Who is Representing You During the Transaction?

Who Represents You?
By John Adams (from NAR web site)

One of the hot topics facing the world of real estate right now is the issue of agency. Some would have you believe that it really doesn't affect you, the buyer, and that nothing much has changed. But they are wrong.

The topic of agency is important to you because it answers the most basic and fundamental question that can be asked of any real estate professional: Who do you represent in this transaction?

Until that question is answered, you may be left with the impression that all agents who work with buyers actually represent those buyers, and that you have somebody going to bat for you in this transaction. Well, the issue of agency is important because without it, we can never be sure who represents who.

Here's the scenario:

You meet a really nice agent at an open house named Bonnie. Even though Bonnie's house is not right for you, she tells you she has others to show you that fit your needs exactly. You spend an hour or so with Bonnie looking at a half dozen homes and talking about your needs and your wants. During the course of the conversation, you volunteer that you have $100,000 cash to spend and that you will not go over $100,000 purchase price no matter what. Then you find the perfect house. Asking price is $100,000 but you decide to offer $92,500 based on recent sales in the area. During negotiations, the seller asks Bonnie directly how much cash you have and how high will you go? What does Bonnie say?

Here's the answer: Unless you have signed a "Buyer Agency Agreement" with Bonnie making her your buyer agent, she is most likely acting as a sub-agent to the listing broker who represents the seller. If that is the case, she has a fiduciary obligation to the seller to disclose to him any information she has that might "promote or protect his interest" in the transaction. Guess what? Bonnie has that information.

The Seller, now having knowledge of your financial position, counters at a full $100,000. He knows you can afford it and that this price falls within your desired range. He also knows that you have seen a number of other homes and that his is the one you want.
Regardless of what eventually happens in this scenario, it can hardly be called an even playing field. So, how can you protect yourself from a possible disclosure required of a seller's agent?

1. Make sure that the agent you are working with has agreed, in writing, to represent you as a "Buyer's Agent." This will mean signing a buyer brokerage agreement in which you promise to work only with that particular agent for a specific period of time, often 90 days. It also means that you promise not to buy from anybody else, even FSBOs, without involving your buyer's agent. In almost every case, the commission will still come from the seller, but your agent must present the offer.

2. Never say anything to anybody unless you would be willing to have that information repeated into a seller's ear. Assume that everybody, and I mean everybody, is working for a seller unless you have specifically hired them to work for you. And even then, be discreet. During the second world war, the military promoted a phrase designed to stop idle gossip: Loose lips sink ships! You would do well to adopt that philosophy in your home-buying as well.

Below by Lee Elmstedt:
The Colorado Real Estate Commission (CREC) has instituted a number of safe-guards to protect the public when dealing with a realtor/broker. These disclosures are required to be in writing using a standard form designed by the CREC. These forms specifically tell the consumer who works for who and what the responsibilities are of the agent you work with. When working with a buyer and on their first meeting the normal protocol is to provide a copy of working relationships: Definitions of working relationships, from here the buyer decides on what level and type of service they want. If the buyer prefers the greatest level of service, then the Buyer Agency is completed in writing. The duration is negotiable. We also use " A Standard and Approved Real Estate Purchase Contract" to purchase existing home. This form is required to be used by all licensed real estate agents in Colorado. Builders and private parties selling real estate may use their own purchase contract/forms. Working with a builder or non-listed home seller does not negate the relationship with the buyer and agent.
If you have any questions, please contact me

Tips on Saving Money and Energy

According to www.energysavers.gov , Americans spend more than $160 billion a year to heat, cool, light, and live in our homes. With energy bills on the rise this year, there are many ways to cut costs on energy.

Helpful tips to help you save money and energy:

- Turn down thermostats a degree or two, especially when you're not at home, or install a programmable thermostat to do the work for you to save up to 10 percent on your heating costs.

- Clean or replace heating and cooling filters once a month or as needed.

- During the heating season, keep draperies/blinds on your sun-facing windows open during the day to allow sunlight and heat your home.

- Close drapes at night to help reduce heat loss.

- During the cooling season, keep the drapes closed to prevent the sun from heating your home.

- Close any vents in unoccupied rooms.

- Seal up your home -- One of the most cost effective ways to reduce energy bills is to air-seal holes, cracks and openings in your home and then add insulation to stop the flow of heat through the walls and ceiling.

- Replace the five most frequently used lights, or the bulbs in them, with one's that have earned the Energy Star, and save more than $60 each year in energy costs.

- Power down computers and electronics products when not in use -- Computers and other electronics account for an increasing energy load in most homes, and often use energy even when switched off.

- Repair or replace leaky faucets.

- Wash clothing with cold water whenever possible.

Energy Star*
Look for many products that have earned the Energy Star -- The government's Energy Star is on more than 40 different kinds of products the home, including lighting, home electronics, heating and cooling equipment and appliances. Energy Star qualifying products provide the features and performance you want while helping you save energy.

Starting Jan. 1, new tax credits will go into effect that provide incentives for making energy-efficiency improvements at home and at work. Families looking to buy hybrid or other fuel-efficient vehicles may be eligible for a tax credit of up to $3,400 in 2006. At home, the legislation signed by President Bush provides a number of tax credits for the installation of energy-efficient products. Families can get tax credits up to $500 for qualified energy-efficiency improvements to their home, including $200 for installing new energy-efficient windows, $50 for purchasing an advanced main air circulating fan, $150 for installing a highly efficient furnace or boiler, and $300 for purchasing a highly efficient central air conditioner, heat pump or water heater. Always be sure to check with your tax preparer, accountant or attorney for government clarification and latest IRS updates.


For more information and helpful tips on saving energy, visit:

www.energystar.gov
www.eere.energy.gov/consumer/tips/

Is Your Home Healthy?

Healthy Homes

Since we spend most of our time in our homes and it is the place we think of as the safest, evaluating our homes for potential air and water hazards are an important part of creating a healthy environment for us to live in. Following are tools and tips to solve some common indoor problems.

Carbon Monoxide is a deadly gas that emits from appliances that burn gas, oil, coal or wood and are not working properly. You cannot see, taste or smell carbon monoxide. At the beginning of every heating season, have a trained professional check all of your fuel-burning appliances: oil and gas furnaces, gas water heaters, gas ranges and ovens, gas dryers, gas or kerosene space heaters, fireplaces and wood stoves. Make certain that the flues and chimneys are connected, in good condition and not blocked. Some signs that appliances are not working correctly include: decreasing hot water supply, the furnace is unable to heat house or runs constantly; there is soot on appliances and vents or an increased condensation inside windows.

Radon is a colorless, odorless, radioactive gas emitted from uranium, a naturally occurring mineral in rocks and soil. Normally, radon rises up through the soil and dissipates in the air outside. Radon becomes a concern, however, when it seeps through openings such as cracks, loose fitting pipes, sump pits, dirt floors, slab joints or block walls and accumulates in the home. Radon has been identified as a risk factor in developing lung cancer because it decays into radioactive particles that can get trapped in the lungs. You can determine if your radon levels are high through a simple inexpensive test available at hardware and home improvement stores. The cost of repairs to reduce radon depends on how the home was built and the extent of the radon problem. A variety of methods may be used to lower radon levels in a home. These include sub-slab, drain tile, sump hole, and block wall suction. Yes, Colorado Springs does have radon throughout the entire area.

Wall cracks in the outer walls of your home or around doors and windows provide a perfect environment for the growth of biological contaminants such as mold. Cracks are also the entry point for insects and rodents. And of course, cracks can allow the hot air of summer and the cold air of winter into your home as well. By properly sealing any cracks you avoid the infiltration of contaminants and outside weather into your home.

According to the National Cancer Institute, children living in homes where garden pesticides are used have been found to be more likely to develop childhood cancers linked to chemical use. You can decrease your use of these pesticides by improving the health of your soil by using organic fertilizers and aerating twice a year. Mixed grasses are less likely to grow weeds. Lastly, try having a smaller area of lawn so you can pull weeds by hand rather than managing them with chemicals.

By planting trees or shrubs at least 3 feet away from your home you decrease the chance of roots disturbing your foundation thereby allowing water to enter your home which may contribute to mold and other biological contaminants.

Follow the label directions for using and disposing of household products safely as chemicals can easily get into your home’s drinking and bathing water.

When working on hobbies or projects that make dust or odors, make sure to provide plenty of ventilation by opening doors and windows and using a fan.

Choosing furniture, carpet and building products that are made with non-toxic chemicals, sometimes called “green products” reduces risk to those with chronic bronchitis, asthma or allergies. Also, try putting carpet down in a season when you can open the windows for several days afterward.

How Many Homes Should I look At?

If you are looking at homes in the Colorado Springs area 2 - 3 months down the road before you get here, the odds of that particular home being available when you get here is not good. Homes in the $150k - $225K price range usually go fairly quick, especially near Fort Carson area. There are homes that are always coming up on our system that will meet your needs. One of the best ways to introduce you to our market is to send you some emailed listings so that you can see and compare what is available to what your needs and limitations are. I send my clients almost daily emails of what is on the market and let them decide if they need to make any changes to their search criteria. Right now I would say that about 1 - 2 weeks before you actually get here is the best time to start picking your top 3-5 homes that really interest you. The day we actually look, is the day we can see what is available via the MLS. Now might be a good time for you to see what is available.

Normally it is best for buyers to look at only 3-5 home per day and no more. I have a checklist that I give my buyers where every home is evaluated on a point system and then we pick the number one home from each day. I have found that the buyers like the process and it keeps them focused on what they really want. Depending on your time frame, we shouldn't have to look at more than 10 -15 home if that, unless you change your mind in the middle of a search such as increase the price, area, style, etc. Trying to see everything is exhausting, and confusing and only leads to frustration. I have a saying: "if the home is talking to you when we walk in, then we are probably 90% sure that that home is for you". The other caveat is if you can get about 85% of what you are looking for in a home, then we are doing pretty good. Remember that no home will have everything you are looking for. Once you have an opportunity to checkout our area and look around, I think you will find that there are an awful lot of homes that might meet your needs.

Remember this: the home that you are seriously "thinking about" now, is the home someone has already thought about yesterday and is now putting in an offer. Don't be disappointed by waiting too long.

Who Pays the Realtor Commission

As a Colorado licensed realtor/broker I can show and write contracts or advise you on any home, investment property, farm or vacant land listed by any company, any agent, any builder or any For Sale By Owner (unrepresented seller) in the state of Colorado regardless of city or county location. There is one catch though: most new home construction builders require that the agent be present during the FIRST visit to a builder’s model, standing inventory or vacant land. If the agent is not present, and you visit and subsequently purchase a home from that builder without your realtor/agent then in most cases the builder will not pay the realtor’s commission. Remember this: the person you talk to at the builder’s site is an employee of that builder in most cases and is not obligated to look out for your best interest and often times has a very limited knowledge about Colorado real estate law. Even though I live in Colorado Springs, I can show and sell you any home anywhere in the state of Colorado.

The seller or builder from whom you are purchasing the home from pays my commission. Colorado law provides that payment of a real estate commission from the seller or builder doesn’t establish any type of relationship, obligation or commitment on the agent’s part to the seller or builder. As a buyer’s agent or transaction-broker for the buyer during the transaction, the agent is not obligated to the seller or builder in any way except for fair and honest dealing. I work only for you, the buyer while someone else pays my fee for assisting you (only in America). Kind of strange I know, but that is how the real estate industry works. There are special circumstances from time to time where the buyer will pay my fee/commission, but in most cases, the seller or builder will pick up the tab. Contact me for more information or clarification.

By the way, here is some more information that you need to be aware of. Since a realtor ONLY gets paid when the home is closed upon, many realtors ask that you agree to a buyer agency agreement. This agreement basically spells out what the buyer is responsible for and what services the agent is to perform during the agreement period. This agreement time period is negotiable. Primarily this agreement says that the buyer will only work through a specific agent when looking for a home to purchase. This agreement is the realtor’s way of getting a commitment from the buyer that if the agent does a good job in finding the right home and is present when a contract on that home is written the agent will get paid at closing. Put yourself in our shoes and think of the risks we are taking in case you don’t buy a home. Realtor’s are not tour guides. I spend thousands of dollars a year staying sharp through continuing education in contracts, negotiations, financing, real estate law, contingencies, communications and marketing to name a few in an effort to protect your best interests and give you the best service west of the Rocky Mountains.

Look at it this way, if I’m going to drive you all over town, maybe buy you a lunch or two, use my computer, knowledge, skill, market expertise, what benefits and negatives all areas of town offer, financing knowledge and provide recommended service providers (appraisers, home inspectors, radon inspectors, roof inspectors etc) to help protect your best interests and let you know about different areas of town, evaluate the homes you have looked at and coordinate all the paper work i.e., title work, financing, inspections, contingencies, contracts, earnest money etc. I would like to know up front that you are willing to work with me and look out for my interests by following the guidelines we agree to.

Be sure to visit my web site for additional information about Colorado Springs real estate .