Why do I need a real estate agent? Answer, there will be dozens of important questions a buyer will have that only a well qualified agent can answer. This has been a growing topic for awhile not, but what buyers really need to know is, a real estate agent; answers your questions, doesn’t charge you for their time and expertise and is paid by the seller – not by you. You can wait till you find a home on Zillow you want to see – but often, the property they are displaying, is already under contract or sold awhile ago. They keep it up on their site, for the fee they charge realtors, who pay them for leads. This is why, when searching for homes, it is better to use local real estate websites when searching for homes. It also allows you to check out a particular agent to see if you might like to work with them.
Having your own buyer’s agent, who represents you in invaluable. If you go through the listing agent, they represent the seller – by contract and that is their ‘fiduciary responsibility’. Here are the top 10 reasons buyer’s need their own representation.
Here are a few examples why you need a real estate agent’s counsel – unless you’d prefer to have an attorney charge you by the hour. You may have your ‘contracts’ reviewed after you purchase a home, and it is always good to do so, but why not save the money till then.
1. Get the history on the home
One of the most important factors you really want to ask your agent is about a home’s history. Unless it is brand new to the market, this can give you a great advantage if you are considering making an offer. For example, if a home has been on the market without a price reduction, this usually means the home is overpriced or something is wrong with it.
Your agent can find out;
Have there been any offers on the home?
Was it accepted?
If so, why didn’t it sell?
Was it inspected?
Were there any defects or problems the seller needed to address do to the inspection?
More then often, an agent is willing to give another agent as much information as possible, in hopes that the home will be shown by that agent, to their clients. These are questions a listing agent will be unable to give an ‘unrepresented buyer’, due to their fiduciary responsibility to their seller.
2. What are the cost of utilities, HOA’s, property assessments…
This can be a big question, depending on where the home is located. Getting all the utility costs to run the home is smart. However, many people are unaware that Homeowners Associations (HOA’s) are part of most new construction. Therefore, they are subject to HOA’s fees which can range greatly depending on the location of the community.
Then there is the question of special assessments. I cannot tell you how many times I have heard that a listing agent didn’t know or check to see if there were and special assessments on the property they had listed. A special assessment is a tax put on homeowners for public improvements that benefit your property. These can be for ; new roads, sidewalks, new utilities, landscaping, cleaning … So it is important to ask your agent, to check if there are presently or ‘expected’ assessments, that you need to be aware of. Often the seller has paid them, but many times they are just added to their tax bill.
3. Seller Disclosure Statement
Before making an offer on a home, make sure you and your agent review the seller’s disclosure statement closely. The areas to be most concerned with are the; foundation, roof, plumbing, heating, A/C, pests, mold, or other issues you may want to address when having things; repaired, replaced or structured as a ‘credit’ on your loan. Many times a home will go back on the market due to something the buyer didn’t like about the inspection. This can give you valuable insight on the seller and their situation as well. Maybe they don’t have the money to remove mold and the previous client didn’t want to either.
Your agent can help you avoid situations where a seller is not able, or unwilling to negotiate repair work by asking them a few questions, again, questions a listing agent cannot tell you directly. But you can save yourself a lot of time, money and disappointment if you discover and potential ‘red flags’ before you make an offer on a property and tie up your earnest deposit money. There could be multiple things seller’s try to hide.
4. What updates were made to the property
Finding out about the updates to a home is also a critical issue. Most of the time, the listing agent will have a list of all the updates. There are occasions however, where a seller has made updates and may have tried to cut costs and didn’t get a permit for the work. If there have been any electrical, plumbing, heating, structural or other improvements, have your agent get a copy of the receipts. Often, if a lot of work has been done to a home, there will be ‘stickers’ from the furnace, electrical or mechanical ‘city inspectors’. These were ‘required’ when the permit was pulled – to come check the job when it is completed. Many times you can see them for yourself, (on the electrical panel, furnace…). What you don’t want to find out at the inspection, is that the the seller, had a ‘friend’ who is a handyman, do extensive plumbing work, right? So ask your agent which of the home improvements made to the property required a permit.
5. What are contingencies?
Contingencies are the requests you make in a purchase agreement. They are for your mortgage, home inspection, attorney review… Most agents purchase agreements include all of these. The contingencies are for your protection and are used to make sure you can get the mortgage, or possibly when a buyer no longer wishes to purchase a home and wants out of their contract. Whichever way you look at it, real estate contingency clauses are just another reason you want to have an experienced agent.
6. Don’t make new credit charges
Do not – under any circumstances, make any purchases that will show up on your Credit Report. A good agent will warn you about all the things not to do. Shortly before closing your lender will most likely pull your credit reports again, a process known as a “soft pull,” because it doesn’t affect your credit score. This is the lender’s final assurance that you truly can afford the monthly payment and that you will actually make that payment. Most lenders will warn you about this, but not all will. You may want to get new appliances, furniture… but wait till you close. It’s as simple as that.
Applying for credit for those new appliances or furniture will show up on the soft pull and will catch the underwriter’s attention. The new credit ‘charges’ made on your card, are a risk to your credit profile. Additionally, the new monthly payment for the items you purchase with that credit may change your debt ratios so much, that you will no longer qualify for the loan. Even if you pay cash, your lender will see that, unless you keep some hidden in your mattress!
It does happen and it’s heartbreaking. Until you close on the house, don’t apply for new credit, don’t switch jobs or move money around to different accounts. Keep your financial situation exactly as it was when you applied for the mortgage.
7. New construction.
- Many people feel they will get a better deal if they go directly to the builder, or the agent representing the builder to buy a new house. This is not true, the agent represents the builder. Their job is to get the best price for the builder, not you.
As a buyer, you pay nothing for the services of a buyers agent. Be selfish – get your own. That way you’ll know for sure that there is someone in your corner at all points during the process.
In summary, your safest course when looking for a home to purchase is to make sure you have a really good buyers agent, who knows all the right questions to ask so you can avoid the costs, frustration and disappointment involved by not asking the right questions.
Wendy Weir Relocation – Real Estate Agent, Relocation Specialist, Birmingham, MI
What to know about the seller’s disclosure form. via Paul Sian
What are the benefits of owning a home. via Kyle Hiscock
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