Posted by ski on May 20, 2005 at 18:56:25:
Rehabbing an OLD place in an historical district may be more hassel than you think. First of all the “historical” rehabbers are far and few between. The local restoration codes may be prohibitive, cost wise. The materials to do a complete “historical rehab” are very difficult to locate. Just my thoughts.
Working with realtors… - Posted by Sue
Posted by Sue on May 20, 2005 at 13:09:19:
I went and looked at nice old house in the historic district yesterday. I just wanted to get a peak at it, so I called the listing broker to let me in. Trouble is, I fell in love with it (although I didn’t let him know that) and now I want to make an offer on it. I want to live in it while I rehab it. Similiar houses are listing for 180-200K when in tip-top up-to-date shape (don’t have access to comps, so I don’t know selling prices), this one is listing for 115K and is structurally sound, just needs a total makeover (think 70’s decor, green shag carpet and all). It was on the market for a year or so, went off the market, and now is back on the market for six months. I think 115,000 is probably right on appraised value as it is now, but of course I want to get a good deal and make a low offer. My question is…would it be unethical for me to go to another agent to represent me, rather than making the offer to the listing agent…even though he’s the one that showed me the house?
I don’t want to step on any toes, but I also know that he’s working for the seller and is obligated to get the best price he can. Would it be a big no-no to go to another realtor’s office now?
Thanks in advance.
Sue
Re: Working with realtors… - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on May 20, 2005 at 19:08:55:
Laws concerning agency vary from state to state, so it really does not help that we have no idea what state you are in. When you contacted the listing broker you formed an “agency” relationship with her/him, so it would be unethical to seek out another agent. In my state it is illegal for an agent to even comment on the agency relationship that you have with this broker.
Sean gives excellent information that should be carefully considered.
Re: Working with realtors… - Posted by Killer Joe
Posted by Killer Joe on May 20, 2005 at 14:58:32:
Hi Sue,
First off, great post Sean, it’s always nice to read realistic posts about the subject matter. Sue, you will do yourself good to pay heed to Seans comments.
Regarding the agents, there are two distinct phylosiphies at play here. The first is that when you buy from the Listing Agent they will not split the commision. This is always my avenue of choice. They will actually have an incentive to make things happen before another buyer/agent duo shows up. What goes on in many cases is the buyer becomes the client and the seller becomes the customer. So if you are involved with a dual role situation, you just might be better off being the buyer rather than the seller.
The other phylosiphy is to have a buyers agent in the deal representing your interests only. A lot of it has to do with your comfort level and experience.
You mentioned something regarding the historic district. Find out in no uncertain terms what the local commitee that oversees the district has to say about the property. I recall watching “This Old House” years ago when they chronicled a situation like the one you are describing. The new owner were no less than handcuffed by the commitee regarding improvements. The paperwork alone can be overwhelming, and the time frames for approvals are astronomical.
Best of luck,
KJ
Re: Working with realtors… - Posted by Sean
Posted by Sean on May 20, 2005 at 13:51:40:
Sue,
Since the listing agent showed you the house, technically I believe they have a claim on you as a buyer, as they were materially involved in your interest in the home… however, there is obviously a conflict being both the buying and selling agent, and often (at least in my limited experience with this) the listing agent, even if they showed you the home, will refer you to another agent in their office to represent you as the buyer when you want to put an offer in. (I assume they give this buddy a smaller commission than they would a 50/50 split should someone else have brought the buyer, but don’t know for a fact, to handle your side of things and avoid appearance of conflict.)
I will say this, 115k needing completely rehabbed and worth 180k-200k after may not be as good of a deal as you think.
Putting a hundred year old victorian into TIP TOP (quasi restored) SHAPE is not remotely the same as taking some 50s or 70s ranch and updating it. Most of the “GURU’S” down in florida don’t know their butts from a whole in the ground when it comes to Victorian type rehabbing let alone restoration.) 65k may sound like a large margin, but I can tell you, closing costs on tbe buy and sell can easily eat up 10k of it… and 55k for a complete restoration of a Large Victorian is not nearly as much as you think it is. Particularly if your goal is Quasi or Complete Restoration, which is generally (other than modern functional upgrades… second bathrooms, whirlpool tubs, etc etc) what makes an old victorian a Tip Top Condition.
The fact its been on the market for over 18 months shows me that the sales price is not what it needs to be… and my gut tells me as well that you need to get it cheaper to get the payday you think you are.
Not saying you won’t get a payday at that price point, just saying I don’t think it will be as much as you expect it to be, particularly if you are relatively new to rehabbing.
Best of luck to you.
Re: Working with realtors… - Posted by Natalie-VA
Posted by Natalie-VA on May 25, 2005 at 16:46:01:
Ed,
I thought about my response to you, and I believe I was incorrect in saying the agency relationship would have to be in writing. It could be an oral agreement. But, I still don’t think that contacting a listing agent forms an agency relationship. I’m not trying to be a smart a$$. Is it really that way in Ohio?
Re: Working with realtors… - Posted by Natalie-VA
Posted by Natalie-VA on May 25, 2005 at 16:18:03:
I agree that it’s wrong to take a listing agent’s time to look at property and then go and hire your own agent, but simply contacting a listing agent does not form an agency relationship. The agency relationship would need to be in writing. Furthermore, since the listing agent already has an agency relationship with the seller, both buyer and seller would need to agree to a dual agency in writing. I don’t think that dual agency is allowed in all states…I am just speaking of how it works in Virginia.
Re: Working with realtors… - Posted by BigAl
Posted by BigAl on May 20, 2005 at 14:53:01:
Hi Sue,
Where I stay here in the midsouth an agent that represents the seller can not have commited interests to the buyer. They must first protect the seller’s best interest to sell the property. Therefore they may not give you all the tidbits to get the best deal. Also, unless you’ve signed a contract you are not legally obligated to that agent who showed you the house. If you choose to deal w/the listing agent be perfectly clear,honest and perhaps tactifully blunt about your opinion on the property but understand their commitment first lies w/the seller’s interest and has the highest priority. I think it may be best for you to find someone to represent you to make sure you’re assured the best deal otherwise you need to research, research before extending an offer.
Re: Working with realtors… - Posted by Ed Copp (OH)
Posted by Ed Copp (OH) on May 25, 2005 at 19:15:50:
All contracts need to be in writing to be enforced, an least in Ohio, so this one would be disregarded. The beginnings of the agency relationship happen when a person asks an agent to do something that might result in the buyer and seller being brought together. Like looking at a property. The agency can not be enforced unless it is in writing, at least in my state. This area is loaded with opportunities for misunderstandings, Add to that a few folks who like to circumvent, chisel, and just rip off whoever will sit still and the problem grows. It is coming to the point where everyone will need their own agent, or at least that is the way some want it. Not a good thing, in my opinion. Many investors are educated far more than the average agent. It should be permitted that we have the opportunity to use our knowledge to the best benefit for ourselves.