Home buyer’s privacy

Buyer InformationIn a time when there is increasing concerned about personal privacy, maybe it’s time for local Realtor® associations (such as the Greater Capital Area Association of Realtors®) to retire the Buyer’s Financial Information Sheet, or at least make major revisions to the form. The Buyer’s Financial Information Sheet is an invitation for abuse and misuse by those who may otherwise be well intentioned.

Sure, privacy laws have been recently enacted that prescribe protocols on the handling and disposal of sensitive personal information. However, there are no provisions to ensure that real estate brokers, agents, and those who have access to the personal data follow such precautions.

If you ask a real estate broker about the origination of the Buyer’s Financial Information Sheet, they might explain how agents needed a means to pre-qualify buyers in a time when loan officers’ pre-qualification letters had little meaning on their own. The tradition of a completed form portrays the buyer’s ability to purchase a home. Legal minds might go further to explain that the form may provide additional recourse for the home seller in case the buyer provides misleading and/or false information, and/or omits relevant information about their financial standing.

Today, many home buyers are pushing back (and rightly so) at the request to provide an abundance of specific financial and personal information to their agents, listing agents and sellers. For many home buyers, the resistance to sharing personal and financial information is not only because of discretion, but mainly because they feel the sharing of the information is redundant and ineffectual. Many home buyers have already provided similar (if not more) information to their loan officer so as to be issued a pre-qualification letter. Additional concerns include the use of buyer financial information to during contract negotiations.

Times change, and it’s time to take home buyer financial information out of the hands of real estate agents. The argument that sellers want to see the buyer’s ability to purchase is antiquated. Today, mortgage originators are licensed and take seriously approvals that are issued because consumers may have recourse; the loan officer usually performs a minimal level of due diligence.

Mortgage originators are required to undergo a federal and state criminal background checks for licensing. Additionally, lenders offer training on managing and disposing sensitive personal information; many lenders offer secure means of electronic transmission of sensitive data. Chances are that the agents involved in your transaction did not undergo a recent background check, much less the seller. But if you are asked to complete said form, you are expected to trust those who may handle and view it.

Additional problems that can occur when presented with the Buyer’s Financial Information Sheet include the compulsion by listing agents and home sellers to underwrite the buyer’s mortgage; they may indulge in deciding whether or not the buyer is mortgage worthy when they may be unqualified to do so. Additionally, listing agents and sellers are tempted to use the buyer’s financial information in negotiations; misguided sellers may regrettably lose a deal when they are told to hold out for a higher price from a buyer who may walk away from negotiation.

Protect home buyers and sellers: retire or change the Buyer’s Financial Information Sheet. Cash buyers can still provide proof of funds to purchase, while other buyers can provide a lender’s letter along with a “Buyer’s Financial Affidavit” that certifies that all information provided to their lender is accurate.

Original published at https://dankrell.com/blog/2013/08/21/home-buyers-privacy-an-argument-to-retire-the-financial-information-sheet/

By Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright ©2013 Dan Krell.

Hire a real estate agent

hore a real estate agentWhy should you hire a real estate agent? Home buying and selling without an agent is not for everyone.

A somewhat prophetic Howard Schneider proclaimed in a 1995 article “For Better or for Worse” (published in Mortgage Banking; 56(1), 110) that a combination of technology and industry consolidation would drastically change the real estate landscape by the end of the 1990’s.

Schneider discussed technology changing the relationship between Realtors® and consumers such that through the development of technology, home sellers and buyers would be able to interact without the use of a real estate agent. He quoted John Moore, then president and CEO of Genesis Relocation Services, “If you can get the word out about your property efficiently to the mass market, you can avoid paying the full brokerage commission…” and “…within five years, most homes will be able to see listings around the country on interactive T.V.”

What Schneider described actually happened,  and is now called “the internet.” The growth of the internet during the first decade of the 21st century allowed home buyers and sellers to interact with each other like no other time. The technology was a boon for those who decided to go it alone, and not hire a real estate agent.

Of course the internet was only a piece to the larger puzzle of the early 2000’s. It seems that for a very brief time, just placing a sign in the yard was enough to spread the word of your home sale.  Deciding price, financing, and closing all seemed to be a “no-brainer.” But five years after the housing boom, it’s evident that not everyone can sell real estate “by owner.” Many moved back to hire a real estate agent.

One of the top reasons for selling or buying a home without a real estate agent is the perception of saving money. People who decide to sell without an agent don’t see the value of hiring an agent; while some buyers who decide to buy without an agent believe they can reduce their sale price by the commission amount.

Although hiring an agent may not be a god fit for some, many value what an agent can bring to the transaction. Real estate agents are housing-market experts; besides knowing neighborhood trends, they can provide detailed market analyses to assist in formulating a listing or sale price for home sellers or buyers. Agents facilitate offers, transactions, and negotiation. They are up to date on legislation affecting home buyers and sellers; agents know the seller’s/buyer’s obligations, including compulsory disclosures and forms. And of course, there is the time aspect (how much is your time worth?).

Reasons to hire a real estate agent

Talented real estate agents are sales and marketing specialists. These agents know how to interpret home sale data to determine a price, and the best times to list/buy your home. Additionally, they know how to prepare and present your home to prospective home buyers and promote it to grab home buyers’ attention.

Getting back to Schneider’s article, he concluded that regardless of technological advances and the inclination toward mergers to an increasingly centralized industry with few big players. It’s ultimately about nearby professionals who have the knowledge of the local market. It’s basically who can personally assist you through your transaction. Personal attention cannot be under-emphasized, especially when the transaction is demanding or emotionally charged.

Are you better off without a real estate agent? You might think that technology has made it easier for you to go it alone; but, if you want a relatively smooth transaction with little drama – hire a professional.

Original located at https://dankrell.com/blog/2013/01/24/thinking-of-buying-or-selling-a-home-without-an-agent-hire-a-professsional/

by Dan Krell
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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

Checking Up on Your Buyer Agent

by Dan Krell

Is your buyer agent showing you all the homes that match your search criteria? Let’s face it, there are presently thousands of homes listed for sale. You can’t realistically visit all the homes for sale, so how are you going to limit the homes you actually visit? If you rely solely on your buyer agent to show you homes that match your search criteria, you may be missing out on seeing other attractive and desirable homes. As most buyer agents act within their duties to their clients, some place their needs before their clients’; some buyer agents steer their clients for financial incentives and just plain convenience.

As some home sellers are offering financial incentives to home buyers, some are offering financial incentives to buyer agents in the form of bonuses and/or higher commissions. Additionally, some real estate brokerages offer financial incentives to their agents for selling intra-office listings in the form of bonuses. It’s easy to see that a buyer agent stands to make more money when they steer their clients to listings that either pay the highest commission and/or offer bonuses. If you ask your buyer agent, they will give you every detail of a home-except how much commission is paid and if there is a selling bonus offered (most agents do the right thing by disclosing selling bonuses to their clients when they submit an offer).

Additionally, some buyer agents look to show homes where the home seller can settle without delay. If there is any indication that it may be a prolonged settlement, the listing is excluded from the list provided to the home buyer. Typical reasons a home seller may need a prolonged settlement include finding a home of choice or requiring third party approval (which include short sale, probate, or bankruptcy sales). Some of these sales can take more than two months.

A small number of buyer agents are just plain lazy; they will only show you the homes that are convenient for them to show. Rather than making appointments and scheduling their time around their clients, some agents will only show vacant homes or homes that do not require any advanced notice. As many listed homes are occupied, some do require appointments or notice to show because of tenants, pets or infants.

As the real estate industry strives to be at the cutting edge of technology, information (albeit sometimes too much information) is available to everyone on the internet. To be certain you see all the homes that interest you, compare a search that you conducted to your agent’s search. One of the best ways to search for homes online is to go directly to the local MLS. HomesDataBase.com is the consumer website offered by Metropolitan Regional Information Systems, Inc. (the local MLS). This site provides up to date information as listings are updated daily. You can search for homes based on your criteria as well as email your buyer agent for additional information.

Vigilance may be too strong of a word, but your home purchase is one of the largest purchases you will make in your life. You must be aware and attentive to all aspects of the home buying process.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of February 18, 2008. Copyright © 2008 Dan Krell.