Tips for first-time buyers (#2)
Understand agency relationships - Single agency and dual agency are pretty straightforward concepts, but make sure your Realtor explains them to you so there are no misunderstandings down the road.
Get representation - I come across a lot of buyer's that don't understand the benefits of having a Buyer's Agent. Having someone advocate for you in a real estate transaction is a good move in my opinion. Talk with a Realtor and they will tell you about the advantages of their OLD CAR - obedience, loyalty, disclosure, confidentiality, reasonable care, and accounting.
Make an appropriate offer - Everyone wants a deal, but many areas of the Twin Cities with affordable, clean entry-level homes are actually receiving multiple offers. Your Realtor can educate you on the right price to offer by performing a comparative market analysis (CMA). Just because the current climate is seen as a buyer's market doesn't mean the seller will give away a home. This includes bank-owned properties too. Banks price their inventory based on research by real estate agents.
Know what is involved in buying a foreclosure- Bank-owned properties tend to have paperwork and requirements that a traditional seller does not. This may include a bank's version of a contract, buying the home as-is, being pre-approved by a certain lender, higher earnest money amounts, etc. It is my experience that a buyer needs to be flexible on the closing date meaning a closing may be delayed several times. These headaches and heartaches could potentially get you a lot of house for the money.
Avoid unrealistic "deals" - If the price of a house seems to be too good to be true, it probably has an underlying issue such as foundation problems, frozen pipes, mold, etc. Many short sale homes and bank-owned properties are sold with a seller's disclosure waiver, so the history of a home may not be known. Fixer-uppers can be attractive, but make sure you understand the time and money (and money and money) that will be involved. Always get a home inspection, especially for this type of home.
Adapted and edited from ABR Today's Buyer Rep March 2010.