Advantages of Using a Real Estate Agent
When you start to consider whether to purchase your first home, one of the first questions that comes to mind is, should I use a Real Estate Agent? Although it is certainly possible to do it on your own, there are several more compelling reasons to use an agent than to “go it alone”. There is a misconception among many first time home buyers that by using a Real Estate Agent, they will be subject to paying a commission. In virtually all situations, this is not the case. The commission for the sale of a home is paid for by the seller, not the buyer. The advantages of using an agent are as follows:
- You will have access to a much wider choice of homes. Although the internet provides for more search capability than ever before, you will have access to a much larger selection going through an agent.
- Determining value is the biggest advantage. An experienced agent will insure that you are not overpaying for the property by preparing a detailed Comparative Market Survey (CMA).
- Experience in negotiating the contract and protecting you with the proper contingencies and special stipulations to insure you get the best value and are protected in the process.
- Can offer recommendations on everything from home inspectors, mortgage companies, closing agents etc…
- A good agent will handle all the details leading up to the closing and insure that everyone is performing their contractual responsibilities.
Pitfalls of Searching for a Home on Your Own
If you do decide to find that dream house on your own, your choices will obviously be very limited. The only homes that you can buy without any Agent assistance are those that are “For Sale By Owner” (FSBO)–generally a small percentage of the market. These are home owners who, for whatever reason, have decided not to use an Agent in the sale of their house. It may be because they think they can get more return by not paying a commission, or it may be because there was no Agent who would take their house listing at the price they demanded. Many Real Estate analysts have found that the selling prices of FSBO homes are equal to–or higher–than those listed by Agents. The biggest hurdle is how to determine if the value is fair.
How do you decide? There is too much money potentially involved to make a “seat of the pants” decision. If you’re not comfortable with your own analysis, be sure to have a proper contingency written into the contract for protection. The next mistake that many buyers make, when they find that their choices are so limited by only dealing with homes for sale by owners, is to jump into the “listed” market by checking advertisements and calling Listing Agents directly or visiting Open Houses. Typically it is possible that the listing agent may agree to a reduction in their commission (which could be used to reduce the sales price) by going direct yourself. There is not a dime to be saved with this strategy (the seller is still going to pay a commission) and you run the risk of ending up with no representation, since the Listing Agent is duty bound to represent the seller. Please see the discussion on Agency. It is crucially important that you understand how it applies when you buy a home.
*See also: First-Time HomeBuyers