We're by no means experts, but we've bought a few houses, and each time we learn more, and get more pissed off in retrospect of how we got screwed somehow. The learning curve is huge-- realtors WANT you to be dumb. If we had access to all the same information they did, they wouldn't even be necessary to the process. They're middle-men, who've teamed up with lawyers and legislators, to CREATE a system so overly complex that they've now BECOME necessary to what could be a relatively simple process (I admit that lawyers would still be necessary to protect all parties). I hope our next house is For Sale By Owner... Anyway, I hope we can help others avoid common mistakes and pitfalls.
1. Understand that the system is rigged against you. Be on the defensive, and question everything, recognizing that the answers to those questions might be lined with, or straight up, horse shit.
2. Realtors are salesmen and saleswomen. Nothing more, nothing less. Call them "used house salesmen" if that helps change your perspective. Buying and selling agents want to sell you a house. The more the house costs, the better it is for them, because they work on commission. Period. Sure, buying agents will act as if they're helping you just enough, so you'll refer them, but the bottom line is that they still work on commission, whether that's at the forefront of their mind, or subconscious.
3. Be aware of the DOUBLE vested interest that occurs when a property is listed by the same real estate company as your buying agent, and personally, I would never allow my realtor to act as a dual agent. Again, whether conscious or not, the buying agent wants his or her company to succeed over the competition.
4. Use the internet like a crazy person to search for houses. WE found two out of the three houses we bought ourselves, the other being the very first house we bought, somewhat naively, and which we would not have bought if we had to do it over again. YOU know what you want, better than an agent, and the listings are out there to sort through yourself. Once in a great while a good agent might show you something before it even hits the market, but you can do so much searching (and drive-by viewings) on your own.
5. Furthermore, do all the research you possibly can for yourself: schools, crime rates, sales history, tax history, etc. Realtors aren't even legally ALLOWED to discuss schools, crime rates, environmental concerns, or demographics, due to the Fair Housing Act. Other regulations may vary by state, such as disclosing the notorious history of a property, e.g., if it's purportedly "haunted" or if a murder was committed there. Zillow, Trulia, greatschools.org, and city-data.com are all great, but, of course, talking to the police, neighbors, or other locals is invaluable.
6. To avoid the conflict of interest problem, your buying agent should work for a FLAT fee. Otherwise, their interests are absolutely vested in getting you to buy a house at a higher price, because, again, they work on commission. We will absolutely be doing this next time, I don't care if we have to ask dozens of agents until we find one. Or maybe we just won't use an agent at all!
7. Don't let them use the old "we don't want to insult them" line when you want to low-ball. It's fucking bull shit. The worst that can happen is that they reject the offer, and accept another offer that came in around the same time. They want to sell their house. The seller doesn't care if it's to you, who low-balled, or whomever, as long as the price is right. Best case is they accept your offer, middle ground is that they're willing to negotiate. If you don't want to play into the little negotiating game, then don't low-ball, but thanks to all these HGTV shows that depict the process as some sort of game, it seems to be expected now. When we went to sell our house, our realtor priced it high on purpose. Of course, it gives the illusion that the buyer is getting some sort of deal when the price inevitably comes down-- closer to what it is ACTUALLY worth, given that the property started out overpriced. Realty apparently now involves as much haggling as a Middle Eastern market.
8. DO NOT use the inspector that the realtors recommend. It should be illegal for realtors to even refer inspectors. It is in the inspector's best interest to find NOTHING or very little wrong with the house, so that the deal goes through, and the realtors will continue referring them. This is inherently corrupt with these vested interests in bed together. Don't play along. Find an inspector willing to travel outside his or her usual area (30+ miles). Then MAYBE you'll get an honest inspection. Even then, no guarantees.
9. Go along on the home inspection. Ask questions, point out anything looks sub par. Maybe even print out your own checklist so nothing gets overlooked. Ideally, the homeowners should NOT be there! It hinders your willingness to be candid and discriminating, or, if nothing else, it's just distracting, thus easier to overlook or forget something.
10. Don't let the real estate agents bump up the purchase price on paper in exchange for concessions. All it does is up their commission-- and the amount of interest you pay over time.
11. If you can, talk with the owners of the house. I'm sure realtors would absolutely prefer to keep both parties in the dark as much as possible, but there's certainly no law stating that you have to. Ultimately, they can tell you as much or as little as they want, but it will probably still be more than your realtor is allowed to. Bear in mind, they'll probably want to portray their house in a positive light, but you can still find out a lot of general and logistical information.
Have anything to add? Any factual corrections? I'd be glad to add it! Feel free to share; knowledge is power.
