Michael Battalio

Friday, May 24, 2013

House buying

I’ve owned a house for about nine months now, and I had a friend ask for some advice on buying a house. I though I should pass along such advice here. I was asked these questions: Did you have any trouble getting a good mortgage, given that you're young and haven't really been in the full-time workforce?  Did you shop around with different banks a bunch? Did you work with a realtor?  If so, how did you select one?

My answers: I did work with a realtor.  They are worth the few percent they charge, though at many points I questioned the competency of my realtor and lender. Even with their marginal competency they were worth it.  I interviewed about half a dozen realtors before picking the one I used.  I found them via online searches of realtors for the area.  I came up with a standardized list of questions, and I picked my realtor based off of their responses, how easily I could contact them directly, and their enthusiasm for helping me.   I could tell a couple of the realtors were too busy to work with me because they only talked with me for a few minutes.  I'll list the questions I asked at the end of the email.  Some of the answers are from some friends of mine that have already bought two houses.  You can also search online about how to find a realtor.  

The only real problem I had with my mortgage was that they required proof that I would get a regular paycheck.  I bought the house before I started pulling a salary from my assistantship, so I had my parents cosign my loan.  It cost me about a tenth of a percent more in APR, but it was worth not getting an apartment for a few months first.  I did make sure my credit history was very good before I began the whole process though.  I had a credit card for a few years before hand and never missed a payment, so I had and still have a very high credit score.  If you don't have a good credit score, you should wait until you improve it.  There are plenty of online guides on how to do that.  

I checked a few banks to get an estimate of how expensive my loan would be, and they were all comparable.  In the end I simply went with the mortgage company my realtor recommended.  (Again, a realtor is worth it.)

I cannot recommend getting a house enough.  You don't share a wall with anyone.  When something needs fixing you just fix it instead of waiting for a landlord.  I love having my own garden again.  You can be as loud as you want.  I am paying less for the mortgage on a three bedroom house with a quarter of an acre than some of my grad school cohorts are paying for renting their two bedroom apartments.  The beauty of that is I will own probably two thirds of the house when I leave Texas; my cohorts will have just given a lot of money to a property management company.

Realtor questions

1.)  Is this your full time job?  How many clients are you currently representing?

15 is too many for a buyer

2.)  Ask about fee

What if I come across the house I want without you helping me?

The seller pays the buyer’s agent using the money you pay for the house, typically 3% of the sales price. Some buyer’s agents refund part of this fee.

3.)  Experience

4.)  How will you communicate with me?

5.) How many sales have you handled in my target neighborhoods?

You want someone who knows the local market, with a few recent deals in your target neighborhoods.

6.) When am I committed to working with you?

Many consumers start touring homes without realizing this can obligate them to work with the agent, contract or no contract.

7.)  How many foreclosure or short-sale transactions have you handled?

Distressed properties can be great deals, but the paperwork is complicated, and your liability is greater. The best agents have experience closing deals with banks.

8.)  Who else will be working with me?

An agent is often supported by a team. But the person you hire should do most of the work.

9.)  How quickly can you get me into a home?

Hot homes move fast. Ask how the agent handles tours on short notice.

10.)  Do you represent buyers and sellers on the same house?

No agent can fairly represent both. You need someone on your side.

11.)  May I Review Documents Beforehand That I Will Be Asked to Sign?

A sign of a good real estate agent is a professional who makes forms available to you for preview before you are required to sign them. If at all possible, ask for these documents upfront.

As a buyer, ask for copies of the following:

Buyer's Broker Agreement (is it exclusive or non-exclusive?)

Agency Disclosures

Purchase Agreement

Buyer Disclosures

12.)  What sets you apart from other agents?

Look for expertise, not just eagerness. You aren’t hiring the neighborhood kid to rake your leaves.

13.) Can I get references for your last five deals?

Every agent has clients he served well. But the best agents serve nearly all of their clients well. Getting an agent’s last five clients will give you a more balanced picture of his service than letting him choose his most favorable references. Call at least two of the five, asking clients some of the same questions you asked him. Look closely at these last five deals to see how they compare to similar sales in the neighborhood. Did he negotiate a good price for each customer?

14.). How Will You Help Me Find Other Professionals?

Let the real estate agent explain to you who she works with and why she chooses these professionals. Your agent should be able to supply you with a written list of referring vendors such as mortgage brokers, home inspectors and title companies. Ask for an explanation if you see the term "affiliated" because it could mean that the agent and her broker are receiving compensation from one or all of vendors, and you could be paying a premium for the service.

15.)  What Haven't I Asked You That I Need to Know?

Friday, May 03, 2013

Serious conversations (part 49):

        This series is a continuation of my conversations with an atheist friend of mine. These are my edited responses from that conversation. The forty-sixth through fiftieth entries deal with introversion/extroversion, social interaction and popularity.

        I’m sure we could have a whole discussion about why some kids are popular and some are not. Suffice it to say that it seems almost arbitrary to me. Although physical attractiveness seems to play a lot into it, doing extra curricular activities that play on qualities of attractiveness are also important. The guys should play sports that demonstrate physical prowess, and the girls should dance or cheerlead. Noting that that statement is awfully sexist, I would argue that popularity is sexist. Popularity reduces everyone to a certain paradigm, and outside of that paradigm you simply don’t fit in.

        I think one also has to be average in other respects, such as and especially intelligence. You can’t be too smart or too dumb. Too smart, you are made fun of for being a nerd. Too dumb, you’re made fun of for being, well, dumb. I don’t remember any “dumb” popular people. The popular people squeaked by grade wise and didn’t attract any attention.

        I tried for a minute or so to think up an unattractive popular person from high school. I could not. Same for my college career. I can’t think of an ugly popular person. People have to be drawn to someone to make them popular. The first thing someone notices about a new person is how pretty they are, not how well spoken or smart or athletic. It is physical attractiveness. People are shallow, me included. Now, I’m not arguing that attractiveness is the only important quality. I can think of many, many pretty people that aren’t popular. Outward self-confidence is important; self-presentation is important. You have to know that you’re popular to be popular. That is connected to knowing how to handle oneself in public, knowing how to talk smoothly, knowing amicable gestures and body language, not being socially awkward (see SC part 48). There is a lot to it, and I’m sure psychologists spend entire lifetimes studying the issue. Additionally, I’ve noticed that people who do not care about popularity are not generally popular. Again, you must know you are popular to be popular.

        There definitely is a hierarchy to popularity. Just speculating, I’d have to say that the Alpha Popular comes from the paragon. They are the most attractive, the most adept at social convention, most self-confident, etc. They are the epitome of such a character. Others aspire to be them. From personal experience I think that adolescence is the trigger for all of this. I remember being great friends with just about everyone in elementary school, but when puberty kicked in I wasn’t good enough anymore. I suspect it was because of my demure stature. I was a nerd and not good at sports, so I simply became irrelevant.

2003-2016 Michael Battalio (michael[at]battalio.com)