Central Arkansas Real estate…

September 12, 2016

Who works for who???

Buyers Agency – Who works for you??

I believe the most common mistake a buyer can make is thinking the agent that shows them houses is working for them.

One of the hottest topics in real estate right now is the issue of agency. Agency is important because it answers the most fundamental question asked of any real estate professional: Who do you represent in this transaction?

The relationship between a listing agent and the seller is understandable. There is usually a contract stating that the agent is employed by the seller and defines the terms under which compensation (commission) will be paid.

In the good old days (approximately pre-1985 when I first became a Realtor®), every agent represented the seller. Because the person who pays the commission gets the allegiance of the Realtor®.

Let me explain… The seller pays the commission, his agent shares the commission with the agent who brought a buyer to the closing table. This creates an implied contract; a sub-agency agreement; every agent involved with the house, even those that only showed the house or talked about the listing is a sub-agent representing the seller. (ie working for the seller)

Because of the representation or lack of representation for the Buyer… a Buyer’s Agency came into being…

Arkansas law requires real estate agents to clearly disclose to all parties in a real estate transaction which party(s) he or she is representing.

Buyer agency is a contract where an agent agrees to assist a buyer in locating a home, and represent that buyer’s best interests in negotiating a purchase, and closing on a home.

Here’s a simple scenario that will shed some light on this…

You meet an agent at an open house. This house is perfect for you. You tell her that you have $45,000 in cash and you will offer $92,000.00 but if you have to you can go up to $96,000.00… (been there done that??)

What can this agent tell the Seller??? Unless you have a “Buyer’s Agency Agreement” in place with your agent, she is most likely working for the seller. That means she has a fiduciary obligation to the seller to disclose any information that might “promote or protect his interest”. She has an obligation to tell them exactly what you have told her.

My advice to Buyers is to make sure that the agent you work with (no matter who it is) has agreed in writing to represent you as a Buyer’s Agent.  Even if the agent sells you a property listed by her company, a ‘dual agency’ exists. In these instances there is a pre-defined code of conduct that must be adhered to very closely.

Simply put, never say anything to anyone unless you want it to get back to the seller. Assume everyone is working for the seller until you have a Buyer’s Agency Agreement in place. This will insure your agent will represent you in any transaction even FSBOs (For Sale By Owner).

In most cases the commission will still come from the sellers, but with a Buyer’s Agency Agreement in place, your agent works for you.

September 12, 2016

First Things First…

Get that Pre-Approval Letter!

As a Realtor® I made a conscious decision some years ago to abide by certain rules.  One of these rules is to only show property to qualified buyers.

When people list their property with me, I assure them that only ready, willing and able buyers will be tromping through their house, opening their closets, peeking in their cabinets and looking at their stuff.

So, unless you will be paying cash for your home, the first step in buying any home is to make sure you will be able to finance it through a mortgage lender. There is no reason to run around all over town looking at houses wasting gas and get your hopes set on a particular house until you get this first and very important step done. Continue Reading →

August 4, 2016

What a Bill of Assurance Can do for you!

Bill of Assurance…

If you are purchasing a home – especially a new home – you may notice something called a “Bill of Assurance”. In the very simplest terms this is a list of rules and regulations that were put together when the subdivision or group of lots was developed to protect owners.

For example, a developer gives a bill of assurance to purchasers of lots to let them know that the development has standards for quality housing, this can include minimum home size, architectural details, and the quality of exterior materials including garages, fences, and auxiliary buildings.

Deed Restrictions:  In Florida we often called them “deed restrictions”. In some instances an HOA (Home Owners Association) may have the authority to enforce the rules. In one subdivision I lived in it was up to the residents to enforce the rules by hiring an attorney. The HOA could write letters, but eventually an attorney would have to be involved to enforce the rules if the offending culprit didn’t comply.

I like having these restrictions in a readable document. Always ask if the home you are considering buying has a Bill of Assurance and get a copy to read it.  Most title companies keep copies of these Bills of Assurance as they close properties.  My favorite local title company had one that was almost 30 years old!

Often times I have heard people say. “I don’t want anyone telling me what to do with my property. I make the payments”. While that may be true there is another side to consider.

A family I am very close to purchased a home on a street where there is no Bill of Assurance or deed restrictions. After a few years, their neighbor let his landscaping turn into a weedy mess which could really impact the value of their property.

Messy burn pileAfter weeks of looking off their patio to see this pile of mess. If you look closely you will see old pizza boxes and beer cartons among the weeds and trash. This “burn pile” was out of control.

Neighbors phoned into the city to ask this fellah to clean up his back yard. Thankfully there were some city codes that applied because the pizza boxes were drawing vermin (coyotes and raccoons).

So in my opinion, a Bill of Assurance is a good thing.

A Bill of Assurance or “Deed Restrictions” would have been very helpful in this case. It pays to do your research. You may not want people to “tell you what to do with your property” but if you had this beside you as my friend did just maybe you’d change your mind.

Does it assure you that everyone will abide by the rules???  No. There will always be people that break the rules and there will always be bad neighbors in need of tall fences. With a Bill of Assurance you stand a better chance of living next door to like minded people.

Who enforces the Bill of Assurance?  In the earlier phases of construction the developer will enforce the rules.  Once the development is turned over to the owners, it is up to the owners to enforce the rules.  They can do this through a property association and sometimes have to resort to hiring an attorney.