I’m house hunting for my first house. I’ve just been going to open houses and using the internet. I keep going back to one house that seems to have what I want. I don’t have a real estate agent, so I would be relying on the seller’s agent (who seems nice, but…a real estate agent). I figure if I get a buyer’s agent, they would get a fat commission for doing very little.
The asking price is affordable for me (I could probably negotiate down some), and it is a good neighborhood where I’d like to live. If anything it is a little too big for me, but I could grow into it. It is a townhouse that is about 10 years old. The owners are the first buyers, and it shows immaculately. Someone else put a bid in on it, got accepted, had inspection (passed with flying colors according to RE agent), but then the sale of their house fell through, so they backed out. Now back on the market, I’m quite tempted.
So any advice out there? If I proceed alone, what should I look out for? Is there any advantage of bringing a buyer’s agent in at this point? If you are a real estate agent, please put a disclaimer on your response.
I am a real estate agent, a Realtor[sup]TM[/sup], but licensed only in Wisconsin, so be aware that anything I say could be different in your state or country. Also, nothing I say should be taken as legal advice, since I am not a Lawyer.
Would you go to court as a defendant in a serious matter without representation? It’s possible, but is it wise? Buying a house is probably the most money you will spend in your lifetime. Wouldn’t it be a good idea to have someone on your side, looking after your interests?
But what will it cost? Depends. If the property is on the market already in the MLS (Multiple Listing Service), a Buyer’s Agent will most likely accept as commission what is offered by membership in the local Board of Realtors, i.e., a slice of the listing agent’s commission, at no cost to you. (This is called a co-broke.)
If the property is not listed, you many negotiate a commission with an agent. In either case, you will have to sign a contract with your agent which spells out, in detail, what you will or will not pay, along with his obligations towards you. This must be done before negotiation begins, usually defined as “writing an offer.”
The agency agreement may be drawn up generally (any properties) or limited (only one property, only for a short time).
Now you have someone on your side. Isn’t that a better idea than going it alone?
I bought my first house without a realtor involved on either side. I had a lawyer look over the buy sell agreement, and the mortgage company took care of the rest.
Need, legally speaking? Maybe not. Want? Probably, especially if this is your first time buying. My experience is of being a buyer twice in the highly competitive SF bay area market.
Get personal references, but the right buyers agent can really smooth out the process of buying a new home. Our real estate agents have listened to our concerns and priorities, weeded out potential duds, pointed us towards great neighborhoods, scheduled showings, helped us write competitive offers, found us inspectors and gave us champagne at our closing.
Since you have a particular home you are looking at purchasing some of these services may be moot - on the other hand if the purchase falls through they can help you figure out if you want to look at other properties.
Every time I’ve bought a house (3 in the last 18 years), the seller has been using an agent, and the fee, for both the buyer’s and the seller’s agent is already figured into the cost of the house. The seller pays a commission to their agent, which is split with the buyers agent. In that case, you might as well have your own agent, since you’re already paying for it, in the cost of the house.
Other reasons to use an agent - they have access to lists of comparible houses, and can tell you if the one you are looking at is priced correctly. If you don’t have a house already picked out, they have better resources for weeding through the lists of available houses. They have better access to gettin you in to see a house, if there isn’t an open house planned.
Now if you’ve already found the house you want, and feel comfortable with the pricing and the process, then maybe you want to approach the seller, and see if their agent is willing to off a discount, for you not bringing in a seller’s agent, so there won’t be a need to give a cut to a seller’s agent. Shoot for maybe a 2% discount, after you negotiate the cost.
We bought a house last Fall and had a buyer’s agent. His services cost us not a penny; his commission came out of the seller’s end (well, I guess technically we paid him, but you know what I mean; it didn’t cost us anything extra on top of the price of the house).
We found all the houses we wanted to see online ourselves and he got us in to see them. He negotiated the deal, he dealt with the seller, he dealt with the neighbors who we needed an easement from (part of the deck was built over their property), he walked us through all the paperwork. Could we have done all of those things ourselves? Probably, but that’s a whole lotta trouble and learning-on-the-fly for a bunch of mundane stuff you could have someone else do. Basically our agent made everything extremely easy; we had a problem, we gave him a call, it got taken care of.
IMO, what’s more important, that you definitely pay for, is having a good loan officer, someone you trust who will be honest and blunt with you about what you can really afford. But you haven’t asked about that so I assume you have someone already.
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In re: the buyers agent, this had been my experience, as a former Realtor TM.
In re: the loan officer, I, myself, wouldn’t worry about one, since said officer will submit your app to an underwriter who will not lend you any more than you can really afford, if you get a conventional bank or FHA loan.
When I bought my first (and so far, only) house, I got an agent. She got the keys for the house i wanted and the MLS info and showed me around. She also brought over some printouts of comparable houses. I decided I didn’t want to look at others, and we discussed the price of the one I wanted and what she thought I should pay. Then I went to her office and signed a ton of paperwork, and submitted the earnest money to her (for the sellers).
Then she went to a meeting with the owners and their agent and fought for the price I wanted plus the demands (some repairs, also the sellers had to pay the agent fees). She called me in the middle and said they weren’t budging. I said “Oh, well that’s all I can afford” and so she went back and got the price I wanted.
Then that was it. She told me where to go to sign the final papers and how much of a check to bring with me, and I was done with her. Didn’t cost me a cent.
Buying a house at 26 by myself with a buyer’s agent was easier and less nerve-wracking than buying a car at 23 with my dad. I wouldn’t have considered doing it otherwise.
To give more details: I am looking to bid on a house, so I don’t need an agent to show me around to places. If I bring an agent in at this point, what would that get me? If I discuss with the seller’s agent that I don’t have a buyer’s agent and get the price down a couple of thousand (US$), could a buyer’s agent do better? The place is in great condition, and I would get an independent inspection, but it looks solid. What would a buyer’s agent add to this?
I should note that the seller’s agent has already mentioned that the seller would be willing to help me with closing costs. That kind of tells me that they realize that they would be willing to negotiate since I don’t have an agent. Bringing in an agent would not help that angle.
And if this one falls through, I will probably look more seriously into getting a buyer’s agent. Although there are two other homes in the same complex for sale, so I may have options.
I’ve never bought a house from the listing agent; different agents got me in to see the houses and negotiated for me, but I did not have a buyer’s agent contract, for the most part.
I’ve only had a Buyer’s agent once; it was a very positive experience, but I would not sign a buyer’s agent contract lightly.
Both buyer’s and seller’s agents only make money if a house is sold, and the amount they make is directly proportional to the price of the house.
No agent is on the buyer’s side; all agents want the house to sell, and to sell for the highest possible amount.
It’s possible, but don’t count on it. I can guarantee that it won’t work in my company. The seller might give you a discount, but I won’t, and neither will my company.
First, let’s define some terminology. We have a listing side and a selling side. We don’t have a buying side – that’s just the way it works.
You are proposing to eliminate the selling side, a selling side agent, or a co-broke commission.
But if you approach the listing agent and want to make an offer, that agent will be the selling agent also (that’s called dual agency), but you will not be their client, you will be their customer, and you will be handed a Customer Disclosure Form to sign. You cannot be “nothing.”[sup]*[/sup]
As a customer, they owe you fair dealings, confidentiality, and can provide you with all publicly available data you might request, but they cannot represent you in negotiations nor can they give you opinions about prices or provisions in the offer. You’re on your own, surrounded by experts in matters you may know little about.
Is that what you want? Even though representation is free?
If you insist on being an asshole about it, and refuse to sign the disclosure form, the agent will make a note that you refused to do so, and ask you to initial that as proof of what you requested. If you refuse to do that, the agent will make a note of that, too. All of which can be used as evidence in court should there ever be a need for it. You can’t win this one, dude. If you were in grade school, you would be told to go stand in a corner with a dunce cap on your head.
I am a REALTOR in Indiana, and yes, absolutely get a buyers agent. I’m not sure why you would hesitate - although the argument could be made that your agents fee is included in the price (as in, the price would be lower if only one agent was paid), the commission is already determined in the Listing Agreement - it won’t go down because you have no agent.
The documents are legally binding contracts - get someone on your side to explain them to you, make sure deadlines are met, etc. In terms of an offer - do you have access to the local MLS? If not, then you don’t know what other comparable homes are selling for, so you could easily get rooked if the Seller’s Agent is shady and dishonest. Re: the inspection - do you know what’s required by your loan terms? FHA loans have have a much higher threshold for what’s acceptable, and you have to make sure any issues are addressed right away, often before the FHA appraiser is even in the house. Can you review title work properly to make sure it’s free and clear? What about surveys, tax pro ration, HOA documents, easements, Seller contingencies, and a whole host of other things you’re not even aware of existing?
Buyers agents do far, FAR more than just “show homes” and your assumption in that direction indicates that you really need one on your side, since your understanding of the process is limited at best IMProfessionalO.
You contradict yourself. A buyer’s agent is indeed, by law, on the buyer’s side. If you doubt that, take a look at a sample blank Buyer’s Agency Agreement, especially the 2nd page, lines 65-77.
And listen to Sateryn76. He/She tells it like it is.
I’ll give you the exception - in NY and northern NJ, you will have a lawyer representing you. Especially NY, it is not an option to forego a lawyer. If you know what you want, you won’t need a buyer’s agent - your lawyer will protect your interests.
I don’t know of any other lawyer states (which doesn’t mean they don’t exist), but it would probably be useful to have someone who does these types of transactions frequently looking out for your interests.
It’s been a long time since I was in the market, but in 2003, I vaguely remember being told that you should get a Buyer’s Agent BEFORE you look at a house: if you look at a house by booking an appointment directly with the seller’s agent, that to some degree locks the buyer’s agent out of the commission. Is there anything to this, or am I totally wrong?
You’re mostly right. (nitpick: It’s not so much the looking at that is the factor; it’s the working with the Selling agent.)
There is a concept called procuring cause. If you have been brought into the transaction by Broker A, then that broker has procured you as a buyer. If you go to Broker B and say, “I want to write an offer on the property Broker A showed me,” Broker B should say, “I could write the offer, but I will not have procuring cause, and I won’t get any commission.” (That doesn’t prohibit you from offering him (Broker B) a commission you pay directly, and if you feel strongly about needing his representation, that’s something to consider.)
If you answer an ad placed by Broker A, call Broker A after seeing his sign, or attend an open house given by Broker A, he would most likely be the procuring cause.
Of course, most things can be negotiated, and sometimes are if the buyer is adamant and the brokers are amiable, especially if they work for the same company.
I think you should hire a Buyer’s Agent. If he’s worth a hill of beans, he’ll advise you on how to best submit the offer, what contingencies should be attached (e.g. contingent on the appraisal coming back at 100% or more of your offer; contingent on inspection).
Since you’re considering buying a townhouse, there are a whole host of things that an experienced agent agent will do. First and foremost, your offer should be contingent on the inspection of the HOA financials and acceptance of the HOA rules. Your agent should procure a copy of Community’s Master document that spells out who is responsible for what. You need to read it, understand it, and accept it. For instance, if the community swimming pool gets a crack in it, how is that paid for? If the roof is leaking over your bedroom, is that considered common ground because it’s the roof, or is each owner responsible for maintaining his portion of the roof?
You should also inspect the latest financials to make sure that the HOA is not only solvent, but has planned ahead for emergencies. For instance, a well run community will have a robust capital improvement fund to pay for new roofs, pavement of the parking lot, and pool maintenance. If they don’t, then you could be on the hook for thousands of dollars.