Last month the Obama administration extended the $8,000 first-time buyer tax credit, added a $6,500 provision for move-up buyers and increased income limits. The eligible borrowers must sign contracts by April 30 and close loans by June 30, 2010. An extension of the deadline to take advantage of the tax break for first-time homebuyers opens the door for a slew of new buyers to take advantage of the tax relief plus reduced home prices as reported in USA Today, Mortgage News Daily, US News & World Report plus Bankrate.com.
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Buyers have more inventory to choose from than ever before, but that doesn’t mean the process of buying a home is necessarily foolproof. In fact, the down market means buyers have more concerns such as home systems failing.
Art Chartrand, an attorney with the National Home Service Contract Association, cautions buyers in the December 2009 release of NBCactionnews.com, the KSHB-TV affiliate in Olathe, KA, that home systems including the electrical and plumbing are engineered to operate full-time. Systems that are designed to operate continually suffer from non-use in a slow market, when toilets aren’t flushed multiple times daily or electrical systems are left dark for days and weeks on end.
That’s the reason that 80% more sellers are buying home service contracts than even two years ago, continues Chartrand.
Service contracts protect buyers and sellers too from costly repairs at a minimum investment—between $350 and $500. These service contracts don’t cover structural problems, pre-existing conditions, or certain aspects of the repair. Instead, these policies cover appliances, plumbing and heating and cooling systems.
One buyer who used a NAEBA real estate agent reports that the Exclusive Buyers Agent’s insistence they purchase a service contract saved the day. The buyer had agreed to rent back to the sellers, seniors moving out of their family home they’d occupied for 40 years. The two-month rent agreement allowed the elderly couple to find a suitable permanent rental. At the same time, the buyer welcomed the extra cash as he still had his home listed for sale. What neither party counted on was the fact that the heavy winter snowfall would cave in the electric swimming pool cover. It had passed inspection without a hitch. The repair would have been over $5,000, so the policy provided the buyers with a substantial benefit.
Exclusive Buyers Agents, agents who represent buyers exclusively, are more likely to point out the downside of any property shown vs. trying to put the shine on the one they list. And one downside in a slow market is systems maintenance.
For buyers who’ve never used the services of a Real Estate Agent previously, that begs the question: What does a real estate agent do for me anyway?
According to Boston.com’s contributing writer Sam Schneiderman, what you are entitled to get from a real estate agent has everything to do with what your relationship is with that agent. “Agents and brokers are all expected to help their clients buy or sell property, but in reality, the way that each agent goes about it, and the amount of time that each one contributes towards getting the job done, can vary dramatically from agent to agent. Since there are no minimum standards for the service that Massachusetts agents must provide, it is possible for two people to have very different experiences with agents that are supposedly doing the same job. The devil is in the details,” says Schneiderman.
The difference runs even deeper when weighing the advantages of using an Exclusive Buyers Agent. The National Association of Exclusive Buyers Agents (NAEBA) underscores the importance of hiring a real estate agent who represents only you, the buyer, vs. an agent who both lists homes and sells to buyers. In fact, NAEBA was formed out of a need to characterize the difference between agents who represent sellers and agents who represent buyers.
The NAEBA premise is that no one real estate agent can do both well. Listing agents promote the properties they list because that’s how they make a living, not because the home they’re promoting to buyers is quintessentially ideal for the buyers’ desires. Exclusive Buyers Agents, on the other hand, happily show buyers potential homes to buy without compromising their inventory because they hold no inventory.
