buyer

How Many Bedrooms Do You Need?

December 14, 2018 by khproperties Leave a Comment

We were talking in the office the other day about some of the old 2 bedroom, 1 bath homes built in the 1940s in communities all across America. In many places, those homes are being revitalized and retooled as many cities look to downtown areas for new growth. Those old 2/1 homes (real estate lingo for 2 bedroom, 1 bath) often raised families with multiple children and those small spaces seemed like all a family needed. Now, our expectations of space are much larger. So exactly how many bedrooms do you need? Is there a magic number?

When it comes to resale, we typically recommend no less than three bedrooms. The days of 2/1 homes are something from the past and although there is some revitalization of those homes, there is still a smaller pool of people looking for them and buying them. Many times when they are bought, they are purchased by investors who go in and reconfigure and expand the homes to more common 3 bedroom, 2 bath homes.

If you have a larger family of course, you’ll want more bedrooms. Much like the smaller homes, as you increase the number of bedrooms, you change your buyer pool. Four bedrooms? Not so bad. Five bedrooms? Still doable, but definitely getting harder to sell in the future. Six or more? At this point your probably looking at luxury homes and a completely different set of considerations.

Overall, 3 to 4 bedrooms seems to be the sweet spot. Remember, many people use a bedroom as an office/study, so if your home has a dedicated room for that, you may not need the extra bedrooms. The median quick sale home at the moment would definitely be the 3 bedroom, 2.5 bath – kind of the gold standard for suburban living.

Of course, the number of bedrooms you need is up to you. If you have a large family or know you’ll be having a lot of guests, more bedrooms might be the way to go. We do recommend avoiding large bedroom counts if you’re thinking of using the bedroom as a rental down the line. We’ve seen more than one 5 bedroom home sit for a long time waiting for tenants. It’s a combination of factors, one of the big ones being that for the price you’ll want to rent it for, most people would be able to buy and with a smaller buyer pool, you need to be competitive and attractive for quicker turnaround.

Find the number that works for you and remember, somewhere out there is someone looking for exactly the same. So while you may have to wait a bit, you’ll find that someone for your home when it’s time to sell.

Information About Brokerage Services: What’s All the Fuss?

April 8, 2014 by khproperties Leave a Comment

The Information About Brokerage Services form has been updated and is mandatory for use as of February 1, 2016. We advise you to take a look at the new form and our breakdown of what it all means.

The Information About Brokerage Services form is used in Texas real estate to help explain the ways in which a real estate agent works – who they represent and what their basic duties are when representing parties in a real estate transaction. It is a simple one page form that is required by Texas law to be given to prospective buyers, tenants, sellers, and landlords. If you’re talking about real estate with an agent, they should give you an Information About Brokerage Services form and you should sign it. It is not a contract and does not mean that person is your agent, rather it is an informational form and your signature acknowledges your receipt of that information.

Information About Brokerage Services: A Closer Look

Let’s break down the form into paragraphs and take a look at what it means…

Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in cooperation with the listing broker. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract for lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly.

The first paragraph of the Information About Brokerage Services form serves as a preamble and sets the stage for the explanations and definitions that follow. There are a couple of important takeaways in this paragraph.

The paragraph mentions a broker who acts as a subagent. In Texas, all agents work on behalf of the seller unless they have a written agreement with a buyer. This is called subagency – the agent is not directly hired by the seller, but works for them in finding a buyer for the home. This is a somewhat antiquated and confusing topic for many, but the way real estate law is written, this is how it works. However, a buyer may seek representation from an agent. This is done through a Buyer Representation Agreement. It’s interesting to note that buyer agency didn’t always exist and at one point in history all agents worked for the sellers no matter what. Luckily, buyer agency was created to give buyers more rights and representation during the home buying process.
The paragraph also mentions intermediary, which we have covered in depth before. Check out these articles: Inter-what? Intermediary in Texas Real Estate and Intermediary: Is it Right for You? for more information about intermediary and how it works in Texas real estate.

If the broker represents the owner:

The broker becomes the owner’s agent by entering into an agreement with the owner, usually through a written listing agreement, or by agreeing to act as a subagent by accepting an offer of subagency from the listing broker. A subagent may work in a different real estate office. A listing broker or subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first. The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent must disclose to the owner any material information known to the agent.

Again subagency is mentioned in this paragraph. Although this paragraph is about owners (sellers), it is an important one for buyers to understand as well. It lays out the basic reason for wanting an agent representing you in a real estate transaction – without a Buyer Representation Agreement, the agent does not work for the buyer and therefore is required to disclose material information to the seller and/or seller’s agent. This is not beneficial to a buyer. Being represented by an agent as a buyer provides certain protections that are essential, particularly when negotiating a real estate contract.

If the broker represents the buyer:

The broker becomes the buyer’s agent by entering into an agreement to represent the buyer, usually through a written buyer representation agreement. A buyer’s agent can assist the owner but does not represent the owner and must place the interests of the buyer first. The owner should not tell a buyer’s agent anything the owner would not want the buyer to know because the buyer’s agent must disclose to the buyer any material information known to the agent.

This paragraph covers the buyer’s side of things. Again, representation by an agent (broker) gives the client a one-on-one connection with the agent. The buyer now has the peace of mind that their interests (as opposed to the seller’s) come first.

If the broker acts as an intermediary:

A broker may act as an intermediary between the parties if the broker complies with The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker’s obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction:
(1) shall treat all parties honestly;
(2) may not disclose that the owner will accept a price less than the asking price unless authorized in writing to do so by the owner;
(3) may not disclose that the buyer will pay price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and
(4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by The Texas Real Estate License Act or a court order or if the information materially relates to the condition of the property.
With the parties’ consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party.

This section is one of the longer sections as intermediary is slightly more complicated. Read the previously mentioned articles for a great look at intermediary. Basically, it’s good to remember that all agreements between agents and clients are actually between the broker and the client, with the agent acting as a representative of the broker. Because of this, it becomes difficult to separate the duties to buyer and seller when the broker represents both. The last paragraph covers what we call “intermediary with appointments” which is arguably the better way to do things. This allows two agents from the same brokerage to represent their respective clients, so that both the seller and the buyer can both have full representation during the real estate transaction. Without it, one party would not get full representation when a brokerage’s buyer-client wishes to buy a brokerage’s owner-client’s home. In all situations, the agent must treat all parties honestly and to comply with The Texas Real Estate Licensing Act.

If you chose to have a broker represent you, you should enter into a written agreement with the broker that clearly establishes the broker’s obligations. The agreement should state how and by whom the broker will be paid. You have the right to choose the type of representation, if any, you wish to receive. Your payment of a fee to a broker does not necessarily establish that the broker represents you. If you have any questions regarding the duties and responsibilities of the broker, you should resolve those questions before proceeding.

The final paragraph wraps it all up. The big takeaway here? If you’re going to be represented, do it in writing. Whether you’re a buyer or seller, you should always seek to gain representation through a written contract, which your agent can provide to you. In the standardized contracts we use, the details of each parties obligations are laid out so that agent and their client know exactly what is expected of both, including information about how and by whom a broker will be paid.

The Information About Brokerage form is nothing to fear – it is simply an informational form that helps owners and buyers to understand how real estate brokerages function. It sets the stage for everything to follow once a brokerage takes on a buyer or seller as their client. It is educational in nature, which is why it is required by law in Texas to be given to the prospective client at the “first substantive meeting” so that they may be better informed about the role of the brokerage within their upcoming real estate transaction.

Can You Ask a Buyer to Pay More For a Home Than It’s Worth?

November 13, 2013 by khproperties Leave a Comment

Why would anyone pay more for a home?

Before we discuss the possibility of someone who wants to pay more for a home than what it is worth, we need to consider what we’re talking about when we say worth. Is it the appraised value, assessed value, or fair market value of the home?

Assuming we’re talking about the fair market value of the home, the answer is: yes. You can ask a buyer to pay as much for the home as you’d like. Will you get it? Probably not.

Two problems creep in immediately if you’re asking a buyer to pay more than the home is worth. One, why would a buyer pay more for a home than what it is worth, when they can get a home of similar quality at a better value? Two, the home won’t appraise for a higher value than the appraiser thinks it is worth. The bank is not going to approve a large increase in the loan amount vs. the appraised value of the home. So unless you can find a foolish cash buyer, you’ll want to price your home right the first time.

If your home is on the market for less than it’s worth, there may be reason for a buyer to pay more for your home. Consult with a Realtor if you have questions about what your home is worth.

image courtesy of Michael Dunn~!

Who Chooses the Title Company in Texas?

November 16, 2012 by khproperties 3 Comments

Here in San Antonio (and Texas in general), we use title companies to close our transactions when selling and purchasing homes. The purpose of the title company is two-fold; firstly, to manage all the incoming funds and make sure all the appropriate parties receive the correct funds (and there’s a lot of parties – lenders, sellers, agents, insurance companies, surveyors, the tax man…the list can be quite overwhelming), secondly, the title company issues title insurance. Title insurance insures the property is being passed from one party to another without any encumberance. By issuing title insurance on the property, the title company is ensuring that if someone indeed does have a claim to the ownership of the property, they will cover the owners’ loss.

Buyers and sellers can negotiate who will pay for title insurance and also who will be chosen as the title company. There are actually two components to title insurance; the owners’ policy and the lender policy (each one protecting that party from possible claims of ownership of the home). If the seller pays for both portions of title insurance, they may pick the title company without fear of violating RESPA (the Real Estate Settlement and Procedures Act). However, if the seller is not willing to pay for title insurance, the buyer may negotiate to choose a title company and pay for the title policy.

There have been courts that have argued that when the policy is split into its two components (lender and owner) and the seller pays for the owner policy and the buyer pays for the lender policy, that the seller may still choose the title company. However, RESPA does not officially cover this position and the waters remain murky. It is best if the seller avoids any conflicts and a) chooses and pays for the title policy (both owner and lender sides) or b) let’s the buyer choose the title company and pay for their title policy. Often in the MLS a title company is written in as a preferred title company, but although the sellers and their agent might prefer it, as a buyer, you do not have to use their title company if you are paying for your title insurance (no matter what some agents might try and tell you).

In Texas, the cost of title insurance is regulated, so all title companies charge the same fees for the policy. Because of this, it really comes down to service and ability to perform the required tasks with efficiency and flexibility. Most agents work with several different title companies and closers and know who can best fit your personal situation and transaction, so ask your agent when buying or selling your next home who they know can get the job done and make your decision with that in mind.

image courtesy of kozumel

How to be a good home buyer or seller.

October 20, 2011 by khproperties Leave a Comment

Buying or selling real estate can be a complex process, and even the best deals can have their moments of frustration for all parties. The entire process itself is stressful, and that can often bring out the worst (and sometimes the best) in people.

We as agents spend a lot of time promoting ourselves and the level of customer service that we provide our clients. Anyone who is a true professional has a deeper understanding of what it means to provide solid information, advice, guidance and support to clients, and this should speak for itself as we assist you with your transaction.

But since agents and loan officers and title companies would not have jobs without customers, we often downplay the fact that we need help and support from our clients as well. When buying or selling a home, rarely do we stop to think what it means to be a good customer. Here are some great tips that may help you feel better about the large undertaking, and the professionals that you will be working with along the way:

Ask questions. If you don’t understand a part of the contract, or you need clarification about a term, or even to know what comes next in the process, ask. Not only will you have a better grasp of the situation, but you will feel better at the end of the day. Real estate contracts can be complex, so don’t just skim along and hope it works out. Be involved in the process and understand what is going on with your transaction.

Listen. REALTORS® are duty bound to protect your interests above all others. Remember why you hired your agent in the first place and consider their advice carefully. It may not always be what you want to hear, but sometimes it may still be good advice. Experience counts for a lot. Most people have only bought or sold a handful of properties in their lifetime. Agents handle a handful per month. They are in a unique position to know the trends, values, and common features in local markets. And they have established relationships with other industry professionals to build upon this knowledge base.

Don’t lie. This one may seem self explanatory, but sometimes we as customers are embarrassed or ashamed of some of our actions. We think that if we don’t bring it up, no one will find out. But even the smallest omissions can turn out to be huge problems down the road. It’s better to be upfront about any issues so that your agent can help come up with solutions before they fester into huge deal-breaking disasters.

Be clear about your expectations and wishes. Take time to think about what your wants and needs are in a transaction. If you are buying, take a few moments to figure out what features are most important to you, and which you have a bit of flexibility on. If you are selling, consider things such as repairs, timeline, and price. Convey these to your agent. Time is a valuable commodity, and no one wants to waste their time or yours. Spending six weeks looking at two story houses only to discover that your mother-in-law will be living with you (and she requires a downstairs bedroom thanks to her recent hip replacement) is going to lengthen the time it takes you to find that home because of the poorly focused plan you started with.

Be fair. Real estate does not have to be a win-lose game. Yes, sellers always want more money for their properties, and buyers are looking for a better deal. But at the end of the day, everyone in the transaction is working towards the same goal of a closing. There is give and take on all sides.

Seek advice of experts. Seek out business relationships with people who have the experience to back up what they say. If your cousin’s sister’s brother kind-of knows something about electrical systems, he may not be the ideal person to conduct an overhaul of your home’s wiring before putting it on the market. It is best to contact a reliable electrician service for any electrical needs.

Don’t trump the expert. Spend time researching the people you work with so that you feel comfortable with him or her. Don’t’ be afraid to ask for references from past clients, or to verify sales figures. But once you’ve spent time doing this, trust that the professional you have selected is going to do their job. Calling every four hours about a new real estate article you saw online, demanding triplicate copies of every ad, e-mail, prospect, flyer, MLS sheet, or other document related to your house, or questioning why buying a home in San Antonio in 2011 is so different than “the way things were done” on a home purchase in 1975 in Pennsylvania may not be ways to show this confidence.

Communicate your frustrations. If the person you are working with is not performing as expected, let them know. There’s a calm, polite way to do this, and most of the time, people will respond positively to the feedback. Letting the problem persist only stresses your further and may end up doing severe damage in the end.

Follow through. Just as you are looking to work with people who do what they promise, make sure you are holding up your end of the deal. Your agent or your loan officer cannot do their job without you. So turn in those loan documents, get back to your agent with answers to important questions, and complete the required repairs when you say you will.

image courtesy of Sklathill