Spring has sprung, and prime house hunting season has arrived. If you happen to have a friend who is a great real estate agent, you are fortunate. Before hiring your Realtor friend, check their online reviews. Ensure they are a full-time real estate agent (someone who works at least 40 hours a week).
Several years ago, I represented the seller on a home in Glendale’s rancho neighborhood. We had a handful of offers, one of which was $20,000 higher than all of the others. The home across the street had recently sold at a low price. Therefore, I knew that it would be tough for my listing to be appraised for what a buyer was willing to pay. The buyer and the real estate agent were “friends”; the agent was new and very inexperienced. He could not understand my concern. He insisted that if his offer was accepted and the appraisal came in low, his client would increase their down payment. I was very clear that my client was not going to reduce the purchase price.
I finalized the contract negotiations by having the buyer waive his appraisal contingency. This means that if the appraisal came in low, the buyer could not back out of escrow but had to increase his down payment or risk losing his good faith deposit (3% of the purchase price).
As I suspected, the appraisal did come in low, much to the astonishment of the inexperienced buyer’s agent. Previously the buyer’s agent assured me that if the appraisal came in low, his client would borrow money from a parent, well that fell by the wayside. The agent and his buyer had ten days of stress while I rebutted the appraisal (and was successful and saved the day, but that’s another blog post).
In addition to being sure that your friend is a full time experienced real estate agent, be certain your friend knows the neighborhood where you are home buying or selling. One of my daughters lives in San Diego. I don’t sell homes there because I don’t know the area or their real estate market trends.
