First Time Home Buyer: Real Estate Agents
In the first two articles in this series, we explained how to calculate an affordable mortgage, and the factors to consider when choosing the home's location. In this third installment, we are going to discuss how to work with real estate agents.
While every part of the country is different, this advice applies to those where the competition for real estate is aggressive; those areas where the housing market might be considered "hot." In areas where the real estate market has temporarily cooled off, these tips are certainly food for thought too.
Working with a Real Estate Agent
One mistake many first time home buyers make is working with just one real estate agent; expecting that person to be able to cover all the townships they're targeting. There is no way that one agent can stay on top of the homes moving in each township; especially what might be considered "good deals."
In today's electronic age, real estate agents have fingertip access to online listings. But in a hot market, homes sell so quickly they're off the market before an "outsider" even realizes the home was for sale.Serious home buyers need to work with multiple agents, one that specializes in each of the townships being targeted. Don't be afraid of interviewing the agent to see if they understand the local market. If they make statements like: "Here are our current listings, but I know this person that is thinking about selling her home..." That is an agent that is very likely tapped into what's happening in the local market.
Fiduciary Responsibilities to Sellers
When working with an agent, keep in mind they are being paid by the person selling the home. That's right, even though they are driving a buyer all over town and calling on the phone; they are paid a sales commission by the person selling the home, not the buyer.
Buyer's versus Seller's Agents
This fiduciary responsibility is one that agents must respect and be careful to fulfill. For example, they must do everything possible to gain an advantage for the seller. They must also tell the seller everything they can find out about the potential home buyer.
A seller's agent is obligated to reveal known material defects concerning the property; however, they are not obligated to tell the buyer about things such as local traffic problems, declining home values, or neighborhood crime rates. This means the seemingly harmless conversations with a seller's agent are very likely to be told to the seller of the home.
Effectively Working with Agents
This is a very important point; these agents are paid a sales commission by the home's seller. They have a legal responsibility to act as an agent for the seller. Even if the real estate agent seems like a new found friend, be cautious. If a buyer tells an agent their bidding or negotiating strategy on a home, the agent must tell the seller what they are hearing.
For example, if a buyer tells her agent she is bidding low, but willing to match the seller's asking price, guess what will happen? If a buyer tells the agent they are in a hurry to buy a home, the agent is obligated to tell the home's seller this information.
The most effective way to work with a real estate agent is by understanding this relationship and respecting it. A buyer shouldn't tell the agent anything they wouldn't want the home's owner to hear. Don't expect the agent to actively point out all the home's flaws; look around and ask questions when they come to mind.
Sticking to Facts
When working with a real estate agent, be honest about a home-buying timeframe. If looking to close on a home in the summer, then let the agent know. Sharing of facts on topics such as price range, types of homes, and desired location (busy street versus quiet neighborhood) will help the agent be more efficient.
Don't spend the afternoon looking at homes that are out of the target price range. Again, most things in life are about balance. Set expectations and only share information that's okay for the seller of a home to know too; this creates a win-win situation.
In the next edition in this series, we will talk about steps to take when serious about buying a home, including pre-qualifying for a mortgage. We'll also discuss the things to look for when evaluating a new home's potential value.
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