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May, 2001 Newsletter


+++++++++++ May, 2001 +++++++++++++++++++
CONTENTS: Introduction
Mortgage Rate Update:
Recent Site Updates:
This Month's Tip: Using a Buyer's Agent

++++++++++++++++++++++++++++++++++++++++++++
Introduction
Welcome to the May edition of the Home Buyer's Information Newsletter.
Spring has sprung and so have home sales! After
a relatively quiet winter, both existing and new
home sales jumped in the month of March, beating
all predictions. Pricing, though, appears to be
returning to a more normal appreciation range,
which is good news for buyers (especially those
in markets where bidding wars had been commonplace).
+++++++++++++++++++++++++++++++++++++++++++++

Mortgage Rate Update:
As further evidence that mortgage rates have virtually
no relationship with the Federal Reserve rates, there
has been a slow but perceptible upward climb in rates
since late March. According to mortgage company
Freddie Mac, 30-year fixed rates in the U.S. averaged
7.12% (with an average of one point) in the week ending
April 26.
Will we see 30-year fixed rates below 7% again? Although
there is some disagreement among the experts (some are
looking for small increases, others for small decreases)
virtually none are predicting sub-7%, 0 point rates anytime
in the forseeable future. If you believe that the economic
rebound is real, then believe that rates will only head in
one direction: Up.
For more information on mortgages, visit the Mortgage Section at:
Mortgage Information

++++++++++++++++++++++++++++++++++++++++++++++

You can always find out "Whats New" at the Home Buyer's Information Center at the following location:
Site Updates

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Looking to find a Real Estate Agent and don't know where to begin?
HomeGain has the perfect service for you where you can anonymously
browse for Agents in the area in which you are interested. Find more
information on their site:
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++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Using a Buyer's Agent

One of the most commonly misunderstood--and most
important--aspects of purchasing a home revolves
around the concept of agency: When a Real Estate
Agent is involved in a transaction, who represents
whom? It is important to understand that, just as
in a legal situation where an Attorney will represent--
and owe their loyalty to--a specific party, a Real
Estate Agent will represent and owe their loyalty
to a specific party, either the seller or the buyer.

Confusion occurs when a buyer does not understand
that a Real Estate Agent ALWAYS represents the seller
unless there is a specific agreement to the contrary.
This means that if you surf the internet looking for
properties or respond to ads and contact the Agent
listing the property, in 100% of the cases those
Agents will be loyal to the seller--not to you.
This is the case no matter how friendly, accommodating
or helpful that Agent may be. By law, they owe
their allegiance to the seller.

The only exception to this rule is in states where
"Dual Agency" is available. Dual Agency allows an
Agent to represent both the seller and the buyer, but
the Agent will be severely limited in what information
they can share between the two parties.

What protection, then, does a buyer have if they would
like their interests to be fully represented? The only
option is to use a Buyer's Agent.

What is Buyer's Agency?
Buyer's Agency is a relatively new (evolving over the
last 10-15 years) concept that has revolutionized the
Real Estate industry. Rather than a buyer being forced
to accept a situation where they had to deal with an
Agent who owed allegiences to sellers, they now can have
someone to represent their interests. The old situation
(before the advent of Buyer Agency) had distinct
disadvantages for the buyer, since the Agent could
never reveal information that may be detrimental to the
seller. For example, if the Agent knew of the seller's
motivation for selling, or a minimum price the seller
might accept, this information could not, under any
circumstances, be given to the potential buyer.
Buyers who insist on searching for properties without
representation (dealing with the Agent who has the
home listed) face the same situation today.

A Buyer's Agent, in contrast, makes an agreement with
a buyer to exclusively represent their interests. This
means that the Agent can disclose to the buyer any
information available, even if that information could
be considered more of an advantage to the buyer than
the seller. A Buyer's Agent, therefore, helps to
level the playing field when it comes to negotiation.

Why Use a Buyer's Agent?
If Buyer's Agency is available (as it is in the vast
majority of the areas in the U.S. and Canada) we can't
imagine any reason why a buyer would not take advantage
of it. Buyer's Agency is the purchaser's opportunity to
get the maximum amount of information for the buying
process, plus it gives representation that can make
more use of the information at hand.

As an example, a Buyer's Agent can develop a Comparative
Market Analysis (CMA) and share it with the buyer, showing
what similar properties in the neighborhood are selling
for--even if this would indicate a price lower than a
seller's listing price. An Agent representing the seller
would never disclose such information, since it could
compromise the seller's position.

In negotiation, a Buyer's Agent can be your complete
representative, furthering your interests. If you are
dealing with the seller's Agent, they can write your
offer and present it to the seller, but cannot suggest
a price lower than the listing price. In addition, if
you have given the seller's Agent any information
(for example, the maximum price you would be willing
to pay for the property) the Agent must relay that
information to the seller. A Buyer's Agent would keep
such information confidential.

Why, then, is Buyer's Agency not utilized by a full
100% of buyers? To a very small degree, there is a
problem with availability. In limited areas, Buyer's
Agency is not the norm. In the vast majority of the
U.S. and Canada, though, it is readily available. In
addition. The use of the Internet by so many home
buyers has also affected Buyer's Agency use. Some
buyers, in a rush to "look at houses" surf the web
in search of homes. Unfortunately, if they find a
house that may be acceptable and contact the Agent
that has advertised the home, they will be dealing
with the seller's Agent--who must represent, by law,
the interests of their seller. When it comes to
buying a home, impatience can be an expensive mistake!

A better tactic is to search for a Buyer's
Agent FIRST, then begin your home search. It may
take a day or two longer that way, but you will have
representation, the Buyer's Agent can arrange for
showings of properties that may be of interest to
you (rather than you having to make all the separate
arrangements) and can probably do much of the initial
groundwork for you.

Who Pays for a Buyer's Agent?
Even though a Buyer's Agent represents the interest
of the purchaser, in the vast majority of cases it is
the SELLER who pays for their services.
How does this work? When a seller lists a home, they
agree to 2 things: First, that they will pay a
commission if the house sells and closes and Second,
that if an Agent other than the listing Agent sells
the home (which almost always includes Buyer's Agents)
the commission will be split between the seller's
Agent and the buyer's Agent. The seller, then, pays
the entire commission, even when there is an Agent
representing the buyer. There would be no cost to
the buyer.

A caution: If you engage the services of a Buyer's
Agent and then, for whatever reason, continue to
look (and buy) on your own, you could be liable for
a commission.

You'll find a complete discussion of Agency and Buyer
Agency on the site, including examples of how buyers
can be confused on the issue of representation.
Agency
Buyer Agency
Find an Agent

As always, if you have suggestions for improving the site, or topics you would like to see addressed in this newsletter (or, if you have used the Home Buyer's Information Center to successfully purchase a home), drop us a quick line at or access our feedback page at:
HomeBuyers Information Center Feedback

A special thanks to all those who have written to let us know that they have found the Home Buyer's Information Center a helpful resource in their buying process. Have a great month and good luck in your home buying process! The Team at the Home Buyer's Information Center

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