Buyer representation on the North Fork: Something Home Buyers need to know about!

It seems a no brain-er: when you are buying real estate you should have a broker who works for you, not for the seller.

Yet, in our area, most deals are done with real estate agents all working for the sellers. And buyers are left in the cold, working with sellers agents. In my experience, consumers are not clearly aware of the important ramifications of the fact they are working with a sellers agent when they make what often is one of the most important purchases in a life time.

It has happened so often to me, while working as a sellers agent, that a customer would say “I know you work for the seller, but could you tell me….”.  Clearly indicating they do not comprehend the consequences  of agency law in New York, no matter how many times explained. And it makes sense given the human relationship and friendship that follows spending time with people.

When people are kidnapped or taken hostage, it is described that many times, a much more friendly relationship forms between captor and captive than one would expect. And when a buyer drives around with a real estate agent, a feeling of trust and friendship ensues that completely belies the true nature of the relationship between buyers and sellers agents. How could this person who is so nice, knowledgeable and professional do something bad to you?

Fact is, this agent for the seller is bound by law and protect the sellers interests, and to say it in plain English: sell the house to you, the buyer, at the highest price he can get from you. And this agent is not telling you “buyer beware” as would behoove you, instead is a well trained sales professional presenting homes to you in the best possible light. As long as he is not lying to you, and remains “fair” in his dealing with you.

So you would be better of with a knowledgeable agent who works for you as the buyer. Now, who is going to pay the commission? That seller’s agent is not charging me at all driving me around, no?

The true answer is that the sellers agent is not working for free: and since all money to buy a house typically comes from the buyer: most real estate agent’s commissions are paid out of the proceeds at the closing table. So the Buyer in effect is paying the commission for the agent who is doing the seller’s work…

If you would like to be represented by a buyers agent when you buy a house, it is important to clarify what your mutual expectations are. And to put these expectations in writing is the best way to ensure that in the future there will not be any misunderstandings. That agreement in writing is the Buyers Agency agreement.

If you still ahve any questions, or remarks, let me know!

Is it a good time to buy a home on the North Fork?

With all the turmoil in the credit markets, following the stock market’s wild gyrations, people are still buying and selling homes on the North Fork. I give you that it was a little slow transaction-wise, but the transactions I saw were good ones by smart sellers and even smarter buyers.

Investing wisely and making money require -besides spreading risk- common sense and thinking just  a little bit ahead of the others: and don’t forget to step aside while the lemmings jump off the cliff.

And make no mistake: people are still making a lot of money even in today’s stock market, also when its going down: it’s the movement that creates opportunities…..  Following the principle of buying low and selling high -although it may seem like gambling- the enormous volatility provides for lots of daily highs and lows, with 1000 point swings in the Dow and many opportunites to make money and contrary to conventional wisdom it is not as risky as you may think.

101 in Economics: The only way to make money in any market is to sell high and buy low. And price is determined by supply and demand.

Is now the time to buy real estate? How to time this market? When’s the low and how are supply and demand faring?

I find this interesting: weren’t people buying like madmen and women at the height of all the markets? How come nobody remarked how high the market was then? Weren’t they massively violating the principle of selling high and buying low , by buying at the top of the market without hesitation? Why did that not feel like extremely risky?

It appears people in general are only thinking linear, they can only extrapolate a line going straight up when the markets are getting higher and higher, not recognizing this line could break, and keep buying without stopping; and now can only understand the downside when the line points straight down. People obviously do not extrapolate in curves. But markets work with curves, not straight lines. It amazes me how even very sophisticated and seemingly smart people are who fall in that trap of thinking. The way out of the economic mess is to teach curves!.So aren’t we all violating the principle of buying low and selling high again by not buying under today’s circumstances?

So it’s all psychology maybe? Hyped by the Presidential elections ? Well listen up: these elections are over in about two weeks, T. Boone Pickens is saying: buy stocks and put his actions where his mouth was. Self fulfilling prophecies.

I know what homes looked like in the 400K range on the North Fork some two years ago, and there weren’t that many, virtually nothing . Look at the availability of homes a little over the 300ks right now! And look at what you can now buy for between 400K and 500K on the North Fork! Not a low yet? You must be kidding.

Steve Harney (www.steveharney.com) spoke at the MLSLI tech fair this month: When looking at the value of real estate for the past fourty years or so, at 5 year intervals, values grew some 25-29%, except for the last 5-year period with a whopping almost 90%. So be the world’s most persistent pessimist and say we lost some 30% in the recent turmoil, the only thing that points to is that we’re still ahead, well above the preceding 5 year intervals. Try give me an example of a safer, better investment than real estate so measured.

So now, maybe we are not buying because all these foreclosures are coming? Maybe we’ll even get a check if we wait long enough when we buy a home? Not so. Banks on the North Fork are not accepting lower offers on short sales -ask any of the many frustrated brokers in such transactions. A few auctions I saw had such high reserves that the auction failed to sell. Banks know a good thing when they have it, like real estate on the North Fork, even if their clients defaulted.

The same greed leading to the excesses that made a few lucky cheats so rich, is now preventing buyers from buying at the low; and the low will at some point -and we may be there already- certainly pass them by recognized too late. In order to make money, you have to be ahead of the curve,  ahead of the wave of buyers coming. Don’t be too late…

The North Fork is a tiny region, and all real estate is local. There’s lots of pressure on our market, lots of people would love to be here, to escape the overpriced and overpopulated Hamptons, to get a way from the City, many, many reasons. There’s lots of people who want to be on the North Fork, as second homers, weekenders, or to live a dream come true. Whatever excess inventory we may have today in our tiny region, is minute compared to the enormous pent-up demand that exists in potential buyers in a 100 mile radius around Love Lane… This excess will be gone in a blink and you will find yourself feeling like you felt like last year, sorry not to have bought more.

Let me know what you think!