it doesn't happen, there is always another one that will come up that's even better.

 

[Snobdds]

I hate dealing with relators. Hate it.

Just try to tell one to submit a bid lower than asking. They get all sweaty and nervous that they will be excluded from the cool kids club.

I finally figured, I will just get a license and do my own procurement of investment properties.

I have been pissing off selling agents with low bids ever since. I bid what it's worth and amazingly 90% of the time they take it. I have saved hundreds of thousands getting out from under the RE agent drama.

 

[newbury]

Everyone's different, but if one of my kids wanted to buy some of our land, I'd definitely give them a family discount.

"Family discount" can be a big variation. I've 3 son's and a daughter.
One son wanted to move into a house I was renting, this was about 2010. I didn't really want to sell but offered to sell it to him at about a 20% discount, no realtor fee. He thought he should have gotten a much bigger discount. At the time that house was my main asset and I was looking forward to it appreciating and I wanted to be able to be fair to the other three children.
He's lived there ever since "renting" and maintaining the property, with me paying for major repairs. Sometimes he pays the taxes, sometimes I do.
Meanwhile the property has gone from an assesment of ~$250K to about $650K in the 14 years (good area).
I would think it extremely unfair to have given one of my children a significant "family discount" while I couldn't at about the same time offered it to all.