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Should We Use a Realtor to Buy Our First Home?
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Should We Use a Realtor to Buy Our First Home?
My wife and I will hopefully be buying our first home before the end of the year. With all of the housing information that can be found online on sites such as Zillow, do we really need to hire a realtor? It seems that it is so easy to make appointments with sellers' realtors to view houses. We obviously want to keep house-buying costs as low as possible and feel like this is one we could forgo, but as they say, we don't know what we don't know. What will a realtor do for us that we can't do for ourselves? If anyone has had either a good or bad home-buying experience when they did not hire a realtor, I would love to hear about it.
Use a Realtor Unless Buying an FSBO
It doesn't cost anything to hire a real estate agent as a buyer. The seller pays the agents' fees (both their own and the buyer's) as part of the closing costs. Typically, the fee is 6%, which gets split between the buyer's agent and the seller's agent. If you don't use a buyer's agent, all you are doing is diverting more of the seller's money to their own agent. The only way you might be able to save money by foregoing the services of a real estate agent is if you buy an FSBO (for sale by owner) house because you could theoretically negotiate with the seller to pay a lower price since there will be no agent's fee to pay. Unless you are planning to shop specifically for an FSBO, you have nothing to gain by doing it all yourselves except a lot of hassle.
Find a Buyer's Agent to Buy First Home
As the buyer, you don't have to hire a Realtor, but you should remember that the seller's agent works for the seller, not you! The agent's job is to make the most money possible for the seller. We didn't realize this when we bought our first home and ended up overpaying for a house that had been on the market for over a year!
A buyer's agent, on the other hand, represents your interests. Best of all, typically you won't pay a dime for this service. The agent splits any commission with the seller's Realtor, so there's no downside for you at all!
Use an Attorney When Buying First Home
Before you make your decision about whether to use an agent or not (not all are Realtors, a trademark), read some good books about home buying and home ownership.
I personally prefer a buyer's agent who works only for me. They can screen houses, help the buyer get pre-approved for a mortgage, and supervise the inspection of the house, as well as help to negotiate the contract.
Also, be aware that any house that you see that is listed by an agent still requires that an agent be paid. That person just won't be your agent. You will have to look only at "sale by owner" homes if you don't want an agent involved. Since most homes are sold by agents, you will miss seeing many homes.
Whether or not you use an agent, be sure to use an attorney to protect your interests. Make this your own attorney, not the bank's attorney, who is there to protect the bank's interest. They will review the contract, hold escrow money safely, and represent your interests during the closing. They will also make sure the deed and mortgage are properly recorded. They will also search to make sure the title is clear and help you buy title insurance.
Get the Realtor to Buy First Home
I just bought my retirement home a few months ago, after buying/selling seven previous residences over the years.
Sellers pay for both their Realtor and yours. Therefore, you get all the benefits of the Realtor for free unless, of course, you make other arrangements with the sellers.
Realtors can see things you might not see, can ask questions you might not know to ask, have available other professional resources/websites you don't, etc. They can help you with counter-offers and other things that could be part of the "deal."
Buying a house is not just about looking at and deciding on a house. Get the Realtor!
Calculator: How Much House Can I Afford?
You Face Risks When You Don't Hire a Broker/Agent
Yes, you should use a "Realtor" (a trademarked name). First note that there are two kinds of licensed real estate people, namely real estate agents and brokers. Real estate agents and brokers who belong to the Association of Realtors can use the term Realtor. The differing characteristic is a non-association member is held to the letter of the law under his/her license while an association member is also held to a standard of ethics. This is one reason you should use a Realtor
There are several other important reasons. There are many, many laws these days governing the buying and selling of real estate and they vary from state to state even city to city. The last I knew there were 14 pages of areas of concern in a California listing and/or buying contract. Failure to adhere to any of the provisions therein could result in the loss of dollars or even a lawsuit. There are all sorts of things you must disclose and failing to mention them might result in a lawsuit. Knowing how to apply a bandage to a wound doesn't one a doctor. It is much the same in real estate and the rules of the game change almost monthly. I was an executive of a real estate association and had a close relative who was a real estate broker and I would never buy or sell a property without a licensed real estate broker/agent.
For the same reason you may hire a plumber, accountant, attorney, roofer, or doctor, you should hire a broker/agent. The risk of not doing so could mean millions of dollars.
Finally, a licensed real estate person can expose you not only to properties advertised and/or in the Multiple Listing Service (MLS), but also "pocket listings," which are listings held close to the heart and only shared agent to agent.
Have Your Own Realtor When Buying First Home
My husband is a Realtor, and I have learned a lot from him. Zillow may be a good basic resource, but it does not always have all the information you need.
Do not forgo a Realtor especially since you have never purchased a home. This does not cost you anything because the seller usually pays their commission from their house sale. There are always some exceptions but not many.
When purchasing a home, you also want to have your own Realtor. Using the seller's Realtor does not benefit you because they are going to look out for the seller since they have the agreement with the seller and not you as the buyer.
Also, watch out if you are going to call a seller's Realtor to view a house. They may want you to sign a buyer's representation document, which means you are committing to using them as a Realtor for any property you purchase, and they could come after you for commissions if you use someone else.
Leslie in Arlington, TX
Spend Money Wisely and Be Guided by Realtor
Realtors do not charge for helping you find a house. When you tell them your requirements and budget, a Realtor knows which houses to show you and can recommend an offering price and any urgency of making a bid. Choose an experienced Realtor and not a friend who has recently obtained their license. By all means, do your own research and visit the area of choice at all times of day or night. If you have or plan to have children, visit the schools and ask about things like graduation rates. This is the biggest purchase you may make, so spend your money wisely and be guided by a Realtor.
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