Across the Picket Fence

General Issues

 

Seller: Do I need Errors and Omissions Insurance? I was told by a real estate agent that it would be a good idea to get this if I'm selling my own property.

 

We checked with a local insurance angencies , who checked with their insurance company providers. Errors and Omissions insurance is not available for a private individual; it is meant for professionals who represent others. The agent is incorrect.

 

Seller/Buyer: Do people usually sell their place first, or find a place to buy first? We're nervous that we might sell right away, and then be stuck without a place to live!

 

Generally, most people seem to do both simultaneously - try to sell while also searching for the next home. Ideally, you want to be under contract, at the time you make an offer on another property, since this will make your offer more attractive to the seller. Most sellers will be reluctant to take their house off the market while waiting for yours to sell. If they do agree to, they most likely will limit the term of the contract to 30-60 days, which doesn't five you much time to sell!

As for being stuck without a home, don't worry. If your house goes under contract first, you can specify in the contract that the agreement is contingent upon your finding suitable housing. The time period allowed for you to find housing is something you will negotiate with your buyer. If you can't find a house to buy for yourself by the deadline, you and your buyer can then extend the deadline or cancel the contract altogether.

 

Seller: A local real estate publication recently reported that only 8% of all FSBO efforts are successful, according to national statistics. Is this true?

 

No. Even the National Association of Realtors admits that around 20% of the nation's real estate sales are FSBO (see Smart Money, July 1997), and the government puts the figure at about 30%. The latter is based upon a study conducted through the U.S. Dept. of Commerce, Statistics division, which looked at the percentage of real estate sales which had a commission included (as reported to HUD).

Q: I am considering buying a home. As a buyer I don't see what difference it makes using a broker -- it doesn't cost me anything. The seller pays for the commission. So why not use a broker? -- Brian K., So. Burlington

 

A: The main advantage of purchasing a home directly from the seller is that it usually saves money for both you and the seller. The Private Sale homeowner is in a better position to offer a more competitive price because he doesn't have a commission to pay. Look at it from the seller's perspective: say he wants to net $100,000 for his property. He will ask or accept $106,000 for the house if he has to pay a 6% commission on the sale, or $103,000 if he's picking up the 3% commission for a buyer's broker. However, if no commission is involved, he will ask or accept $100,000! The buyer benefits because he was able to get the house for less.

 

Your objective, though, is to find the house that is right for you. If you can't find what you're looking for through a private sale, you should certainly seek the services of a real estate agent or buyer broker. There are exclusive buyer brokers who ONLY represent buyers, and have taken courses for this. These are your best bet, since you can be assured they will not try to steer you toward their agency's listings.

 

 

Q: Seller/Buyer: Do people usually sell their place first, or find a place to buy first? We're nervous that we might sell right away, and then be stuck without a place to live!

 

Generally, most people seem to do both simultaneously - try to sell while also searching for the next home. Ideally, you want to be under contract, at the time you make an offer on another property, since this will make your offer more attractive to the seller. Most sellers will be reluctant to take their house off the market while waiting for yours to sell. If they do agree to, they most likely will limit the term of the contract to 30-60 days, which doesn't five you much time to sell!

 

As for being stuck without a home, don't worry. If your house goes under contract first, you can specify in the contract that the agreement is contingent upon your finding suitable housing. The time period allowed for you to find housing is something you will negotiate with your buyer. If you can't find a house to buy for yourself by the deadline, you and your buyer can then extend the deadline or cancel the contract altogether.

 

Seller: I'm planning to build in the spring and want to sell my property first. I wonder, though, if I'm wasting my time trying to sell it before spring, since I've heard the market slows down in the winter...

 

Why wait until spring when there will be more houses on the market and you'll have more competition? With mortgage interest rates at an all-time low, people are motivated to keep looking until they find the home they want.