- The Washington Times - Friday, June 30, 2000

This is the second story in a two-part series.

Buying a house in the Washington area isn't easy these days. Few homes are on the market, and buyers are often competing for the same homes.

Fortunately, a relatively new trend in residential real estate has become commonplace. Buyer agency, in which a real estate agent works exclusively for the buyer, has been growing in popularity. Most home buyers in the Washington area now work with a buyer's agent.

This region is actually a leader in the trend toward buyer representation, with 61 percent of buyers in the District, Virginia and Maryland working with a buyer's agent, according to 1999 data from the National Association of Realtors (NAR). Nationally, 46 percent of buyers had representation in 1999.

"That figure has risen rather quickly," says Kevin Roth, a senior economist at the NAR. "In our 1997 survey, only 34 percent of buyers said they worked with a buyer's agent. And 10 years ago, we didn't even ask the question."

The rapid growth of buyer agency is partially due to the information revolution.

Today's buyers need plenty of current data and, according to a recent NAR survey, 37 percent of home buyers are using the Internet as a source of information.

The survey showed that more than two-thirds of home buyers using the Internet found listings, information about a particular geographic area and information on how to contact a real estate agent "extremely valuable."

Realtor.com, which is operated by NAR, is the largest real estate Web site nationwide. It has 1.35 million listings in its database as of April, its latest figures. The site received 4.48 million visits in March with an average of 223 viewings per listing.

To illustrate how Realtors are embracing the Internet, one local real estate company Coldwell Banker Stevens Realtors in partnership with Homebid.com has created a new Web site where brokers can list and sell homes. This site was designed to keep the Realtor at the center of the transaction, while cutting paperwork and the length of the process. Through E-HomeSale, customers can complete the home sale on line.

"I don't look at this as a new program or a tool, I look at it as the real estate process changing," says Thomas M. Stevens, president of Coldwell Banker Stevens. "This is the way business will work in the future."

Besides allowing buyers to research areas, neighborhoods and schools on line, buyers can find homes and present a contract on line, with the assistance of a real estate agent. This enables the buyer to get a response back from the seller without the late night presentation of contracts and counteroffers.

"The process is changing. A week after we announced, the final piece fell into place when Congress approved electronic signatures," says Mr. Stevens.

You could conceivably buy a property off the Internet and settle the transaction on line, he says.

"We are the first company to see that as the future and the first to endorse the new process, which is quite exciting," says Mr. Stevens.

The Internet is driving a lot of change, starting with the listings of homes on line to now the completion of the whole transaction. "I think it makes it better for everyone involved," says Mr. Stevens.

Not everyone sees the Internet in quite the same way, however.

As explained in last week's article, the Metropolitan Regional Information System (MRIS) is the local database that contains all the homes for sale in the Washington area that are listed with a real estate agent.

Access to the MRIS database is critical. Buyers who drive around looking at "For Sale" signs or surfing for homes on the Internet are mostly looking at old information. That's because on-line listings and "For Sale" signs remain in place until a home goes to settlement. That can often be 60 days or more after the home is sold. Therefore, you can spend a lot of time falling in love with pictures of homes now bought by others.

"You absolutely need access to the data your agent can provide," says Stephen Israel, president of the Buyer's Edge, a company that exclusively represents buyers.

"How else will you determine the value of a home?" he says. "Many buyers drive around communities, looking at homes. They see one they like for $250,000, and a similar home three blocks away for $200,000. They get excited. What they can't see is the value of the homes in relation to the homes around them. An experienced buyer's agent using MRIS data would be able to tell them that the $200,000 home is actually overpriced."

In most cases, it costs the buyer nothing to be represented by a real estate agent because most listing agreements contain a co-op clause, meaning the commission will be split between the listing agent and the buyer's agent.

Even if you had to pay to work with an agent, it would still make sense. Consider the case of Helen and Tim, who asked that their last name be withheld. The couple moved into their new home in Fairfax County recently the end of a six-month journey that they say would have been much harder without their agent.

"After three months and four homes that fell through, we were getting a little discouraged," Helen says. "We had bought several homes before, and even lived in the area five years ago, but it's amazing how much things have changed. The market is very different than it was back then."

Helen and Tim had been bidding on four homes, some at full price, and had had no success at all. That's when their buyer's agent got creative.

"We had a list of requirements that really limited where we wanted to look," Helen says. "So our agent made a list of 500 homes that were not on the market, but were in communities we would like to live and were in our price range."

The agent mailed letters to those 500 homes, telling the homeowners that he had buyers who were ready to make a deal if they felt like selling.

"He received four calls within four days of mailing the letters," Helen says. "And one of them was willing to sell a home that we wanted to buy."

That kind of aggressive representation is a tremendous help in a competitive market such as Washington.

To get a jump on other buyers, an agent will put his clients' criteria in the MRIS database and monitor it closely. Agents who do this can receive immediate notification of any new listings that match their clients' needs.

"Finding homes is what Realtors do best, but perhaps the biggest reason to use a buyer's agent is for protection," Mr. Israel says. "Your buyer's agent will have legal knowledge and experience in dealing with contracts that are essential if you want to protect your interests."

Home-purchase contracts these days contain addenda regarding radon, lead-based paint, asbestos and the like. They contain clauses about buyer financing, home inspections and the condition of the home. Buyers who don't understand these issues may get into trouble if a problem arises.

"One of our clients contracted to buy a home that had an above-ground oil tank that was leaking," Mr. Israel says. "The contract required the sellers to remove it. They hired an environmentally certified contractor to remove it, and the contractor promised that all the oil had been cleaned up."

Fortunately for the buyers, their walk-through inspection just before settlement revealed oil in the sump pump.

"So that meant oil had leaked through the ground, through the foundation and into the basement. How much oil was under the foundation and in the ground? There was no way of knowing, but our clients wanted out of that contract."

Situations like this may not be common, but they demonstrate dramatically how valuable a good buyer's agent can be. The seller in this transaction wanted to sue the buyer and keep their deposit.

"But our attorneys argued that the seller was not selling the home that the buyer negotiated for," Mr. Israel says. "They contracted for a home that was certified to be oil-free, and this wasn't that home."

The buyers received a full refund of their earnest-money deposit and walked away from a bad situation without a scar. But if these buyers hadn't been working with an agent, who would have advised them about their rights? They could have hired a lawyer to fight for their deposit, but they would have had to pay the lawyer out of their pocket.

"If you are using an agent, you are working with someone who is going to be there with you all the way," Mr. Israel says. "It helps to have a professional begin with you as you look for homes, be there when you make offers and write contracts, advise you on home inspections and settlement issues, and even be there after the transaction to provide expert advice."

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