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Saturday, March 18, 2006 - Page updated at 12:00 AM

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Home Forum

Revealing too much worries buyer

Seattle Times staff reporter

Q: In shopping for a home, how much should I tell my real-estate agent about myself and my financial situation? For example, should I reveal how much of a loan I qualify for or just how much I want to spend? I realize that the more expensive the house, the larger the agent's commission.

A: State law actually addresses your situation because it defines the duties of an agent representing a buyer. Among them are:

• "To be loyal to the buyer by taking no action that is adverse or detrimental to the buyer's interest in a transaction;

• "Not to disclose any confidential information from or about the buyer;

• "To make a good faith and continuous effort to find a property for the buyer."

In practice, what does loyalty and confidence mean? It means, for example, that a buyer's agent cannot tell a seller (or the seller's agent) that the buyer will do almost anything to get the property because Mom lives down the block, says Mike Skahen, owner/broker of Lake & Co. in North Seattle. Or that the buyer is making an offer that's much less than they can afford.

"However, to be honest, some confidential information has to be disclosed — for example, if the buyer has a bankruptcy and may not be able to get financing," Skahen said. "That has to be told to the seller."

His advice is to be honest and open with your agent — but to be very clear about what you consider confidential. In the past few years, more than 10,000 new agents have begun selling real estate locally, and many of them may not know what's confidential, Skahen said.

He also suggests you be forthright about how large a loan you can qualify for because to do otherwise will reduce the pool of potential homes.

"The average buyer tends to buy at the top of what they can afford because they discover that what they want to spend doesn't get them what they want to live in," he said.

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Skahen dismisses the idea that agents try to sell more expensive houses to make larger commissions.

"Whether you pay $350,000 or $400,000 is relatively irrelevant to the agent because the difference in the commission isn't that great," he said. (In his example, it's $1,500, presuming the buyer's agent receives a 3 percent commission.)

What's more important to the agent is "finding a house the buyer wants and sealing the deal," said Skahen, so the agent gets the buyer's business. Otherwise, the buyer might find another agent.

Q: Is it true that manufactured homes don't appreciate the same way as traditional site-built homes? We're wondering because we need to either refinance our manufactured home (in King County on land we own) and make some improvements or sell it and buy a site-built house. We don't want to spend money on it and not add value.

A: Erik VanderWaal, senior appraiser for Bridgeport Appraisal in Woodinville, begins his answer with an appraisal fundamental:

"In real estate, land is what appreciates. Buildings don't appreciate," he said. "A typical [site]-built home has an 'economic life' of 60 to 70 years — meaning that if you never touched it, in 60 or 70 years it would be worth nothing."

If this seems illogical, just think of sales ads for older, poorly maintained homes. Often their main selling point is that the "value is in the land." Once a sale is completed, the bulldozer moves in.

VanderWaal says manufactured homes typically have an economic life of 45 to 55 years. Thus, as a housing type, they're not going to be worth as much as site-built. Adding to this is the reality that manufactured homes are harder to finance than site-built homes, he said.

If your home is on a very desirable piece of land, the property may appreciate handsomely. Otherwise, a manufactured home "won't hold the same market appeal as a [site]-built home," he said.

Q: I'm aware of several developers who are building detached homes on one large parcel and marketing them as single-family homes because each has its own enclosed yard, even though there are no lot lines between these houses. Are there any ramifications, financial or otherwise, to buyers who think they're getting a single dwelling?

A: Seattle attorney Samuel Jacobs, of Mosler Schermer Walstrom Jacobs & Sieler, says the term 'single-family' is "typically a land-use or zoning term used to denote a dwelling which is not physically connected to another dwelling."

"However it is not, in my view, a precise term used to describe a form of ownership," Jacobs said.

While most detached homes are on their own separate lots, Jacobs says it's not unheard of for a distinct few to share one piece of property and be legally incorporated as a condominium. Some of the newer cottage communities around here are, in fact, condos.

To answer your question, Jacobs says, "There are clearly financial, practical and legal implications which relate to different forms of ownership."

The best way for prospective owners to gauge those is to carefully read the legal documents relating to the property. A real-estate attorney can help decipher them.

Home Forum answers readers' real-estate questions. Send questions to Home Forum, Seattle Times, P.O. Box 1845, Seattle, WA 98111, or call 206-464-8510 to leave a question on a recorded line. The e-mail address is erhodes@seattletimes.com. Sorry, no personal replies. More columns at www.seattletimes.com/columnists.

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