Buying

How to go about buying a home in Springtree Territory

Research conducted by the National Association of Realtors indicates that the vast majority of home searches today are begun on the internet.  Many, many sites carry information from the local multiple listing services and a few also provide demographic information and market trends.  There’s almost too much of it.  Almost all of this information is driven by databases.  Computers are smart but still may not capture the same sense of place that a professional with a long history in a location, like your friendly real estate agent. Using both the way they are intended will increase your chances of having a good homebuying experience.

Online searches

The online search that you have access to in the sidebar on the right provides access to all the listings in Springtree Territory and all fourteen counties in the Triangle MLS. Very soon it will have access to several other North Carolina markets as the result of a project called the North Carolina Data Share. There are a number of tools available to companies like Springtree and individual agents to share with their clients to do searches. The one you have access to here was developed by a local company called BestHomePro. BHP is a service within itself.

No registration is required for your initial search and the results are stored on your computer in a “cookie” on your browser. You may open and modify that search as often as you like. However, I urge you to register and gain some additional functionality that will make your online searching a much better experience.  These features include the ability to do multiple searches, access them from any computer, save favorites and receive notifications of changes in the top ten selections in all of your searches.

These are cool features but what really distinguishes BHP from most other tools is that you have the ability to “weigh” the importance of the features that you choose for your criteria. If you like this kind of thing, you’ll love BHP. If you don’t, it gives you the same results as any other tool just entering the most basis information. Try it and you will see immediately how powerful it is.

Registration only means that I and I alone will have access to your information and I will keep it confidential until you ask me to share it.

At some point serious buyers are going are going to want to engage the services of a buyer agent to assist in the search, show them their top choices, help negotiate a purchase and manage the transaction. Of course, I’d like to be that agent but even if I’m not, I would strongly advise using an agent familiar with the neighborhoods that you are interested in. For more information on the services provided by Springtree, click on the SERVICES tab at the top of the page.

Some Technical Stuff

All real estate transactions in the U.S. are governed by local and state laws and are strongly influenced by local custom so it is important to learn about these things, especially if you are contemplating a purchase in a market new to you. In North Carolina the North Carolina Real Estate Commission supplements the existing real estate law with regulations governing the practices of real estate agents. Its mission is primarily consumer protection and it licenses all real estate agents and dictates pre-licensing training and required continuing education.

Until a few years ago, all real estate agents technically represented the seller in a transaction, even when that agent was engaged by the buyer. The real estate commission decided that buyers deserved equal representation and formally established “buyer agency” with its own set of practices and requirements. All licensed agents are licensed to represent both buyers or sellers and under certain circumstances they can represent both in the same transaction.

When an agent or broker (all licensed agents in North Carolina are now brokers) signs a listing agreement with a seller or a buyer agent agreement with a buyer, they assume some important obligations to protect their clients’ interests.  When interviewing buyer agents it is important to be careful about what information you share with them about your motivations or financial situation until you actually sign an agreement.

An agent may show you homes without a buyer agent agreement in place, however, at that point the agent is technically representing the sellers and should use any information they have learned from you to get the best deal for the seller, not you. This troubles some buyers who do not want to commit to a buyers agent that they may have just met. However, most buyer agents will work with a client with a short term agreement or readily release a buyer from an agreement if some conflict develops. Per the Commission regulations, one of the first things any agent you talk to in a “meaningful” way should do is explain these agency rules.

Unless you have purchased property locally recently you should also ask that any prospective buyer agent review the process with you . In most cases a home purchase will involve other professionals including an inspector, an appraiser and an attorney.

In North Carolina, most residential real estate closings are handled by attorneys who specialize in these transactions. This is a little different than some other states where this is traditionally handled by a title company. In North Carolina these attorneys maintain Trust Accounts and are strictly regulated with regard to how money is handled.

“Earnest money” is traditional and part of the contract negotiations but not required and is traditionally kept in Trust accounts maintained by the listing agent’s firm once a contract is in place. A buyer agent in most cases will be willing to recommend professionals for these roles as well as other specialized personnel such as well inspectors and even contractors for estimates and repairs. In addition they will often be in a position to recommend lenders or mortgage brokers but the choice is always the buyer’s choice. The exception is that the lending institution will choose the appraiser when financing is required.

Like most areas of the country, it is traditional that potential buyers be “qualified” before entering into a purchase contract. In the luxury segment, many sellers also want assurances that potential buyers are qualified before a house is even shown for the first time. It is a good idea to have a commitment from a lender or the certification from a banker or investment professional that the funds will be available to make the purchase before actually starting to visit potential homes. This saves a lot of time and potential embarrassment. It is not as critical for unoccupied new homes.

North Carolina also uses standard contracts that were developed by the State Association of Realtors and the State Bar. The most frequent exception to this rule involves national home builders that may have their own standard contracts.

In the last few years some major changes have been made to the standard contract. The most significant change is the addition of what is known as “Alternative B” which essentially creates an option agreement prior to the purchase of a home. Alternative A specifies an inspection at the buyer’s expense and usually involves a subsequent negotiation of repairs or financial concessions based on the operating condition of the key systems of the house.

Because Alternative B eliminates a lot of post inspection repair negotiations it is expected to eventually become the preferred alternative for most transactions. But because it involves a different approach to making offers and negotiating a final deal it is only being adopted slowly. It is important to have these alternatives thoroughly explained by your buyer agent.

Agent commissions or compensation generally are not governed by law or regulation. When multiple listing services were first established, the first intention was not to share data but to create a basis for sharing compensation. Tradition has long determined the commission amount, who it was paid by (the seller in most cases) and how it was split with the agent who brought the buyer.

More correctly all compensation is required to pass through the agents’ firms, which follow strict requirements for accounting. Listing agreements now require that the listing agent disclose in the agreement what compensation will be offered to the buyer’s agent. HUD regulations also require that this compensation be included on closing statements to make sure everything is as transparent as possible.

This is not the fun part of purchasing a home. However, the savvy buyer is wise to try to understand the motivations of all parties including both agents. To reiterate, compensation practices are driven by tradition and company policy, not law or regulation. This means that it is totally negotiable. In fact, the compensation doesn’t even have to be a commission or be paid by the seller. This is often disconcerting to many agents who operated for many years guided by tradition. However, pressure from so called “discount brokers” and the “trust busters” at the U.S. Department of Justice has made the whole industry take a hard look at some of these traditions.

Wrap Up

This page is meant to be a primer for those interested in the Triangle and Durham real estate market but it is far from comprehensive. Please feel free to use the search tool  and follow the market reports and other community information as it is posted on the site .

An easy way to do that is to subscribe to the RSS feeds. This can be done easily and anonymously. Whenever a new article is posted to the blog a summary is sent to a reader on your computer. The one I use is free from Google. But please, if you have a question, don’t wait for it to be covered in a blog post. In fact, any suggestions for improving this site or for topics you would like to see addressed in the blog would be more than welcome. I can be contacted anytime at my using the contact tab or by phone at 919.819.6666. I hope this will prove helpful.