Home inspectors

Home inspectors occupy a strange role in the real estate transaction. Since virtually every lender requires a home inspection before making a loan, you obviously need them for a transaction. The costs of these inspections (typically $300-$400) is paid for by the home owner, so in theory at least, the home inspector is working for the buyer.

The reality though, is that again, since the agent is focused on getting the deal approved and closed, the allegiance of the home inspector is more closely aligned with the real estate agent.

Also, over the course of a year, the inspector is only going to do one inspection for you, but many more with the agent. So, when it comes time to disclose the hard fact/unpleasant facts regarding an inspection, inspectors have a tendency to sugar coat the facts in order to “keep the deal” together.


I’m not implying they are acting fraudulently, it’s more a matter of tone and presentation. Trying to sugar coat any findings that might “blow-up” a deal. The inspector only need to complete 120 hours in home inspection instruction, plus 40 hours of field training, so how much they can really tell you is impossible to say.

BuildSmart take away: don't assume a home inspector is working for you. Consider using one who isn't directly tied to your agent.

Lenders and mortgage brokers

Since the real estate shake out, the world of lending has changed tremendously.  Previously, everyone was a mortgage broker or “mortgage banker” if you were high-falutin.

Storefronts for independent mortgage brokers opened faster than Budweiser stand at a NASCAR race - appeared faster than ice cream trucks on a sunny day.

Since that time, there has been a contraction in the number of lenders (Countrywide being purchased by Bank Of America, for example), increased regulation of individual brokers and a drop in the number of mortgage applications. This has had the combined effect of forcing many people from this  industry.

As a group, lenders suffer from a lack of transparency; unlike real estate agents, they have a less of a public presence (no pictures on billboards) and tend to work behind the scenes.

Many lenders and mortgage brokers get referrals from real estate agents, rather than directly from potential clients. Working with a lender/mortgage broker recommended by your real estate agent is not necessarily a bad thing. Real estate agents have an obvious interest in seeing a transaction close and increase their odds by working with mortgage brokers who have a track record of getting deals funded.

Before, the economic reset, having transaction close successfully this was less of an issue, however, with tighter underwriting and appraisal standards, working with someone who can get a transaction financed is now more important than ever.

Your real estate broker is not your investment strategist

Be clear about what your real estate agent is supposed to be doing for you. Many real estate agents freely offer advice (maybe too freely). They can be a great source of information about local market data (time on market, closed transactions, sold price vs. asking price, etc.) However, once you get out of these topics, you are swimming in the deep end of the pool.

Asking “how’s the market”, “is this a good time to buy” or other open ended questions of this type is non-productive. Real estate agents simply don’t have the skill set to address these issues.

Remember - your real estate broker is not your investment strategist.

This is not a dress rehearsal - how to ask the tough questions

When it comes time to hire your team of BuildSmart professionals, remember: This is not a dress rehearsal - you need to ask some tough questions.

Don’t hire someone just because they showed up. Instead, engage them with detailed questions to verify that their background matches your needs and expectations.  The following, are a set of questions to ask when interviewing prospective service providers. This is not intended to be a script, rather a way to methodically find out if these people have the appropriate knowledge and skill set to add value, etc.

Real Estate Agents 

How long have you been an agent? 
From an absolute sense, more experience is better. Most people don’t realize that it takes determination to keep a real estate transaction together. For instance, aggressive offers from a buyer are often rejected out of hand by unrealistic or uncooperative sellers. An experienced agent can present an offer in such a way that this doesn't happen.  In a competitive, multiple-offer situation, a newbie agent might not have the expertise to get your bid accepted.

That said, experience can be a double edged sword, many of the experienced “war horses” in real estate can be frustrating to deal in a different way. Often these agents have an “I know better that you” attitude or never give you their full attention, since they are already focused on their next client and next transaction.

BuildSmart tip: Select a real estate agent based their experience, plus your assessment of their attitude.

How many transactions have you closed this year?
The industry standard for closed transactions is probably 8-12 a year for full time agents and 4-6 for part-time agents. The importance of the number of transactions, is that it shows how engaged they are in the market. More engagement means their understanding of the local market conditions will be fresher and more relevant. Make sure they have closed the industry standard amount of transactions decision based on the amount of closed transaction they

BuildSmart tip: Select your real estate agent based on number of transactions they have completed in a measurable period.

Do you usually represent buyers or sellers?
Over the course of a year, most agents will represent both buyers and sellers. Who you choose to work with depends somewhat on whether you are buying or selling. For the purposes of this post, we're assuming that you're a buyer.

In general agents that represent buyers (buyer’s agents) tend to hustle a little more. It takes more efforts to help your buyer identify and evaluate the home than just listing it. That said, this is a less critical than other factors.

What is your knowledge and experience in the distressed home market?
It’s important that whoever you work with has direct knowledge of the distressed properties discussed in this blog. Many of these homes, and programs will be unfamiliar to many agents, so choose an agent who has direct knowledge and experience with these transactions

These are just a few questions you want to be ready to have answered when its time to work with a real estate agent. BuildSmart can help you every step of the way. Contact us today to learn more.

Choosing your team the Buildsmart way

Too often, what happens when you're ready to start a renovation project, either through buying and rehabilitating a distressed property, or adding value to an existing one is that you don't take the time to identify the best people for the jobs at hand. Some preliminary pleasantries are exchanged and then they’re retained. Locating the professionals for your team is only the first step in the process.

The critical next step and one that is usually overlooked, is conducting a rigorous interview to determine if these professionals have the skill set and knowledge to really help you in this transaction.

Imagine you’re conducting a job interview. What you’re trying to find out is, if the person being interviewed has the skill set to do the job. Additionally, it helps if they are someone you want to work with.

Would you hire someone just because your kids were on the same soccer team? Because you both collect old type writers ? Because they were cute? Of course not, (for your sake, I really hope so), then why not apply the same rigor in choosing your real estate (Buildsmart) team.

Buildsmart tip: Select your team with the same rigor you’d hire at your company

Putting together the right team for your project

What’s the only thing worse than having no team for your investment, remodelling or rebuilding project?

Having the wrong team!

Unless you’re a full-time investor, most people have a day job. If you’re one of these people, then you’re going to need to rely on other people to implement the BuildSmart program. These people have the potential to act like your trusted advisor making for better decisions and a better outcome for you. The trick is finding the right ones.

The traditional way of finding and connecting with these people was asking friends and relatives to refer you to a real estate agent, contractor, etc. The problem with this approach is two-fold. First, if you’re new to an area you just might not know that many people to ask.

Secondly, people will always pass along a name, just to be helpful.  These are usually the most counterproductive. Maybe they bought a house but it was five years ago, since that time their mortgage broker has gone back to waiting tables or fled the country, who knows but the referal at this point is useless.

There’s also an important element of chemistry at work. There is ample research people respond to and hire people like themselves. The problem is that selecting an advisor solely because you get along with them is the wrong criteria. “Go along to get along” is the recipe for disaster.

So, go ahead and ask away, but make sure you’re realistic about the limits of this information. While a recommendation from a trusted friend is the best way to find a referral, if you’re new to an area or a first time buyer, this can be easier said than done.

Let BuildSmart help you build the right team of professionals you can trust to keep your best interests first and foremost. BuildSmart is unique in that our approach is designed to benefit the homebuyer or renovator - not take advantage of them. Contact us today to learn more about the BuildSmart difference.

The Lost City of "K"

During the 1920’s a mythical city “Z”, was reported to be hidden in the Amazon. Rumors of this city lead many explores to risk it all and try and find this city. For every explorer that never returned, the legend only grew. Col. Percy Fawcett, a legendary British explorer, allegedly heard about this city in the early 1900s and went to Rio de Janeiro to learn more, but never found the city. Instead, in 1925, Fawcett, his son Jack, and Raleigh Rimell disappeared in the Mato Grosso region of Brazil while searching for "Z".

Like the lost city of “Z”, the 203K loan program remains a myth for most borrowers. Because of the built-in bias previously described, most mortgage brokers and real estate agents want nothing to do with these loans, so, their loan volume is only a tiny trickle compared to conventional FHA loans.

However, unlike the lost city of “Z”, they do exist; the challenge is knowing the process and working with the right people to make the process work for you.

BuildSmart can help you find the Lost City of "K" - where these loans really DO exist and can be put to work for you. Contact us today for more information.