How to Use a Buyer's Broker: Goals and Timing

Decide on Your Goals

In order for a buyer's broker to effectively represent you, it is important for you to know the primary goals you wish to achieve BEFORE you purchase property.  Know how the purchase will fulfill each goal and give this information to the licensee.

Advantages of Goals

Knowing your goals and how the purchase will fulfill each may help you to determine many aspects of the purchase including

• Choosing when and where to purchase,
• Deciding the maximum price you are willing to pay,
• Determining the priority of your needs and desires for choosing the property,
• Choosing the property that is most appropriate to your needs  and desires,
• Paying as little as possible for the property, and
• Minimizing the tax consequences of the purchase.

Completion of the Goals Worksheet on the next page may assist you in determining your specific goals. 

 GOALS WORKSHEET
 PRELIMINARY GOALS

1. Write out in the goals column below the goals you wish to  achieve in buying your property.

2. Prioritize your goals by placing a number in the No.  (number) column to the left of each goal.  Make the most  important goal 1, the second most important goal 2, etc.

No.  Goals
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________

 PRIORITIZED GOALS

 Rewrite your goals in their order of importance.

No.  Goals
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________

Understand Property Purchase Variables

How much you pay for your property can be affected by the time of year, economic climate in your area, interest rates, and tax regulations.

Timing Your Property Purchase

Some months of the year are usually deemed better for the purchase of property, particularly homes, as the table below indicates.

  
Personal Schedule

 Your personal schedule is important in considering when to purchase a property.  Visualize when you are going to be able to move into the property you purchase.  Try to find reasons why you cannot move into the property when the escrow closes.  It is better to find out scheduling information before paying a licensee to show you property.  Consider

• Family obligations, such as when children get out of school.
• Monetary obligations, such as how much time you can afford  to rent out a property or let it stand empty until you can  move in.

Interest Rates

Interest rates when you want to buy a property may greatly influence the number of buyers with whom you compete.  The number of buyers usually increases when interest rates are low.  The number of buyers increases greatly if this period of low-interest rates immediately follows a period of relatively high-interest rates.  Few buyers generally exist when interest rates are high.

Regional Economy

A saying in the real estate industry is to buy low (at a low price) and sell high (at a high price).  During an economic slump in your area can be a good time to buy -- if the slump is likely to be temporary or if you plan to keep your property for a long time.  A slump in the economy generally decreases the number of potential property buyers with whom you compete.  If, however, the slump is likely to be prolonged or you will only own the property for a short time, consider not buying.  Even if prices are low now, you may lose a lot of money if you need to sell while the region is still in a slump.

Tax Regulations

If the property you are buying is a home which will be your principal (main) residence, consider the tax consequences of the purchase.  If you have sold your principal residence and you want to defer (postpone) tax on the gain, you must buy or build another principal residence within 24 months before or after your sale of the first residence.  Check with your accountant or tax preparer regarding this and other tax regulations which affect the timing of you buying a home.

Conclusion

We suggest you obtain information on all the above topics yourself.  Talk to licensees about these subjects before you sign an agreement with them.

(Saul Klein is CEO of Real Estate Electronic Publishing Company, home of RealTown.)