It is impossible to ignore the bond that exists between man and land. There is no other feeling like the one we get from setting foot on our own property for the first time. Whenever you consider acquiring real estate, it is essential that you acknowledge this unique attraction that land has for us.
Perhaps nowhere in the marketplace is the warning caveat emptor (buyer beware) more applicable than in a real estate transaction. Whether you are purchasing your own resi-dence or the time has come to add real estate to your investment portfolio, you will need the assistance of a qualified real estate professional. A licensed agent or broker can neutralize your natural emotional responses and ensure that your interests are represented.
As recently as ten years ago, real property was bought and sold on virtually a handshake. Purchase contracts were one page documents that outlined little more than the agreed upon price and the terms of financing. Today, buyers are faced with multi-page contracts covering every-thing from seller's disclosures to information con-cerning legal rights and arbitration. Although written with the buyer's protection in mind, making an offer is no longer as simple as it once was.
But your involvement with a real estate professional will probably begin long before you arrive at the contract stage. As an active member of your investment team, your real estate agent can guide you through every aspect of the acquisition and sale of real property whether for personal use or investment purposes.
To begin with, the agent you choose should certainly be licensed and have experience. But whether you choose an agent employed by a large brokerage firm, or an indepen-dent broker is entirely up to you. As with all the members of your investment team, pick someone qualified who will listen to your desires and advise you in accor-dance with your stated financial goals.
Additionally, your real estate advisor should be know-ledgeable in three key areas:
Location. Particularly if you are looking for investment property, you may be considering purchasing outside your own geographic market. In that case, your agent must be able to answer the question, "why should I invest here?" He or she must know the growth rate and job markets of the area. Additionally, you will want to know about schools, shopping, transportation factors and other overall living conditions. Finally, key economic factors of market shifts and rent rates will influence your decision.
Financing. Your real estate representative should be up to the minute on the full range of financing options and loan qualification requirements for any transaction you are considering. That's not to say that he or she will necessari-ly assist you in obtaining your financing, but without key knowledge in this area, you may find yourself entered into a contract for which you cannot satisfy the financing contingency. Your agent's thorough under-standing of your financial condition and today's stiff loan requirements will prevent such a mishap.
Tax Issues. No one should advise you on the complete tax implications of an intended investment except your CPA. But your real estate advisor should possess an understanding of how a particular real estate investment will be impacted by taxes.
When you're buying real estate, your agent should represent you in all negotiations with the seller's broker. Even though ultimately the agent's commission will be paid by the seller from the sales proceeds, he or she carries a fiduciary responsibility to you alone. Having properly qualified this person to become a member of your invest-ment team, trust him or her to know the market and to advise you regarding the appropriateness of your intended offers.
Finally, when the time comes to sell a real estate invest-ment, your broker or agent should be qualified to assist you in properly pricing your property. Keep in mind that all you can get for your investment is what the law of supply and demand will allow. Your agent can show you listings for comparable properties and make recommendations based upon other recent sales in your area.
Of all the advisors on your investment team, the real estate professional is the one most likely to encounter your urge to "shoot the messenger". If you're buying, the price seems to be too high; if you're selling, the offer is too low. A broker or agent's function is to interpret the market for you. And the market is what determines price, not the agent.
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Moorman and Company, an accounting and personal financial management firm based in Palo Alto, serves the San Francisco Bay Area, Peninsula, and Silicon Valley from Hillsborough to Saratoga-Los Gatos, including Atherton, Menlo Park, Los Altos, Los Altos Hills, and Cupertino.