Hi Everyone and welcome back! In today’s episode, James and Michelle are joined by SellBoston’s very own Aurielle Kallmerten and John Farrell-Clancy to discuss the benefits a buyer receives when they are represented by an agent during a transaction.
ENJOY SOME HIGHLIGHTS BELOW!
Topic One – How Much Does A Buyer Agent Cost You?
Aurielle Kallmerten: “That’s an awesome question. Many think that you have to pay to have a buyer’s agent, but it’s actually free to buyers, as we are getting paid directly from the list side. So we come as no cost to you, but obviously give you a huge value add. Basically, the money’s in the transaction already. So regardless of where you’re looking, whether you’re looking at a condo, whether you’re looking at a single family, we can help on everything and we’re still getting paid. Nothing on top of what you are already paying.”
John Farrell-Clancy: “I mean I think what we really need to talk about is why it’s important to work with the buyer’s agent as opposed to going through the listing agent. And to sum it up, pretty bluntly, the buyer’s agent works for you, whereas the listing agent works for the seller. And I know that sounds pretty simple, but people don’t quite understand that when you work in with a buyer’s agent, the buyer’s agent actually can advise you and figures out how to get you the best deal possible. If you go through the listing agent, the listing agent represents the seller. So there’s a conflict of interest there naturally….how can they be looking out for you as the buyer when they’ve signed an actual contract with the seller to look out for their interests first? It just can’t happen.”
Topic Two: What Value Does A Buyer Agent Actually Bring?
John Farrell-Clancy: “A lot of people can access properties with Zillow and Trulia and so on… they might sign-on every night and look at listings, and maybe even go to open house. But that can only take you so far. Eventually you’re going to have to know the questions to ask and what to actually do. If you want to put an offer on a place and that’s where the buyer’s agent really adds the value. So that’s where we step in and we can actually make a huge difference that you wouldn’t be able to do on your own.”
Aurielle Kallmerten: “Yeah, and we actually will do a lot of the groundwork and the legwork for you. So while we can show you everything that is on market, we will always go and look for off market opportunities as well and check in with all our colleagues in the area to see what they have in their pipeline. So while something may not exist yet, we are always looking for what the next best thing for you.”
James Marsden: “Sort of like with things that are coming to the market three weeks from now that you can basically get into early, right? Keep it from going to that bidding war..or get it for the number that it’s actually worth. “
John Farrell-Clancy: “Exactly. And I think a big part of our job is actually serving as a person that is going to push someone to do something when they need to do it. And also pull back on a buyer when they’re thinking with their heart instead of their checkbook. So we’re a means of making sure you’re doing what you need to do as a buyer at any given time.
James Marsden: ” I think that’s a value that we bring to the table, not just, ‘pay this or go over list price.’ But sometimes we actually say, no, you don’t want to buy this because….”
John Farrell-Clancy: “Yeah, that’s a really interesting point because there’s a stigma with real estate agents in general where, some people feel like we’re used car salesmen and listen, there’s a lot of agents out there that are just going to push you to get a deal done and they’re not actually looking out for what you should be doing as a buyer. Unfortunately I think we’re all the types in this room where we have no problem taking money out of our own pockets if it means doing the right thing. And like James said, there’s plenty of times where I will strongly advise a buyer that they should not be buying a property. And they kind of give me a weird look. Like, why are you telling me not to buy a property? It’s because at the end of the day, our expertise is to make sure that you’re buying it for the right reasons and you’re going to feel good about it, you know, a year, two years, five years, whatever it is, down the road.”
Topic Three: What’s The Buying Process Really Look Like?
Michelle Hediger: “Aurielle, you mentioned that you’re looking at properties before they hit the market. As a consumer, I have access to Zillow, I have access to Red Fin, I have access to Realtor.com…a sundry of websites that give me these listings in real time. But tell me what you guys do. If I’m looking for a two bedroom, in the South End, what value add do you bring in? How do you find that property? Walk me through that process a little bit.
Aurielle Kallmerten: “We are going to meet with you first, see what exactly you are looking for. And then we’re going to hit the ground running. Obviously you may see stuff on Zillow, Redfin, realtor.com but you may not see everything on there. We have access to MLS, which is our multiple listing service. And then I think like I said earlier, we are going to scour everything, whether it’s on market or off market for you. So whether you’re in the office nine to five, if you’re working weekends we are going to jump in and preview. We can FaceTime you so that you don’t have to make it out of the office. If something is on over the weekend or a Monday with offers due Tuesday, we are going to do everything we can in our power to get you access to that person.
Michelle Hediger: “I mean, I think I had heard somewhere that 40% of new construction actually sells before it hits the market. Is that hold true for resales that you’ve guys have kind of seen.. what do you guys think?”
John Farrell-Clancy: “It’s probably somewhere in that range. And by the very virtue of that question, you know, we don’t know what we don’t know. So that’s the first step; actually diving into the pool of properties that are off-market. If you never dive into them, then you don’t even know what you’re missing. A lot of times with off-market listings you can get some really good value, because when a property makes it to market, it’s a really calculated thing that they’re doing. And keep in mind that when a property goes to market, there’s marketing costs involved with that, there’s a whole bunch of costs that are effectively going to be passed on to you as the buyer, and that’s going to be reflected in the price. “
Aurielle Kallmerten: “Another part of our value add is that we are looped into a ton of reputable lenders in the area. So you may be working with someone already, maybe not. We can hook you up with someone in the area who will give you a pre-approval or pre-qualification letter. That is something you will need for any offer you put in. And we’ll also give you a good idea of what you can spend on a property.”
James Marsden: “Do you shop banks for rates? Do you shop for service? I’ve often looked and discovered that sometimes a bank may have a lower rate, but it’s built into the closing costs. So actually you’re paying the same money. It’s just in different categories. So do you guys find that if you get a good deal at one bank, you’ll take that deal and shop it to another bank just to see if you can save your client money?”
Aurielle Kallmerten: “We can definitely lead you to banks. I mean the rates change so often….that’s something to keep in mind. But like James just said, there’s other incentives that can make a better deal even if the rate may be a little higher. So we like to take everything into consideration in that aspect. You may have better services, things could be built into your closing costs, you may get a discount on closing costs …origination fee is all of that. So those are all aspects you want to keep in mind when looking for a lender.”
John Farrell-Clancy: “Yeah, and it can actually help you as a buyer to work with one lender compared to another depending on whatever the listing agent is looking for. So that that’s something important.”
James Marsden: “Yeah, it is very true because we do a lot of new construction and sometimes when you get offers you look at the pre-approval letter and are like, ‘who is this person?’ Or you’ve had experiences with that bank that the deals become very complicated because of financing, and things like that. So it’s always good. I love it when you see a mortgage letter from a mortgage officer you’ve done business with in the past and it’s like, ‘oh they’re cool…this is going to work.’
Michelle Hediger: “Or even just a city-based lender. I think the other day when we were fielding offers for something over in the South End we got a pre-approval from a bank in Western Mass that I’ve never heard of. And I can tell you they didn’t go high in the offer category.”
John Farrell-Clancy: “So you’re saying that they didn’t really inspire confidence with you as a listing agent. And furthermore, you couldn’t really pass that on to your seller either.”
Michelle Hediger: “Yeah. Not at all.”
James Marsden: “Yeah, it’s the old thing: you never want to put a deal together that falls apart. So you want to make sure that the financing is just rock solid with a reputable lender.”
Aurielle Kallmerten: “We’re here to build your dream team. So we’re looking at the best lenders possible. We can sit here and give recommendations on inspectors, attorneys, basically anyone involved in the process that we know we’ll get a deal done.”
Topic Four – I Think I Found My Dream House – Now What?
Michelle Hediger: “So that’s all prep stuff, which is very important. And I think what I’m taking out of this conversation is the importance of being prepared before you go look at these homes. Now when I’m in one of these homes, whether it be a Single Family or a Condo, talk to me about what value you guys bring. What do you ask? What do you do? You walk in with me as a consumer and then what? “
Aurielle Kallmerten: “Before we walk into the property we’re definitely going to prep you on some things; ‘So here’s what you can expect, here is how we want to keep your emotions in check…we want to keep a poker face – don’t give away money by your reaction.”
James Marsden: “So I don’t want to run into something and say, yeah, I love this. This is perfect. I could live here.”
Aurielle Kallmerten: “Yeah… and then we will walk out the door and I’ll say, you know, just added some decimals to your checkbook there; we are going to be spending a bit more money now that we have shown all our cards.”
John Farrell- Clancy: “Yup. Basically when you step in the door and you have a big smile on your face, and you’re screaming at the top of your lungs that you love this property, it’s effectively like you’re pulling out your checkbook and giving it to the listing agent. And that’s not the intended result that we’re looking for as a buyer agent.
Michelle Hediger: “I mean that makes total sense- So what else do you guys bring into it?”
Aurielle Kallmerten: “So there’s going to be some questions that you’re not going to necessarily know to ask that we are here to help with. Say you’re looking at a condo in the city, there’s going to be a few things you might not know about. Is the building all owner occupied? Is there a certain percentage owner occupied? How much are the condo fees? Has there been any recent assessment on it, or are there assessments coming in the future?”
John Farrell-Clancy: “What is included in the condo fees? Is it a professionally managed building? What are the rental regulations? If you decide you want to keep it as an investment after you move out… there’s a whole slew of questions that you actually need to know in order for you to understand if it’s a property that you should be moving forward with.”
Aurielle Kallmerten: “Are you an investor, or is this something you’re looking to Airbnb, which could be a whole podcast on its own. And they’d be completely different [questions] if you’re looking at a single family where you don’t necessarily need to worry about some of these. Now where you’re more concerned is how old are the systems, how old is the roof, since you will be paying all those costs yourself.”
James Marsden: “How long you plan to live there and how all those roof, furnaces, things like that impact cost down the road….”
John Farrell Clancy: “Yeah, with a single family your problems are your own. Whereas with a condo or even a co-op, which is another conversation, you actually have to deal with other people.”
James Marsden: …”Is the place professionally managed or is it self-managed? Because sometimes professionally managed companies have built-in profits because… they’re going to do all this work in the building so your costs are a little bit higher than if you’d done the work yourself, or if the work ever really needed to get done at all.”
Aurielle Kallmerten: “And another thing too is ‘what percentage does this unit take up in the whole building?’ Say there’s three units in a building, but you have the largest unit. You could be having the largest fee. You could be bearing the brunt of any assessments coming if you have the roof rights. What comes along with that?”
Michelle Hediger: “So you’ve actually mentioned the assessment word a couple times in this conversation. And I think for our listeners, can you break down to me what an assessment is? What does that mean? Like why do I care about special assessments past, present and future? What does that entail?”
John Farrell-Clancy: “It’s kind of simple while also being complicated, right? One of the first questions that you want to ask when you’re walking into a condo or a co-op is A, what are the reserve funds of the building? Basically what reserve funds are, is a rainy day fund that the building has saved up to put towards any work that’s going to be done in the future, which is what we refer to as an assessment. So an assessment can be any number of things done any number of times. It could be something as major as a whole roof being replaced. It could be something as simple as, you want to get new mailboxes and the entryway of the building. It’s really important to know how much there is in reserves for the building and what upcoming assessments there are. Because as a buyer, you wouldn’t want to buy into a building that had no reserves. And in a month they’re going to do the whole front of the building over and it’s gonna be $80,000 to do it, and you’re going to have to cut a check. So you need to know kind of what you’re going to be getting yourself into. Basically if you’re buying into a building that has more reserves, then you don’t have to worry about as much. So these are all the questions that you really need to know.”
Michelle Hediger- “And that type of situation that you just mentioned, a building with no reserves and an upcoming special assessment, what recourse do I have as an educated buyer? If I asked those questions and I find this out, but this happens to be the house that I want to call home, what do I do then?”
Aurielle Kallmerten: “So there’s a few options – We can negotiate upfront. If we know there’s an assessment coming, we can work that into the offer. Let’s say there’s just talks of an assessment coming, nothing’s been formally issued. We can work with our attorneys to put language into your purchase and sale, protect you. So for example, it may say any assessment issued before closing is the responsibility of the seller.”
Conclusion: “I Want To Buy A Home, What Do I Do?”
Aurielle Kallmerten: “First off, you want to sit down with us to lay the groundwork for your 2019. You want to get a pre-approval letter from a local lender if possible, or a reputable lender in the area, which we are happy to help guide you to. Then you want to get your timeline in order. Think about things such as, how much money you’ll want to put down, where you stand in terms of your lease, what do you have for liquid funds, all of that type of information.”
John Farrell-Clancy: “And take it seriously because the longer you wait, the more money it’s going to cost you.”
James Marsden: “So, in essence, get your act together?”
John Farrell-Clancy: “Yeah, basically. Put it this way; the longer you wait, there’s going to be more people that are out looking for properties, and you’re going to get into bidding wars which is going cost you a lot of money. I know it kind of sucks to be going out and looking at properties when you don’t want to, and it’s cold out, and so on. But that’s actually when you save yourself a lot of money. Just take it seriously and and let us guide you to the promise land.”