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 In the first two additions of this First Time Home Buyer series, we explained how you can go about calculating the monthly payment you can afford and how to narrow down the townships that you would like to live in. In this part of the first time home buying series, we are going to discuss how to work with real estate agents and house hunting.
Throughout this series, we have spoken in general terms. Each part of the country is different, but this advice applies to sections of the country where the competition for real estate is pretty aggressive - those where the housing market might be considered "hot." In other portions of the United States, it might not be necessary to take all of these steps, but certainly they are food for thought even in areas where the real estate market has temporarily cooled off.
Working with a Real Estate Agent
One mistake many first time home buyers make is working with just one real estate agent and expecting that person to be able to cover all of the townships you're targeting. There is no way that one agent can stay on top of the all homes moving in each township - especially what might be considered "good deals."
There is no doubt that in today's electronic age all real estate agents have fingertip access to online listings, but in a hot real estate market many times homes will sell so quickly that they are sold before an agent even realizes that the home was for sale.
This means you need to work with multiple agents, one that specializes in each of the township you are targeting. Don't be afraid of interviewing the agent to see if they understand the local market. If they make statements like: "Here are our current listings, but I know this person that is thinking about selling her home..." that is an agent that is very likely tapped into the local market.
Responsibilities of Real Estate Agents
When you are working with an agent, remember that they are being paid by the person selling the home. That's right, even though they are driving you all over town and calling you on the phone; they are paid a sales commission by the person selling the home - not you.
Buyers versus Sellers Agents
Unless you have decided to hire an agent yourself, which is possible and they are called a buyer's agent - then the agent is a seller's agent. That means they have a fiduciary responsibility to the seller of the home.
This fiduciary responsibility is one that agents must respect and be careful to fulfill. For example, they must do everything possible to gain an advantage for the seller. A seller agent must also tell the seller everything they can find out about the potential home buyer.
A seller's agent is obligated to reveal known material defects concerning the property; however, they are not obligated to tell the buyer about things such as local traffic problems, declining home values or neighborhood crime rates. This means that seemingly harmless conversation you are having with a seller's agent as she drives you around or walks you through the home is very likely to be told to the seller of the home.
Effectively Working with Agents
This is a very important point, money talks and the agent is paid a sales commission by the home's seller. She or he has a legal responsibility to act as an agent for the seller. Even if the real estate agent seems like a new found friend, be cautious. If you tell the agent your bidding or negotiating strategy on a home, the agent must tell the seller what they are hearing.
For example, if you tell the agent you are bidding low, but willing to match the asking price, guess what will happen? If you tell the agent that you are in a hurry to buy a home, then they are obligated to tell the home's seller the story.
The most effective way to work with a real estate agent is by understanding this relationship and respecting it. Don't tell the agent anything you wouldn't want them to repeat to the home's owner. And don't expect the agent to actively point out all a home's flaws - you need to look around and ask questions when they come to mind.
Sticking to Home Buying Facts
When working with a real estate agent, you do want to be honest about your home buying timeframe. If you are looking to close on a home in the summer, let the agent know. Sharing the facts on topics such as price range, types of homes, and desired location (busy street versus quiet neighborhood) will help the agent be more efficient in showing you homes.
You don't want to spend the afternoon looking at homes that you would never even consider buying. Again, most things in life are about balance. You need to tell the agent what you are expecting, but only tell the agent things you would want the home's seller to know.
By now you should have a pretty good idea of how to work with a real estate agent so that you both are in a win-win situation. In the next addition of this series on First Time Home Buyers, we will talk about steps you need to take when you're getting serious about buying a home, including pre-qualifying for a mortgage. We'll also discuss the things to look for when evaluating a new home's potential value.
About the Author - First Time Home Buyer Part III
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