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Smart Moves

Internet Tells Only Part of the Story to Home Buyers

January 25, 1998|ELLEN JAMES MARTIN | SPECIAL TO THE TIMES

Has the home-buying process been transformed by the Internet?

Yes and no. The Internet has become a vast storehouse of information on property listings, mortgage rates and general advice. Yet it still has genuine limitations, real estate specialists say.

Just as learning via computer is unlikely to replace the experience of going to a college, where professors convey their knowledge in person, no online experience is likely to substitute for the counsel of a skillful buyer's agent or mortgage lender when it comes to purchasing a home.

"The Internet is getting better, but it's not a perfect tool," said Pat Magnell, who sells homes through the Buyer's Resource Real Estate chain.

Many young tech-smart first-time buyers seek to control their own destinies by attempting to travel along the purchasing highway solo. They visit weekend open houses without bringing along a buyer's agent as their guide. And, using their well-honed computer skills, they search through online property listings by clicking on key words.

As a buyer's agent, Magnell would never discourage any client from navigating the Internet in pursuit of property listings. But she cautions that relying solely on electronic information can lead to disappointment.

For instance, some computer listings may already have been sold by the time an Internet search is run, Magnell said. Or possibly some brand-new listings have yet to be added. What's more, an up-to-date agent who is in close contact with others in her field may learn of for-sale properties even before they're formally listed.

Working with an agent who stays abreast of the market can be especially important if you've targeted a popular community where buyers outnumber sellers.

The right agent can also be invaluable in negotiating terms on a home, said John Pynchon, an architect-turned-agent who is a vice president with the Coldwell Banker chain.

"Timing is everything in real estate," said Pynchon, noting that the first and best-prepared prospect who makes a reasonable offer to a home seller can often beat the competition from other qualified prospects who discover the place later or don't have their financing plans in place.

"Agents are also a key element to saving a buyer time," Pynchon said. Here are four other pointers for first-timers entering the arena in 1998:

No. 1: Take a day or two away from work to search for a home.

If you're seeking a first home in the same general area where you now rent, you may be inclined to do all your home shopping on weekends. But weekends are when competition heats up for plum properties, Pynchon said.

By taking some weekday time off from your work, you could be the early bird who puts in a successful offer on a home, even before a weekend open house is held to show the place. Given the robust economy of 1998, you may need the competitive edge that a weekday search could give you over rival purchasers.

Another advantage is that you'll command more attention from your agent on weekdays, when there are fewer demands on your agent's time.

No. 2: Be ready to jump immediately when you find the right home.

By now, most home buyers are aware that they should visit (or phone) the office of a mortgage lender before they go house hunting. But only 20% of would-be buyers take that first step, and still fewer take the time to get a pre-approval letter from the lender, Pynchon said.

It's smart to scan the newspaper or Internet for mortgage information. But there's no substitute for asking a lender for a letter indicating exactly how much you can borrow. This is especially important for any buyer who is self-employed, which is true of more purchasers than ever in 1998.

Perhaps your small computer-related start-up company is bringing in revenues ahead of expectations. But if your federal income tax returns show you've taken a large number of deductions for the start-up, most lenders will still focus on the bottom line, said Magnell of Buyer's Resource Real Estate.

It may seem unfair for lenders to treat promising entrepreneurs in this fashion, but chances are they're not going to change their view of self-employed applicants in 1998, Magnell said.

Whether you're self-employed or not, you can avoid the torture of picking a property beyond your reach by asking a mortgage lender for a pre-approval letter before you become emotionally entangled with a property.

Such a letter could also give you a competitive advantage if you're facing other rivals for the same home.

"It makes a good impression on the seller to have one of those letters from the lender," Pynchon said.

No. 3: Select a home inspector who casts a sharp eye on your property.

Some first-timers fear that they'll be directed by a real estate agent to a home inspector who deliberately does a superficial job to be sure the deal between buyer and seller goes through. After all, a sour deal means no commission for the agent.

But real estate agents have a strong personal stake in seeing that buyers have homes inspected. In an increasingly litigious society, they don't want to be held accountable if an unhappy buyer sues.

"I don't want the inspector working for me. I want the inspector working for the customer," said Concenzio J. DelRose, a broker-associate for the Re/Max real estate chain.

No. 4: Don't let expected interest rate fluctuations drive your purchase.

The American economy is producing some very low mortgage rates in 1998. At this point, some economists believe that rates will rise, and others think they will fall. No matter whom you believe, it's unwise to let the expectation of minor interest rate changes drive your home selection, said Pynchon, the Coldwell Banker vice president.

"It makes no sense to attempt a strategy that would gain you a quarter percentage point if that's going to cost you your dream home," Pynchon said.

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Distributed by Universal Press Syndicate.

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