When you’re considering the purchase of a home, you’re probably also wondering if you need a buyer’s real estate agent. Many people think they can save a few bucks by cutting out the middle man, but that’s not the case. In fact, not working with a buyer’s agent could prove to be a costly mistake. A real estate agent’s role when representing you as a house shopper goes much further than just showing you homes. Here’s your ultimate guide to buying a home with a real estate agent.
Will Work for Free (Sort of)
It may seem like you’re getting a free real estate agent because it’s usually the seller who pays real estate agent fees. Here’s how it works: The current homeowner’s agent prices the home to include room for agent commissions. When the transaction is completed, the seller’s agent compensates the buyer’s agent. What this means is that you, as the buyer, do not pay a real estate agent. But that doesn’t mean you’re ready to call up agents and start the house hunt. You first need to establish yourself as an empowered buyer, not a window-shopper.
Although it’s true that the seller compensates the buyer’s agent, the caveat is that no one gets paid until the house sells. If you’re not qualified to buy a home, your agent doesn’t collect a commission. But don’t let the word “qualified” confuse you.
In bank terms, you can establish yourself as a qualified buyer without actually going through the process of formally applying and getting approved for your home mortgage loan. To get pre-qualified, you informally furnish the financial institution with information that the lender uses to determine whether or not you may be approved, and for how much. However, there is no guarantee with pre-qualification that you’ll be approved – and that depends on things like your credit score, debt-to-income ratio, and other factors. Pre-qualification is not the same as pre-approval. You need pre-approval before you begin looking for agents.
Seller’s Agent vs. Buyer’s Agent
You specifically want representation from an agent who is an Accredited Buyer’s Representative (ABR), or a Certified Buyer’s Representative (CBR). Be cautious of dual representation where the agent represents both the seller and the buyer because this dual representation could create a conflict of interest or a breach of confidentiality. Remember, the seller’s agent works for the seller and has the seller’s best interest in mind.
Understanding the difference between a seller’s agent vs. a buyer’s agent, you should never contact a seller’s agent directly, especially if you’re represented by an agent of your own. Trust your real estate agent to represent you to the seller’s agent. In other words, stay on your own team.
The Benefits of Working with a Buyer’s Agent
- Finding Available Homes: Yes, you have the ability to browse properties online, but agents often have access to more properties than are listed on the Internet. Furthermore, agents may know about specific features within a home that don’t receive adequate attention in virtual showings.
- Knowledge of real estate pricing: Your agent has been working in real estate long enough to recognize a house that is overpriced or underpriced, which could secure you a steal of a deal or save you from overpaying.
- City codes and ordinances: When you talk with your agent about your intentions for the house you buy, the agent may be able to lend expertise about city codes and ordinances. For example, if you talk about adding a deck but the building codes in the area don’t permit that kind of construction, the agent could help you prevent buying a home that doesn’t suit your needs.
- Spotting problems: With a trained eye, a real estate agent may be able to identify problems that may never have crossed your mind. Especially if you’re a first-time homebuyer, you may not recognize trouble areas that an agent can spot quickly.
- Offers and Negotiations: When you do find a house you love and are ready to submit an offer for, your agent will help you construct a competitive offer. And, when need be, your agent will go up to bat for you in non-emotional negotiations.
- Repairs: As a buyer, you may feel embarrassed to ask about certain features or to request maintenance on some items before agreeing to the purchase. For example, if the carpet in the home you’re buying is destroyed, your agent will negotiate for either a lower price to cover replacing the carpet (also called a carpet allowance), or will arrange for the seller to replace the carpets before you move in.
- Dotting I’s and crossing T’s: Although not a lawyer, your real estate agent has a keen eye where contracts are concerned. He or she will help you read through and understand the contract so that you have time to request adjustments if needed. Furthermore, your agent will keep organized records, even long after the transaction closes. You should keep accurate records of your own, filing copies of all of your paperwork, but it’s a comfort to know your agent will have these in the event you need access to them later.
- Conquering Closing without Conflict: Many situations could arise that could prevent delays in completing the transaction. There are a lot of contributors in the sale of a single property, and all of the service providers are on timelines. Your agent makes sure the process stays on track and that everyone is meeting deadlines, including any requests for repairs from the seller so that you close on the property on schedule.
How to Find the Right Buyer’s Agent
You can’t just snatch up the first agent you come across. Well, that’s not true – you absolutely can, but that doesn’t always work out in your best interest. Interview agents to determine which is the best for your needs. For example, if you’re looking for a condominium vs. a single-family residence, your agent should have experience in that niche. The agent you choose should also know all about the neighborhoods you’d like to consider so he or she can advise you on features and traits of the area.
You also need to make sure you get along with the representative you hire. Let’s face it – agents are people, too, and don’t always have mannerisms that compliment our own. When you ask questions, determine whether or not the agent answers them sufficiently, and that you feel comfortable asking. The agent should be eager to meet your questions without making you feel uncomfortable.
A good starter question to ask is if the agent works full time in the industry, or if real estate is a part time job. You want someone who is dedicated to their career, not someone who is just getting started or who feels the need to supplement their income. Part-time agents may also be hard to get in touch with when you need them.
You may choose to ask whether the agent accepts seller listings. If so, that agent is not exclusively representing buyers, which may create a conflict of interest.
Ask to see an agent’s credentials and certifications.
Although you’ve already learned that the seller’s agent compensates yours, verify that and ask if there are additional charges or fees.
Also, inquire about the exit strategy. When you do hire a professional agent, you’ll be asked to sign a contract. In that contract, you’ll likely find a separation agreement that defines the process by which you can terminate the agreement – usually only after a certain amount of time has passed or specific conditions are met.
Finally, when you find the agent that feels like a good fit, clearly define your expectations. How often should you expect to hear from your agent? Will you communicate verbally by phone, by text message, email, or in person?
Once the expectations are defined, be respectful of the agent’s agenda. Show up to meetings and appointments on time.
Your Wish List vs. Your Budget
Sadly, many first-time buyers over-estimate how far their budget will stretch when buying a home. More often than not, buyers have grand visions of all the high-end features, the bells and whistles such as hardwood floors, granite countertops, and other upgrades. Before you start shopping, discuss your wish list with your real estate agent to determine whether you’re in the right ballpark, or if you’re way off your mark.
If your budget and your wish list don’t align, consider adjusting your list into two categories: must have features, and features you’d like to have. Remember, if this is your starter home, you’ve got lots of time and opportunity to customize the house to your liking after you move in.
Keep an Open Mind
With an idea of your budget and your desires, your agent will set to the task of finding properties for you to consider. You may find yourself looking at properties that don’t align with your vision. That’s okay! Be open minded. Don’t rule out a property because it’s got carpet instead of hardwood, or because the paint on the walls isn’t to your taste. You can get a great price on a property that needs some T.L.C., especially if the location is a significant factor. In other words, a move-in-ready home in excellent condition may cost considerably more than a home in the same neighborhood that needs a few renovations.
On that same token, an agent may show you homes that are outside of your desired areas. The most desirable parts of town are also the most expensive. Stepping a few miles outside of your comfort zone could save you thousands of dollars in the purchase of your house. Know where you’re willing to compromise and be prepared to accept a variety of possibilities.
Offers and Negotiations
When you do find the house that moves you want to make it your home, your agent will help you comprise a competitive offer. Submitting offers and negotiating terms is one of the trickiest parts of real estate transactions.
The price set on a house isn’t finite. Buyers have the right to submit an offer that is above or below asking price. In a competitive market, buyers may submit offers slightly over asking price to give them an edge against other offers. But more often than not, buyers will try to negotiate a lower price for the home – even if the price they submit is considered insulting to the buyer.
Your agent can advise you, but ultimately, it’s your call. Trust your agent’s expertise and present an offer that is fair, and be willing to compromise in negotiations. Including too many contingencies or being too rigid in your stance could be the difference between the seller accepting your offer, or declining yours to agree to another.
Patience is a Virtue
Real estate transactions take a lot of time. Do not get impatient. Once the seller accepts your offer, the home must be surveyed, appraised, and inspected to satisfy your lender that the house is worth what you’re borrowing. Each of these steps is time-consuming. As challenging as it may be to hold back, try not to blow up your agent’s phone during this part of the process. Keep in mind that your agent is as excited to get the deal done as you are because they don’t get paid until you own the home. Calling them at all hours of the night or repeatedly during the day will not make the ball roll any faster and may cause a rift in your professional relationship.
Tell a Friend
When you get the keys to your new home and are completely satisfied with the service your agent provided, take the time to visit their website or social networks to post a review and share a rating. Furthermore, when someone you know mentions that they’re ready to look for a house, refer your agent with confidence.
You’re much better working with an agent when buying a home, provided you choose the right agent and have a clear understanding of what to expect. Get pre-approved for your loan, interview agents, be realistic with your wish list, submit fair offers, and practice patience on your journey to home ownership.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.