12:45 p.m. - 2002-03-05
Why You Need A Buyer's Agent (Yes, You, Miss Gregg!!)
I had a long talk with Miss Gregg last night. Yes, ya'll heard right - Miss Gregg and I are actually on speaking terms these days! We were actually on speaking terms for three hours last night, and for about 2.75 of those hours we were talking about housebuying.

About 1.5 of those hours was spent telling Gregg the whole story of Why We Have A Buyer's Agent. This is a question I get asked over and over again. People think it isn't worth it, that they will get into problems with paying the buyer's agent (which is a legitimate concern and I would definately get a contract in writing stating how the agent is to be paid - but try to get an agent who splits the selling agents commission. Why should you pay a hefty fee, which is built into the price of the house, by the way, so you are paying it whether you like it or not, to the SELLER'S agent! Why not have some of that dough paid to someone who represents YOU!!) but personally I would NEVER buy a house without a buyer's agent.

Do you want to know why? You do? Good. I'll tell you. But before I do, you need to go make yourself a big cup of tea and get some cookies or a sandwich. Or maybe a full seven course meal, because this is a loooooong story...

Bruce and I decided we wanted to buy a house last August. We spent a few months getting ready, reading books on it, etc and then in October we came across a house we really liked. We went to see it on a whim and fell in love with it. It was a very small house, only about 1100 square feet, but it was a sweet 1920's bungalow with high ceilings, bullseye molding, a big mature pecan tree in the back...

The story the real estate agent (who seemed just very nice and honest and claimed to be a friend of our landlady, who is a retired real estate agent) gave us was that the woman who owned the house had been fixing it up over the last few years and she had gotten to the point of renovating the kitchen and had gotten sick. She needed to sell to raise money for medical bills and she also just couldn't physically handle the responsibilities of having a house.

The house supposedly had a new roof, new electrical system, new heat and air conditioning systems, the floor had been braced for sagging, etc. We had read enough books with titles like "The Savvy Homebuyer's Guide To Crawling Around Under Your House Looking For Termites" to feel reasonably sure that the house had had a significant amount of work done on it and it felt like the problems would be fairly minor.

In addition, the house had actually almost been sold a few weeks before we got to it. The buyer had gotten a home inspection that had been, according to the agent, "spotless". She had also had a termite inspection and the house had had a termite bond. The buyer had also gotten a mortgage, which involved the house being appraised, and the appraisor had given it a price a few thousand above the agreed upon selling price.

We actually got to see this appraisal a few days later when, by chance, we went to the same mortgage company the other buyer had gone to. In this part the agent was telling us the truth. It did get a good appraisal and a good estimated value. Which just goes to show - the house is being appraised as if nothing is wrong with it! They are determining value largely based on how the house would compare to other houses that have recently sold in the neighborhood, if it were in good condition with no major flaws.

The first buyer had, unfortunately, died "suddenly" before the closing though, and so the house was back on the market.

Are you with me? Take a deep breath! Have a sip of tea!!

We took a deep breath ourselves, thought about it, and decided to go for it. We signed the purchase agreement while sitting in the New Orleans courtyard style backyard, eating pecans. We decided to give the owner the asking price, based on our assumption that the house was in very good shape. It actually seemed like a good deal.

Fortunately we weren't totally naive. We decided that we wanted to write in a home inspection contingency, saying that we could back out if we were unsatisfied for any reason with our home inspection. We decided that having an inspection would be worth it for the peace of mind but also we mainly wanted to find out how all the systems in the house worked, where the water shutoffs were, etc, etc. A good home inspector can tell you all kinds of things about your house. Like that if you knock the plaster off you will find the houses original beadboard ceilings.

We went to get our mortgage (which took five minutes. "You have LOVELY credit" said the nice lady, starry eyed.) and set up our home inspection. We arranged with the utilities company to have the electricity, water, and gas on. On the specified day we went to the house at 9 am to find the house open and the real estate agent nowhere in sight. (I think she probably didn't want to be around for the fireworks.) The home inspector was there, though, and he had already found a major problem.

"I can't turn on the electricity or the gas." he informed us. "I got the water on but there's a problem with the (at this point my brain turned off for about five seconds due to technical terminology) ..but I did get it on so we can test it. But we can't test the electricity or heat!" The utilities company had refused to turn on the electricity/gas because of a problem with the interface between the house and the street.

"But the house was just rewired a year ago!!" we wailed. "and the other buyer had a spotless inpection!!"

The inspector gave us big grin. "Jus' cause it's rewired doesn't mean it's rewired right! That's why you're havin' a home inspection! Let's go look at the breaker box and see if we can tell anything from that."

We dejectedly slunk in behind him. And when we got to the breaker box, something became amazingly clear. Who ever had previously inspected the breaker box wiring had pulled a fast one. The living room had been painted shortly before the owner put it on the market. Fortunately she had painted over the entire breaker box. When we looked at it closely we realised that the other inspector had removed the screws to make it look as though he had done the inspection, but the paint at the edges of the cover was unbroken!! He had never actually pulled off the breaker box cover! He had never actually looked at the inside of the box!!!

The rest of the inspection was full of other such enlightenments. Most of the problems were pretty minor, however, one of the roof beams had a crack. And all the new improvements on the house had been done, but not done very well. And when the inspector went under the house (which I had gone under earlier but I'm no home inspector) he was under there for about two minutes before he came out with an excited look on his face.

"You got somethin' under there real serious", he said.

Part of the main beam of the house, way in the back, was sitting directly on the ground. In Alabama this is the kiss of death to a house. Because of the clay soil drainage is terrible and beams left like this rot. In the case of our house, however, the problem was even more serious.

"Well, I'm not a termite inspector" our inspector said, shuffling his feet, "and I won't swear to this in court, but I think the house has termites. Well, actually I know it has termites. I saw them."

That was it. We went home and called the agent, sho pulled a fit, threatened not to give us our money, told us the house had been inspected by Dove Brothers who were "very reputable". And then there was the termite bond!! She was furious. But in the end there was nothing she could do. We had the contingency, and she had to return our earnest money and null and void the purchase agreement.

Are you exhausted? Me, too. But I'm almost finished! Really. Have a sip of tea.

In the end we found out from our landlady that the agent was never a friend of hers, just a business associate, that the seller was not "sick" but was an alcoholic who had periodically tried to fix up the house but was not in good enough mental state to do things right. The first buyer had indeed "died suddenly" - the poor thing had killed herself. Probably out of buyer's regret! Oh, and Dove Brothers were one of the most notorious inspection companies and had been involved with a previous scandal about a bad home inspection.

If we had had our agent, David, for this negotiation, we never would have even looked twice at this house. A good buyer's agent has looked at enough houses to know if there are probably basic structural problems. He also would have advised us not to agree to the asking price, because the seller is almost always willing to negotiate for a little less. (Well, at least here in Alabama where the housing market is normal!!)

He would have compared the asking price of the house to the asking prices of other comparable houses in the neighborhood that had recently sold, and then he would find out the actual selling price of those houses, and then he would assess what was probably wrong with the house in question and after doing all these complicated mathematics he would determine a fair offering price. You may know the general asking prices in the neighborhood, but do you know how close to the asking prices the houses actually sell for? Your buyer's agent has access to all this info without trudging down to the town clerks's office, which is what you would probably have to do.

He would also make sure that the contract contained the proper "escape clauses" and that they were worded correctly. (Bruce and I just lucked out on our wording of this one - we could have been forced by contract to buy a termite infested house!)

Since this horrible fiasco we have negotiated on two other houses, and without David, we probably would have gotten robbed. Need I say more?? Good, I'm tired. Have some more tea!

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