Purchasing a Property

 Searching for a property is work, time consuming and draining. Whether you are looking to purchase your first home, move to a larger home or have decided to buy an investment property you need to recognize this task is a job. The poor state of the housing market is making this job more difficult but it is also creating buying opportunities.

The best time to buy anything is when buyers are afraid to buy. It doesn’t matter if it’s houses, stocks, bonds or any commodity. The time to buy is when the majority of people are afraid to. The only thing that everyone can agree on today is that housing prices have dropped and no one is confident in predicting how much further down they will go before stabilizing.

With the proper analysis, a purchase can be made with excellent profit potential. You just need to have a long-term time horizon and be able to make an informed decision.

The Real Estate Broker has traditionally filled the role as the industry expert in advising a client. Unfortunately as the real estate marketplace evolved over the years, the quality of the service provided has decreased and at the same time that the cost for that service has increased.

The Real Estate Broker and his staff work for the seller. The seller pays the commission and the contractual obligation to the broker is get the best price for seller. This obviously is not in the best interests of a potential buyer.

The number of people working in the industry has grown every year. The turnover is one of the highest of any industry. New agents, typically, have to prove their sales ability before their broker is willing to invest his time in training them to be professionals.

Only a small percentage of real estate agents are successful. The average annual income of an agent is less than $30,000. Few are in the business long enough to gain the expertise needed to be successful. The industry standard compensation package is 100% commission based. This encourages Real Estate Brokers to take on staff primarily based on the size of their social network. Skill level, desire to learn and years in the business tend to be secondary considerations.

Real Estate commissions are paid by the seller, but only upon a successfully completed sale. This results in a commission structure that needs to generate enough profit on the successful sales to cover the investment of time and money in the unsuccessful sales.

This has created a need in the marketplace for a new class of Real Estate Broker, the Buyer’s Broker. A Buyer’s Broker works exactly as the name implies. He is working for the buyer, not the seller. This is a major step in the right direction. The potential buyer now has a person that answers only to him and is now contractually obligated to put the buyer’s interests in the forefront.

The number of Buyer’s Brokers in every area is growing. As more and more house hunters understand that the traditional Real Estate Broker is working for the seller, they are discovering the benefits of having an agent who has their best interests in mind.

Utilizing the services of a Buyer’s Broker obviously addresses the loyalty concern. It is also a reasonable assumption that a Real Estate Broker that elects to work as a Buyer's Broker will have a higher level of experience. There is however, a resistance on the part of many Real Estate Brokers to work with Buyer's Brokers. 

In a typical real estate transaction a broker introduces a buyer to a home that is being marketed by another broker. When a deal is struck, the sales commission is split between these brokers. If the broker working with the potential buyer identifies himself as a "Buyer's Broker" you can't assume that the sale commission is going to be shared. Since you have hirer the Buyer's Broker to work on your behalf, you are obligated to pay his commission directly. The Buyer's Broker will tell you prior to introducing you to the property if the selling broker has agreed to split the sales commission. It then becomes your decision whether or not you want to proceed.

What's the best approach, work with a Buyer's Broker, deal with a conventional Real Estate Broker or buy directly from the homeowner? It's a complicated decision. Give me a call @ (516) 627-0800 and I'll help you take the path that is best for you.