Why Using a Good Realtor is Important
In this series, we are providing tips to avoid the Most Common Roadblocks to Home Ownership. So far we have discussed 1) how to solve limited or bad credit, 2) no down payment, 3) not having a budget, and 4) documenting rent history. Today, we are discussing Roadblock # 5: Why and How You Should Use a Realtor to Make a Home Purchase Easier.
Many buyers believe a buyers agent is a waste of money OR just don’t know how much a good Realtor will do. So this article is to make sure prospective buyers understand these benefits. In addition, the buyer’s representation is almost always at No Charge to the buyer!
Don’t Make These Mistakes/Misunderstandings, How a Realtor Will Help You
- Expect a Realtor to show a lot of properties before getting pre-qualified with a knowledgeable mortgage lender. Most of the time a Realtor will require a mortgage prequalification for a certain price range and mortgage type before showing properties. We have seen so many important examples for why Realtors require this prequalification like below.
- Often buyers misunderstand how mortgage payments work. We have seen buyers ask us to check numbers on a $300,000 house yet want a $600 total payment at the most.
- Buyers forget to add in PMI, Annual Fees, or Escrows in the house payments. Excluding these creates a big payment discrepancy.
- Not understanding a prequalification amount will waste the time of the buyer and Realtor. Why look at homes that do not meet payment goals or prequalification?
- Realtors have taken so many buyers through dozens of houses to then find out that the buyer doesn’t even qualify for a purchase or at a price point nowhere near the houses being looked at. Having the prequalification helps the Realtor show homes that fit the buyer’s parameters. Why look at homes in a shotgun format when there could be a laser focus?
- Believe that a website like Zillow will provide everything about a changing real estate market. Generally the public purchases a few homes in a lifetime. Realtors, on the other hand, keep up with the local market heartbeat and know which homes will meet a client’s wish list. Let the Realtor weave through the properties that meet your requirements
- Believing the Realtor is just out to make a buck. Of course they get paid, but a Realtor has a fiduciary responsibility in representing a buyer as a buyer’s agent. So it is their duty to give a buyer the best representation and get the best price.
- Believing the online value of a home. Online estimates like Zestimate can be off by A LOT and they even say it in the small print. A Realtor will expertly pull comparable closed sales of homes to help determine an offer price for you that will be much more accurate.
- Pretending to understand the purchase contract. This is not the time to act like you know it all. Even if you do, let your Realtor go over the entire contract and explain the details. Most are amazed at the important requirements and disclosures in a real estate contract. A Realtor is a licensed and trained expert, so listen and then ask questions.
- If I use the listing agent, I will save money. The seller agrees to pay a commission when their home sells. This commission is split between the seller’s agent and the buyer’s agent. So a buyer’s Realtor will be paid by the seller’s funds most of the time!
- Only window shop online to choose the houses you should visit. Pictures are nice but remember often the pictures are from the perfect day and the perfectly staged look. Listen to the Realtor as they have often seen many of the homes being viewed online. This is especially true when on the market a while.
- Expecting to meet for the first time and look at houses right away. Let the Realtor go through the interview process to make a plan for areas and houses to view. Would anyone want to tell a doctor that there is a chest pain and immediately the doctor puts you on the operating table? No!
- I should see 3 homes and then miraculously close all within a 30 minute HGTV show. Remember that on HGTV, they have really looked at probably many homes, edited all the outtakes, and then jumped ahead to the closing. Actually many of these homes have already closed and the whole show is staged. Remember that it may take some time to determine wants and needs, compare to the market, and then find the right home.
5 Important Tips to Understand Your Relationship With Your Realtor:
- Decide on a Realtor and any listed home can be viewed. Too often, we see buyers choose a Realtor and then next thing we know they are working with another Realtor. The reason? “Well, I drove by a house I like and called the name on the sign so I could see it”. This is a big misunderstanding. Remember that a buyer’s agent can show any house that is listed for sale. So if there is a home of interest, a buyer should tell the agent. The agent will research the home, set up the appointment, and show the buyer the home. At that point if the buyer wants to make an offer, the Realtor will prepare and present the paperwork to the seller’s agent. Your agent has already gone through the interview process with you and probably by then, knows your needs so why jump ship?
- A good Realtor will ask important questions to start the home search such as:
- What school district works best?
- How many bedrooms & baths are needed?
- Do you have a mortgage pre-qualification?
- Who is your loan officer so I can discuss directly how much you qualify for? It is mportant to know if seller paid costs are needed, if there are geographic restrictions such as for USDA, the price range of home, and many other items
- Are there neighborhoods that you really like?
- What amenities do you like or require such as 1 story, an office, open concept, etc?
- Listen to your Realtor’s advice. It is their job to know the neighborhoods, the homes available as they come up (remember they can’t know them all), and much more. The home buying process has just started so make sure to listen to their advice. It is usually very good advice.
- Use the Realtor’s knowledge to know if a property meets the condition requirements for the buyer’s specific mortgage. For instance, a VA loan will not allow a leaking roof.
- Be reasonable with your Realtor. Too often buyers are too demanding of their Realtor. Remember that..
- Realtors have lives too so be considerate of their time as well
- Don’t look at houses until pre-qualified
- Looking at a hundred houses is too much. Would you spend 25 weekends driving a couple to see every house which costs a lot in gas, wear and tear on a vehicle, and more importantly-time? Probably not, so refer to the top of this article again.
Read the other articles in the Homebuyer Series – “I want to buy a home in a year!”:
Following these tips and steps up-front will make your purchase go much easier.
- Week 1: Establish Credit Worthy of Mortgage Approval for Any Type of Mortgage Loan
- Week 2: Saving for a Down Payment and Emergency Savings
- Week 3: Creating a Budget to Afford and Qualify for a Mortgage to Purchase
- Week 4: Best Tips for Paying Rent & Why
- Week 6: Knowing Your No to Low Down Payment Options
- Week 7: The Last Steps to be Ready for Closing
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