For Home buyers

Buyer representation contracts in Minnesota

Posted on by Teresa Boardman
butterfly
Monarch butterfly

In Minnesota, we have used buyer representation contracts for a few decades. Home buyers who are working with Realtors are required to sign an agreement with their agent. The agreement outlines the Realtor’s duties and how they will be paid.

As of last week, Realtors are required to have a written agreement with people who want to tour homes we listed for sale.

Previously, we could show anyone our listings without a contract or agreement with people who want a tour.  On the plus side, this new practice may weed out the holiday housing tourists who are just curious and have no intention of buying a house.

On the other hand, home buyers hate to sign anything, making it a struggle. It is easier to sell a house if we can show it to anyone interested without paperwork. I do not plan on charging anyone anything for showing my listings but I could and the new system makes charging a fee easier.

The good news is that contracts or agreements buyers sign with Realtors do not require the signer to buy a house. You can sign an agreement with a Realtor to go house hunting but that does not obligate you to buy a house.

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Do you really need a buyer’s agent?

Posted on by Teresa Boardman
House

We did not work with a buyer’s agent when we bought our first house. At the time we thought that we came out alright. We did not know what we did not know.

With the help of a buyer’s agent, we may have paid less for the house and if we had made an inspection contingent offer we may have been able to negotiate some repairs.  The seller’s agent wrote our offer, she was helpful but did not negotiate or work on our behalf.

It wasn’t until many years later as I started working as a real estate agent representing buyers that I realized we missed a few things when we bought the house.

Buying a second or a third house is a little easier but each house is unique and so is each seller. Rules and laws change over time. If you bought a house twenty years ago you might not be aware that laws have changed.

No, you don’t have to have a buyer’s agent representing you but most home buyers need one.

Choose an experienced agent. An inexperienced agent can be worse than no agent at all.

If you choose to go it alone consider consulting a real estate attorney.

The end of an era

Posted on by Teresa Boardman

Coins, moneyThis week marks the end of an era. The multiple listing service, MLS is a database for Realtors of homes for sale. We must add homes to the database when we list them for sale. The MLS is the source of homes for sale fed to real estate websites.

As of August 17th payment for buyer’s agents will no longer be listed in the MLS, yet buyer’s agents will still expect to be paid. Which ends an era of guaranteed compensation for buyer’s agents.

This new system has never been tried before or tested. It is part of a settlement for some lawsuits against the National Association of Realtors and others.

Generally, the home buyer did not have to pay his or her Realtor.  The seller paid a commission to the listing broker who shared it with the buyer’s broker. That practice can continue and probably will but buyer agent compensation can not be listed in the MLS.

This change and lack of transparency is certain to have unintended consequences. We won’t know how well it will work until we see how consumers respond.

Other changes go into effect at the end of the week as well. Real estate is local and several of the new rules have been in place in Minnesota for many years.

If you are a home buyer you can expect to sign a contract with a buyer’s agent before touring any houses. In Minnesota. buyer representation contracts have been required for decades but we could show houses without a contract.

It is uncertain how the new rules will help or how they will hinder consumers as they buy and sell real estate. Fewer Realtors may be willing to work with home buyers.

I’ll revisit this topic in a month.

It has to be in writing

Posted on by Teresa Boardman

Getting it in writing sounds so obvious but sometimes home buyers have questions and real estate agents “guess” at the answer or make assumptions.

For example: A real estate agent thought there was parking included with a condo and told the buyer the same. There was something in writing from the association that plainly stated parking was not included and that there would be an extra charge for parking but that a parking spot wasn’t guaranteed.

In another situation, the agent who said that there was a storage unit with the condo was mistaken. Condo documents did not include a storage unit.

Even if it is in writing it may not be true. Information in the Northstar MLS is deemed reliable but not guaranteed.  Room dimensions are rarely exact. Buyers should bring a ruler along. I have seen some mistakes too. Like one in a half-story houses that are listed as two-story.

Also, understand the difference between real estate and personal property. Appliances that are not built in are considered personal property and may not be included in the sale. Buyers need to specifically ask for those appliances in writing.

Buying a home isn’t always easy which is why home buyers often choose to work with experienced, knowledgable real estate agents.

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The couple who wanted the loft

Posted on by Teresa Boardman

housesI rarely share details of transactions on this blog but today I am going to share. I’ll change the names and location to protect the innocent and the guilty.

Once upon a time, there was a beautiful loft for sale. There were a few interested buyers. One couple saw the place three times. Their agent said he had an offer and he would send it at X time. The sellers were notified and standing by but the offer never came.  The buyer’s agent kept in touch and kept mentioning that there would be an offer but none came.

Then one day a near-perfect offer came along. Qualified buyers who were able to accommodate the owner’s preferred closing date and no contingencies. The owners of the beautiful loft immediately accepted the offer.

The other interested party found out and their agent called and told the listing agent that she was supposed to let the buyer’s agent know about any offers. The buyer’s agent never asked to be informed about offers and even if he had the sellers can decide not to share that information. They can ask their agent to not disclose the existence of other offers.

Bottom line a home can only be sold to one party and often several parties who wish to buy it. Homeowners only need one offer.  When a great offer comes along the seller can and should accept it. Home sellers are under no obligation to have their agent let interested parties know that there is an offer. 

The buyer’s agent claimed that he knows how things are done and that any other listing agent would have called to let him know about an offer. That had been his experience during his three years as a buyer’s agent.

Buyers planning to buy should make sure they are ready to buy before they start looking. Once the right property is identified it is time to make an offer. Waiting rarely works out. A buyer’s first offer should be his best offer. Agents should not repeatedly promise an offer before the buyers. When there is no offer the agent loses credibility with the listing agent and the sellers.

One universal truth about buying or selling residential real estate is that every situation, client, and home is unique. We have to be prepared for every kind of scenario and never make assumptions about what buyers or sellers will do. We expect the unexpected.

Agents should refrain from saying they are going to submit an offer unless they are sure. If an agent says they are going to do something at a particular time they should do it or at the very least call the other party and let them know what is going on instead of making them wait.

Garter snakes on the river bluff

Posted on by Teresa Boardman

I have lived in the West 7th neighborhood for most of my life. The block we live on is on the river bluff and the limestone is just beneath the soil. Garter snakes love it because the soil is warmer. Garter snakes love it. It isn’t unusual to see a few garter snakes sunning themselves on the basement window sills.

Occasionally a snake gets in the house. They can’t climb but they can fall in. They are not poisonous, they don’t have teeth and they usually slither away when someone comes near. They eat frogs, small mammals, earthworms, and insects. They hibernate in the winter.

Fear of snakes is common and some people have ophiophobia, which is an irrational fear of snakes. Over the years I have known people who bought houses that they could not live in due to fear of snakes.

It is best to ask about snakes before you buy. It is best to ask about anything that might affect your use or enjoyment of the property.

The snakes can be found anywhere in Minnesota and throughout St. Paul.