Real-Estate Fiction * Death by Real Estate Death by Real Estate, by Maggie MacLeod (Daybreak Publishing): Barb Parker is a mystery-solving real estate agent.* Closing Costs Closing Costs, by Seth Margolis (St. Martin's Press): Five couples try to survive the cutthroat Manhattan real estate market.* Good Faith Good Faith, by Jane Smiley (Anchor): A divorced real estate agent is lured into a development deal by a newcomer to his small town.

One good way to find out whether your agent will ever be a dual agent is to ask, before hiring, "Will you ever represent me in a dual agency?" Only work with agents who say "no." If you become interested in a property listed by that agent, he or she can help you find another agent to complete the deal.

In a similar situation called a designated agency, you're represented by one agent, and the seller is represented by another agent who works in the same brokerage. In states where designated agency is allowed, all parties must normally agree to it in writing. The risk of divided loyalties is much less than with a dual agency. Still, you'll want to be confident that your agent is trustworthy and be careful about what you disclose.

Some agents focus solely on buyers' needs. They're called exclusive buyer agents or "EBAs." An EBA will never represent a seller in any transaction. By default, this means you'll avoid any possibility of a dual or designated agency. But an experienced agent who won't act as a dual agent can serve your needs without being an EBA.

CHECK IT OUT.

To find an EBA in your area: Contact The National Association of Exclusive Buyer Agents, at 800-986-2322 or Contact The National Association of Exclusive Buyer Agents, at 800-986-2322 or www.naeba.org.

Finally, on the other side of the table sits the seller's agent, sometimes called the "listing agent." The seller's agent is hired by the seller. While the seller's agent is ethically and even legally bound to be fair and honest toward you, this agent focuses on representing the seller's best interests. You want the seller's agent to remain where he or she belongs-on the other side of the table.

How Real Estate Agents Are Paid

After hearing about what a good agent can do for you, you may start mentally calculating whether you can fit one into your budget. The good news is, your agent is one person in this process you won't won't have to hand money to. The seller pays the entire commission (averaging 5%), which is split between the seller's agent and yours (usually, 2% each). You do end up indirectly paying for your agent's services, though, because the seller will probably factor the cost of paying both agents into the purchase price of the home. have to hand money to. The seller pays the entire commission (averaging 5%), which is split between the seller's agent and yours (usually, 2% each). You do end up indirectly paying for your agent's services, though, because the seller will probably factor the cost of paying both agents into the purchase price of the home.

Some people will tell you that agents are mainly out to make buckets of money, by maximizing their commission and minimizing the amount of time they spend with you. They caution you that agents will show you only properties above your price range, push you to offer too much, or rush you into a purchase.

It's true that the more you spend, the higher the agent's commission goes. However, to say that agents are solely motivated by money is an overgeneralization-in fact, it's often not in the agent's own interests to behave this way. If, for example, you're pushed to offer an extra $10,000 on a home, and then don't qualify for the mortgage, the agent will have wasted a lot of time. Or what if you pay the extra $10,000, then feel the agent trapped you into it? You'll never use that agent again and will tell your friends not to, either. Neither prospect will appeal to the professional, experienced agent you'll be choosing-not to mention the fact that an extra $10,000 on the sales price adds up to only about $150 in increased commission.

Money-Saving Agent Agreements As a first-time, cash-conscious homebuyer, you might consider hiring a full-service agent who'll give you a commission "rebate." For example, an agent whose commission is ordinarily 3% might return 20% of that to you when the deal closes. That's about $3,000 on a $500,000 purchase. There's no disadvantage for the seller's agent, who still gets paid the standard commission for the area.In exchange for the rebate, you may need to share responsibility for finding prospective properties. For example, clients at ZipRealty (www.ziprealty.com are given access to MLS information usually only available to real estate professionals, then select properties to visit. are given access to MLS information usually only available to real estate professionals, then select properties to visit.You're best off choosing a full-service rebate agent rather than what's called a "discount agent." Discount agents don't ordinarily give you access to the MLS or help coordinate showings. They may require you to view properties alone or to pay extra for these services. You thus lose the benefit of the agent's experience.

Using an Agent When Buying a Newly Constructed House

When buying a new house from a developer, you can be represented by your own real estate agent. However, the agent usually needs to be with you on your very first visit or the developer won't allow the agent to collect the commission.

Developers usually have salespeople, paid by and loyal to the developer, who they'd prefer to have you use for the tasks your agent would normally handle, such as drawing up written agreements. Of course, these usually favor the developer, for example, limiting the developer's responsibility for shoddy work or late completion. It's worth bringing your own agent to advocate on your behalf and help you negotiate a fair deal.

However, if you're represented by an outside agent, the developer may, as a way of recouping part of the commission (particularly in a hot market), be less flexible about price or less willing to give special incentives or upgrades.

TIP.

Consider adding an attorney-review contingency to your contract. If bringing your own real estate agent appears unnecessary or impossible, at least insist that an attorney review your agreement. You can make this a condition of the sale (a "contingency"), as discussed in Chapter 10. If bringing your own real estate agent appears unnecessary or impossible, at least insist that an attorney review your agreement. You can make this a condition of the sale (a "contingency"), as discussed in Chapter 10.

Getting the Best Agent Out There

It's worth putting some effort into finding an experienced buyer's agent with whom you'll enjoy working. You could just walk into any real estate agency, but you'd probably end up with whoever had time to spare. Instead, start by getting recommendations from family members, friends, colleagues, or neighbors who've bought homes-particularly in the neighborhoods you're interested in.

If you come up dry, check out the NAR website at www.realtor.com, and enter your city and state under "Always use a Realtor." Your state association may also provide similar information. But keep in mind that this is a membership listing based on location and doesn't distinguish between good and bad agents.

CHECK IT OUT.

Check their license. To make sure a prospective agent is currently licensed in your state, visit To make sure a prospective agent is currently licensed in your state, visit www.arello.com, by the Association of Real Estate License Law Officials. The site can also link you to relevant laws and regulations.

Once you've got a few names, choose a few agents to meet in person. Look at the agents' websites, which may contain their photos and descriptions of their skills, services, or philosophies. You're looking for an agent who is knowledgeable about the area and the type of house you want to live in, experienced, easily reachable and responsive to your needs, ethical and honest, compatible, and loyal. At the interview, ask concrete questions about the agent's experience, certifications, and more, and how the agent's skills will be put to work for you. Also request the names of three references, and (assuming you're interested in the agent) follow up to make sure they had a positive working relationship.

CD ROM.

For a comprehensive set of questions for both the agent and his or her references: Use the "Real Estate Agent Interview Questionnaire" and the "Real Estate Agent Reference Questionnaire" in the Homebuyer's Toolkit on the CD-ROM. Samples of these forms are shown below. Use the "Real Estate Agent Interview Questionnaire" and the "Real Estate Agent Reference Questionnaire" in the Homebuyer's Toolkit on the CD-ROM. Samples of these forms are shown below.

Got an agent who specialized in our neighborhood. Craig and Lorena had been looking for an affordable starter house in a much-desired neighborhood for months, with no luck. Lorena explains, "Although our agent specialized in our target neighborhood-she lived there-there just weren't many houses we liked at a price we could afford. We'd just about given up when she called us. A neighbor of hers was getting ready to sell and was willing to let us have first peek. We loved the place and immediately put in an offer, which was accepted. The place was never even advertised!" Craig and Lorena had been looking for an affordable starter house in a much-desired neighborhood for months, with no luck. Lorena explains, "Although our agent specialized in our target neighborhood-she lived there-there just weren't many houses we liked at a price we could afford. We'd just about given up when she called us. A neighbor of hers was getting ready to sell and was willing to let us have first peek. We loved the place and immediately put in an offer, which was accepted. The place was never even advertised!"

Real Estate Agent Interview Questionnaire Ask potential agents the following questions, as well as anything special to your transaction, like their experience helping buyers looking for fixer-uppers or newly constructed houses.Name of real estate agent and contact information (phone, email, etc.):Date of conversation:1. Do you work full time as a real estate agent?2. How long have you been in the real estate business?3. Do you have additional certifications beyond your general real estate license? If so what are they?4. Will you ever represent me as a dual agent?5. How many residential real estate transactions have you been a part of in the past year?6. In how many of those transactions have you represented the buyer?7. What was the price range of homes you helped clients buy within the last year? What was the average price?8. Do you specialize in a certain type of property?9. Do you specialize in a certain geographic area?10. Do you partner with other agents or use assistants?11. How will I reach you? Are there days or times you're unavailable, or do you have any vacations planned?12. Can you provide at least three names of recent clients who purchased first homes with you, who will serve as references?

NOTES:.

Best Answers:1. Yes.2. The longer the better, but at least three years.3. More certifications show a commitment by the agent. A Realtor ABR or ABRM designation indicates that the agent has significant experience working with buyers.4. Only acceptable answer is "No."5. Should be a minimum of ten.6. Best answer is "all of them," but should be at least half.7. Should be about your price range.8. Should be the type of property you're interested in, like a single-family house, condo, or co-op.9. Should be the geographic area where you're looking to buy.10. If so, find out who you'll be working with, what their real estate experience is, and what they'll be doing.11. Make sure you can reach the agent when you need to. If you plan to buy soon, make sure the agent will be readily available (not on vacation).12. Only acceptable answer is "Yes."

Real Estate Agent Reference Questionnaire Here's what to ask the agent's referrals. You can add any other questions that interest you, such as special issues if you're buying a new house in a development.Name of real estate agent:Name of reference:Date:1. How did you choose the agent? Did you know the agent before you worked together?2. What kind of house did you buy?3. Was the agent responsive? Did the agent return calls promptly, follow through on promises, and meet deadlines?4. Did the agent take the time to find you the right property?5. How long did you look?6. How many houses did you look at before you bought?7. Did the agent show you houses in your price range?8. Are you happy with the house you bought, and the neighborhood it's in?9. Did the agent help you coordinate other details of your purchase, like finding financing and working with the title company, inspectors, or insurance agents?10. Did the agent keep you up to date, and explain everything in terms you understood?11. Would you work with the agent again?

OTHER COMMENTS:TIP.

Don't spill your beans. Wait to tell the agent your own objectives (where you want to live, how much you want to spend, and what type of property you're looking for) until your questions have been answered. You don't want the agent to feed you the answers you want to hear. Wait to tell the agent your own objectives (where you want to live, how much you want to spend, and what type of property you're looking for) until your questions have been answered. You don't want the agent to feed you the answers you want to hear.

If It Doesn't Work Out: Firing an Agent One common misconception is that once you've chosen an agent, you can't fire that person. Whether you can extricate yourself from the relationship (and what it will cost you to do so) will probably be determined by the terms of your agreement. So try to insert a clause at the outset allowing you to release the agent with sufficient notice (usually, about 48 hours) if things aren't working out.Even if you haven't done this, if an agent isn't showing you appropriate properties, or isn't responding to your calls or inquiries, or you just don't like working with that person, you may want to move on. Of course, if the problem can be resolved by a simple conversation, it's wiser to try that first. But if that's fruitless and the agent isn't willing to walk away, you may need to discuss the issue with the managing broker (the agent's boss).If you decide to end a working relationship, do it before before you find a house you want to buy. It would be totally unethical-and risk a lawsuit-to try to get out of the relationship just to avoid letting the agent claim the commission. you find a house you want to buy. It would be totally unethical-and risk a lawsuit-to try to get out of the relationship just to avoid letting the agent claim the commission.

Who Does What

Your Cash Cow: The Mortgage Broker or Banker

Even in inexpensive housing markets, you'll likely be taking out a mortgage to finance your purchase. In the next chapter, we'll talk about how to research options, select the best loan, and actually apply for it. Here, we're going to talk about the people you'll work with to do that.

As many as two-thirds of all buyers get their loans through a mortgage broker-a professional who's in the business of compiling and filtering through the options for you. Your other primary alternative is to go directly to a bank, credit union, or other commercial lender.

If you're buying a newly constructed home, the developer may line up financing for you-but it's worth checking out other options. While developers often form relationships with specific lenders, the terms offered sometimes favor the developer more than the buyer.

TIP.

A "mortgage broker" and a "mortgage banker" aren't the same thing. A mortgage broker is the middleman who brings you and a lender together. A mortgage banker is a lender who actually lends you money. A mortgage broker is the middleman who brings you and a lender together. A mortgage banker is a lender who actually lends you money.

Your Personal Shopper: The Mortgage Broker

A mortgage broker acts as your agent to "shop lenders" for the best possible loan terms, given your financial situation and goals. Many states require mortgage brokerages to be licensed, and individual mortgage brokers are sometimes certified by the National Association of Mortgage Brokers (NAMB). To be NAMB-certified, brokers must show a certain amount of work experience and other qualifications, pass a written exam, and attend continuing education training. There are two types of NAMB certification: Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC).

As for compensation, mortgage brokers make most of their money by marking up the costs on the loan the wholesale lender is offering. This may get passed on to you in the form of points (one point is 1% of the loan value), processing fees, or a higher interest rate. Although the broker's commission ultimately comes out of your pocket, a savvy borrower can negotiate down a fee that seems excessively high. Of course, a good mortgage broker should be able to save you the equivalent of his or her earnings and then some, by finding you a more affordable mortgage than you could locate on your own.

TIP.

Choose a mortgage broker before you find a house. If you wait to get a broker until you've found a property you want to buy, you'll have very little time to find the best professional. If you wait to get a broker until you've found a property you want to buy, you'll have very little time to find the best professional.

What Your Mortgage Broker Does for You

To help you find the best loan possible, a good broker will: * Talk with you about your financial situation and goals.* Find and explain financing options available to you.* Work with you to get preapproved for a mortgage.* Help you complete and assemble the documentation the lender needs. This might include your loan application, confirmation of employment and wages, financial information, and credit report.* Once approved, review loan documents before you sign them. If the lender refuses to approve your loan, your mortgage broker should explain what went wrong and help find alternative mortgage options.* Coordinate the property appraisal.* Continue to act as a liaison between you and the lender up through the closing day.

TIP.

Run your own numbers. The mortgage broker's view of your finances will be much like the lender's-a measure of what you can qualify for based on your debt-to-income ratio. Don't look to the mortgage broker to tell you what you can comfortably afford: Conduct a personal evaluation of your finances, as explained Chapter 3. The mortgage broker's view of your finances will be much like the lender's-a measure of what you can qualify for based on your debt-to-income ratio. Don't look to the mortgage broker to tell you what you can comfortably afford: Conduct a personal evaluation of your finances, as explained Chapter 3.

Getting the Best Mortgage Broker Out There

Good mortgage brokers possess many of the same traits as good real estate agents-integrity, professionalism, and experience. They should also be skilled (and patient) at explaining complicated financing concepts. In addition, good mortgage brokers stay informed about the policies, requirements, and products of various mortgage lenders, so as to provide you with up-to-date and accurate advice.

Get recommendations from friends, coworkers, and other homeowners. Your real estate agent, if you have one, is another good resource. A less reliable option is the "search for a mortgage broker" feature on the NAMB website, www.namb.org. NAMB membership is just a starting point: You'll want to learn more about each broker's education, experience, and philosophy. Ask whether the broker will tell you up front about every fee they'll charge you (you may want to negotiate these fees, as we'll discuss in Chapter 6).

Next, interview two or three prospective mortgage brokers. Ask about their experience and certifications, plus any questions special to your situation (like whether they can provide help getting an FHA or other government-backed loan). Also ask for the names of three references, and follow up to check whether these folks enjoyed working with the broker and are still happy with the loan they got.

CD-ROM.

For a handy set of questions to use in your interview and when checking references: Use the "Mortgage Broker Interview Questionnaire" and the "Mortgage Broker Reference Questionnaire" in the Homebuyer's Toolkit on the CD-ROM. Samples of these forms are shown below. Use the "Mortgage Broker Interview Questionnaire" and the "Mortgage Broker Reference Questionnaire" in the Homebuyer's Toolkit on the CD-ROM. Samples of these forms are shown below.

Mortgage Broker Interview Questionnaire To get the best mortgage broker on your team, ask the following questions, as well as any special to your situation (for example, concerning a credit history issue, your interest in an FHA or other government-backed loan, or the broker's experience with self-employed buyers).

Name of mortgage broker and contact information (phone, email, etc.):Date of conversation:1. Do you work full time as a residential mortgage broker?

2. How long have you been in the residential mortgage business?

3. Are you licensed (if applicable) and certified by the National Association of Mortgage Brokers?

4. How many residential mortgages have you brokered in the past year?

5. How many of those transactions were with first-time home buyers?