Advice on Working With a Real Estate Agent
Like many real estate questions, there really is no definitive answer to that question other than "it depends". Legally, most states don't require you to work through a real estate agent to buy your home, so the choice is left up to you. When you're buying a new home, a good real estate agent can provide invaluable help and assistance through their knowledge of the local real estate market, checking listings, driving you around, showing you houses, and providing advice. They also help you complete offer sheets and negotiate the deal. Many homebuyers think when they're buying, an agent doesn't cost them anything. All the real estate commissions are paid by the sellers. Unfortunately, even when you're buying, you can end up paying for your agent.
Let's think about how real estate agents are paid. Home sellers pay a commission between 5% and 6% to the listing agent. At closing, this money is split roughly in half between the selling and buying agent. When buying, you don't directly pay any commissions; however, since neither agent gets paid until after a deal is closed, both your agent and the seller's agent have a vested interest in making sure that a deal comes together and that's how you can end up paying.
Is the Agent Really Working for You
Remember that your agents don't work with you out of the goodness of their hearts, they want to make money. You need to be aware of some things that your agent might not be doing for you.
Your agent may not show you all the houses that are for sale in your target area, such as homes being sold directly by the owners. The agent won't get any commission for these sales; therefore, you likely won't be shown any of them unless it's being used as a bad example.
Once you've found a house you like, your agent might pressure you to make a high offer to ensure you get the home. This kind of advice can cost you thousands of dollars, since you don't know how flexible the seller actually is in their asking price. In cases like this, your motivation and the agent's aren't the same. They want to get a commission and move on to the next deal. You want to get your dream house at the lowest possible price.
Don't forget that one of the benefits a good agent brings to the table is their ability to recommend reliable people to help with your purchase. There is always the possibility that they could recommend a "quick and dirty" home inspector who will gloss over problems with the home to make the process move along.
Use an Agent Wisely
Start by getting personal recommendations on agents from people you can trust. Meet with a number of agents and tell them what you are looking for, what your budget is, and any special requirements you have, such as the closing date. After meeting with a few agents, choose one you feel comfortable working with.
Don't rely totally on your agent. You still need to spend some time familiarizing yourself with market conditions in the area by reading newspaper listings and checking the Internet. Check out homes for sale by the owner. You just might find the perfect home all by yourself.
Evaluate any suggestions your agent makes on an offering price. Ask them to show you what similar homes in the area have sold for recently and don't just take their word for it.
Clearly, a good agent can help immeasurably when you are looking for a new home. If your agent finds the house you love and helps negotiate a reasonable price, they probably deserve your gratitude and have earned their commission. Never forget that in the home buying process, their motivation and yours aren't necessarily the same.