Just a few years ago, being a buyer’s agent essentially involved locating and assisting a buyer in writing an offer, carrying it around to all parties involved and shepherding the transaction through to closing, whereupon the golden keys were given and the buyer became the happy owner of their new house. (Yes, I know there was more, but essentially.)
While those steps are still in place with an “upgrade” to their practical application, the amount of knowledge necessary now to guide a buyer through to making the actual offer is enormous.
For example, short sales abound in most parts of the country. At the very least, the Buyer’s Agent must
- Have knowledge of the steps involved in making an offer,
- Determine whether the asking price is reasonable compared to the likelihood of the seller receiving approval,
- Research and determine how many liens might exist against the property,
- Research whether a foreclosure is imminent,
- Determine whether other offers were made on the property previously and why they might have failed,
- Consider the experience of the person/firm handling the short sale negotiations
- Determine who will pay for the short sale negotiation
- And make an educated thought about whether or not this sale is likely to close.
Now on to bank-owned or REO properties. A few pertinent considerations for the agent:
- Which Bank owns the property
- Is the property owned by Freddie Mac, Fannie Mae … is it a HUD home?
- What are the offer procedures for those types of properties?
- What’s the likelihood that the Buyer’s approved financing is appropriate for the type of ownership (for example, a VA loan isn’t particularly appropriate for a HUD-owned property)
- What bank addendums are needed to make an offer? Do they override the existing MLS forms?
- Can the normal MLS forms be used in making an offer?
And then there’s the house itself:
- Is it likely that the property will qualify for the type of financing for which the Buyer has been approved? For example, if the buyer hopes to use an FHA loan … are there obvious defects that may need repair before the purchase can be completed? (let alone those that the appraiser might note)
- Or … suppose the Buyer is looking at a property that will require a Rehab loan. Hmmmm, what type? An FHA 203(k)? Or what about HomePath Renovation or some of the other specific loans sponsored by a municipality?
- And then, roughly, will the renovations be more than the Buyer can afford? Or more than, say, an FHA 203(k) StreamLine loan might allow?
- Is that LP siding?
- Does that roof look like it’ll pass the 5-year test?
And so on …
The agent with whom a Buyer works needs an enormous amount of knowledge just to bring a appropriately written offer to the Seller. — An amazing amount of knowledge!