Last updated on November 4th, 2024 at 02:17 pm
Looking for a buyer’s real estate agent? Let this article help you understand why you need a buyer’s real estate agent. And what to look for in a great real estate agent. An important reason you need a buyer’s agent is that the seller’s agent is a professional. Your professional agent knows how to work with other real estate professionals.
The real estate industry is like most modern industries, based upon numerous legal principles. Contracts, agreements, rules, regulations, it’s a maze that real estate agents understand.
Did you know that among many federal laws is the Fair Housing Act? Even unintentional comments made to property owners and other agents can get you into legal hot water.
Buying a home is a legal process
The real estate transaction is very structured and you need a guide through the process. Selecting a great house is just one step in what seems to many to be a very long process. Your buyer’s agent will have your best interests foremost in their minds.
Realtors who are licensed real estate agents are members of one of the largest trade groups in the nation. As members of the National Association of Realtors, your realtor works under a code of conduct.
As potential buyers, you need the guiding hand of a good Realtor to help you navigate the process. The best real estate agent knows the local real estate market. Your agent also understands the real estate business. This knowledge includes but is not limited to the following.
Key areas of Real Estate Agent knowledge
The real estate business significantly impacts prospective home buyers in various ways, including financial, legal, and practical considerations. Here are some key aspects:
1. Financial Considerations
- Home Pricing: Market conditions, location, and property features affect home prices, influencing the buyer’s budget.
- Mortgage and Financing: Securing a mortgage involves understanding loan types, interest rates, down payments, and credit score requirements.
- Closing Costs: Buyers need to be aware of additional costs. Such as inspection fees, title insurance, appraisal fees, and loan origination charges.
- Property Taxes and Insurance: Annual costs like property taxes and homeowners insurance should be factored into the overall budget.
- Homeowners Association (HOA) Fees: In some communities, buyers may have to pay HOA fees for amenities and maintenance.
2. Legal Aspects
- Contractual Obligations: Real estate transactions involve contracts that bind both parties to specific terms and conditions.
- Disclosure Requirements: Sellers must disclose certain information about the property’s condition or potential issues.
- Inspections and Appraisals: Required to ensure the property is in the agreed-upon condition and worth the purchase price.
- Title Searches and Insurance: Verifying the property’s ownership history and ensuring no legal claims against it.
3. Practical Considerations
- Location: Factors such as proximity to schools, workplaces, public transport, and amenities impact desirability and property value.
- Market Trends: Understanding whether it’s a buyer’s or seller’s market can affect negotiations and property availability.
- Property Condition and Maintenance: The age of the property, necessary repairs, and maintenance costs impact the long-term investment.
- Resale Value: Potential appreciation in value or the ability to sell the home in the future.
4. Home Search and Buying Process
- Real Estate Agents: Working with agents can provide access to listings, market insights, and negotiation assistance.
- Viewing Properties: Buyers need to schedule visits to various properties to find the right fit.
- Making an Offer: Once a suitable property is found, the buyer must make a competitive offer that aligns with market conditions.
5. Post-Purchase Considerations
- Utilities Setup: Arranging for electricity, water, gas, internet, and trash collection services.
- Moving and Settling In Coordinating the move and any required renovations or upgrades.
- Community Regulations: Understanding local zoning laws, HOA rules, and neighborhood regulations.
6. Market Regulations and Policies
- Government Incentives or Tax Breaks: Programs for first-time buyers or incentives for energy-efficient homes.
- Interest Rates and Economic Factors: Federal policies influencing mortgage rates and borrowing costs.
- Local Real Estate Market Conditions: Trends like housing shortages or rapid price increases in certain areas.
These factors collectively shape the home-buying experience and influence decision-making throughout the process.
Pick the person you believe understands what you want
Top real estate agents are familiar with all of the items listed above. It’s important that the Realtor you choose has knowledge of the business, and is the best fit. An agent can be very knowledgable but their personality is not in sync with yours.
In other words, pick the right person who you believe understands what you want. Having said this, it’s important that you understand the process requires both parties to become temporary partners.
Real estate agents work on the basis of compensation. Agents are paid when they successfully help you find the house you want. And of course, get you through closing. Real estate agents earn their way generally by being paid real estate commissions at closing. For many decades, the buyer’s real estate agent was compensated by the selling real estate agent.
The commission
Real estate agents do not receive income from the transaction, the real estate broker on each side receives the income. Real estate agents have arrangements with their real estate brokers. They will be paid a percentage of the total commission or other compensation for their services.
Recent changes initiated by the National Association of Realtors required by the U.S. Justice Department, now require real estate agents to discuss compensation at the beginning of the relationship. Prior to the government becoming involved in the real estate business, a handshake between agents and buyers started the process.
Not so now. It’s now the law. A buyer may not be shown a house by a real estate agent without a signed agreement between both parties.
The agreement does not require the buyer to purchase a property. The agreement does require the buyer to pay the real estate agent for their efforts. Unless the selling real estate agent or seller of the property pays the buyer’s agent at closing. A buyer according to the new rules must be shown any for sale property they want to see.
Buyer/Agent agreement
Based upon your agreement, your real estate agent will be compensated by you the buyer, or the seller. The real estate agent works for the buyer. The buyer can at their option tell the real estate agent to show them only properties where the seller will pay the buyer’s commission.
The arrangement between the buyer and the buyer’s real estate agent work must be documented. A buyer who wants to see properties where the seller will pay the commission must be memorialized in the agreement. If the buyer is willing to pay the real estate agent commission then document that. It seems that most sellers are agreeing to pay the buyer’s commission.
Dual Agency
One item that comes up is the concept of dual agency. A dual agent is a real estate agent who works with both the buyer and seller. it’s very unusual that the real estate agent helping you find a house sells you one she has listed.
Should that be the case, a discussion with both the buyer and the seller must take place. You can probably see the potential conflict of interest this situation could create.
Some brokers may ask another agent to represent one side. This is not required and it is perfectly legal for a real estate agent to represent both parties. It’s still rare that a listing real estate agent will sell that house to their own client.
Pre-approval for a mortgage loan
Real estate agents require that buyers obtain pre-approval for a mortgage from a financial institution. Many sellers require a pre-approval before a prospective buyer can view their home. The experienced agent understands that their time is valuable. Unless a buyer is pre-approved they may not have credit scores that will support a home purchase. The agent needs this pre-approval letter to negotiate with a seller’s agent.
Your agent can introduce you to various financial products such as FHA, VA, and more. The best agents know a good mortgage lender who can obtain a fast pre-qualification letter. A good agent will caution their buyer clients not to buy anything big during the closing process. This caution includes using their credit cards.
Many real estate sales have been derailed because buyers started using credit before closing.
Evaluate a home inspection report
An experienced real estate agent knows how to evaluate a home inspection report. Your agent knows how to negotiate with the seller about making repairs. This is part of the negotiation process which your agent must balance against getting you the best price.
Speaking of price. Part of the homebuying process is to find a property that fits your budget and the lender’s requirements. Knowing when the seller is offering the ideal price is a skill.
A significant advantage prospective buyers have working with the right agent is arriving at a fair purchasing price. This is based in part on the condition of the property. Part of this negotiation process includes weighing any concessions that the agent may try to obtain at the same time having some items on the inspection list repaired. In the end, it’s a balancing act to obtain the best deal for buyer and seller.
How do you select the right agent with good experience?
Most buyers interview agents in person or via the phone. You can use a checklist or have a normal conversation with the prospective agent. Tell the prospective agent what you are interested in and generally where meaning what city or neighborhood. Let the agent describe the area to you.
The conversation with drift around, you will learn something about the agent and the agent will learn about you. Talk about why you are looking for a house e.g. moving from Seattle due to a job.
The years of experience will weave into the conversation. Experienced agents may tell you a story of finding a house for a client with an interesting requirement. The first agent you speak with may be the one. If the conversation does not feel right, perhaps that agent is not the one for you.
The best interview is in person
Just because Agent X sold 20 homes last year does not mean they are the one for you. Very busy agents may not give you the time you need. The best way to make a decision is to meet the prospective agents in person. Go to a restaurant for coffee or a drink in the afternoon. Talk as friends, discuss the area, and what you think about it, and see where the conversation goes.
You can help the process by discussing the real estate agent commission during the interview. Explain to the agent that you are aware of the need to sign a representation agreement.
If you are willing to pay the commission bring it up. Tell the agent if you want the agent to show only properties where the seller is paying the commission. This discussion for many agents is the elephant in the room.
If you are considering selling your home, read this article about seller financing. This article about Millennials buying a home by the beach is interesting. First-time home buyers read this
