Hiring A Real Estate Agent To Buy A House VERIFIED
House projects are expensive but generally not nearly as expensive as buying a house. For this reason, some buyers try to buy a house without a realtor. Listing agents and buyer's agents typically each get a 3 percent commission. Usually, it is paid by the seller but considered when setting the sale price on a $310,000 house (the median home sale price in the third quarter of 2019), $18,600. Provided the home buyer can get the price they want without the help of a real estate agent, there is a potential to save a lot of money.
hiring a real estate agent to buy a house
But not all home sales will have a 6 percent commission fee, even if real estate agents are involved. The commission structure is changing as agents do less work than in the pre-Internet age. Buyers search for homes online. Listing agents have lockboxes (so they don't need to open a house for buyers to view it). Automated systems allow buyers set up home showing appointments. For all these reasons, commissions are often negotiated below 6 percent.
Buying a house without an agent can be done, though it is not easy. Most likely, it will likely require the help of a real estate attorney. Buyers may later regret the decision if price negotiations quickly sour or the sale hits a legal snag they are challenged to solve. Savvy negotiators familiar with legal jargon may feel differently.
Buying a house is a complicated, expensive and timely process. Even with the help of a real estate agent, it usually takes at least three months or longer to move from house-hunting to closing and moving in. A buyer's agent will represent your interests and is familiar with the area you are focused on. Realtors are familiar with home prices and market conditions and can be much more helpful than going to open houses alone. A good agent will guide buyers through the entire process, from house-hunting and price negotiation to setting up inspections and appraisals. Realtors get all the paperwork ready for the closing.
One of the key things real estate agents do is help buyers identify potential homes. For out-of-state buyers, real estate agents fill a crucial gap. They attend open houses for buyers and lead a buyer on real-time virtual tours. Good real estate agents also manage the process of appraisals, inspections, and repairs. Surprisingly, this scenario is not as uncommon as it may seem: One in three people in 2017 reported buying a house without first seeing it in person.
Buyers and sellers may find that they can save the combined buyer's and seller's agent commission fees and hire a real estate attorney instead. In this case, buyers must manage the process themselves. It includes getting an appraisal, title search, and home inspection.
Most renters live in apartments that are not for sale. But there are cases where a renter decides to buy the house they are currently living in. Only about 5 percent of renters purchase their rental property each year. Landlords find this advantageous. They don't need a listing agent to list the property and help them find a buyer, saving them money and time. Landlords also know renters have good credit and can make mortgage payments. Just like they were making timely rent payments.
Some buyers agree on a purchase price and get an appraisal, title search, mortgage, and home inspection. A real estate attorney usually drafts the paperwork. Renter's familiarity with property should not preclude getting a home inspection. Remember that enting is very different than buying. Other buyers may be less comfortable negotiating the price and conditions and choose to hire a buyer's agent. Buyers would then need to agree with the landlord on how to pay the agent's commission or do it themselves.
Buyers who find an FSBO house may find that no real estate agent wants to work with them. Many buyer's agents worry they will also end up doing the job without being compensated. This is especially true since the seller typically pays the agent's commission through the home's sale. If your agent is ready to work with you on an FSBO sale, you need to pay the commission yourself. You can also choose to negotiate directly with the owner and hire a real estate attorney.
Some people buy properties and rent them out to make an income. These people usually focus on a specific geographic area and are very familiar with local real estate prices and options. Investors with good negotiation skills and resources for inspections, appraisals, and paperwork might forego a real estate agent. Investors who buy homes as a side income may decide that paying a real estate commission is worth the money. It helps save them time and hassle.
If you are buying a house in a competitive real estate market where most sellers have a listing agent, you will find that a real estate agent is necessary. Sellers want to make sure buyers are serious. Some might view buyers without any agent as less serious, even if they have a mortgage pre-approval letter. Hot markets often require an Earnest Money Deposit to show you are serious about purchasing a property. Negotiating the amount and securing it through a third party are both jobs managed by a buyer's agent.
Whether or not to hire a real estate agent is a decision that only a buyer can make. Most people, 86 percent to be exact, used a real estate agent to purchase their home. Why? There are many reasons. For starters, the commission paid to real estate agents is a part of the selling price, so buyers who choose not to use an agent must negotiate with the seller to reduce the purchase price and save money. Real estate agents are very familiar with local markets, have access to market data, and know when a house is priced low, high, or correctly. They also have access to listings for short sales, which can be excellent options for some buyers but are only shared in trusted circles of agents.
For all these reasons, many buyers decide to hire a real estate agent. Buyers should be sure to hire a buyer's agent and not an agent providing dual agency, meaning they serve both the seller and the buyer in a single transaction and are likely to have conflicts of interest arise.
When a buyer purchases a home and has representation, his real estate agent splits a commission with the seller's agent, which is paid from the seller's home sale proceeds. As a result, a buyer has no direct cost for using the services of a real estate agent. The benefits for doing so include access to the Multiple Listing Service (MLS) and help with negotiating. A buyer's agent has relevant legal knowledge and takes care of the sales offer paperwork.
Gather the names and contact information for prospective real estate agents. Sources for agents include recommendations from friends, family or neighbors, attending a homebuyer class offered by local real estate companies or mortgage lenders, and your local real estate classified advertisements. Look for agents who are familiar with homes for sale in your area of interest.
Interview prospective agents. The most effective buyer's agents are strong negotiators who possess a varied knowledge of the local real estate law, current real estate market, conditions and amenities in your neighborhoods of interest, zoning regulations and issues, mortgage financing, property taxes, and homeowner's insurance.
Sign the guide to agency relationships, provided by the real estate agent, which is a federally required disclosure form explaining buyer's and seller's agent relationships and the real estate agent's responsibilities. The agent will generally inquire about your time line for purchase to determine the length of your agency agreement and schedule for touring homes.
Tricia Chaves began her writing career after working in advertising and promotions for entertainment publisher "The New Times." In 2005, she earned her real-estate salesperson license from the state of Ohio and certification for leasing and property management from the Northeast Ohio Apartment Association. She was certified as a life and weight-loss coach and master practitioner of neuro-linguistic programming in 2011.
Recommendations: An experienced agent can recommend lenders, real estate attorneys, escrow officers and home inspectors they trust. If your agent and these professionals have a strong working relationship, they can often work together to streamline processes and keep the transaction moving forward.
Depending on how your home-buying process goes, you could be spending multiple months working with your agent, so be sure to partner with someone with a complementary communication style and work ethic. In addition to a good personality match, here are some key attributes you should look for in a real estate agent.
The content on this site is not intended to provide legal, financial or real estate advice. It is for information purposes only, and any links provided are for the user's convenience. Please seek the services of a legal, accounting or real estate professional prior to any real estate transaction. It is not Zillow's intention to solicit or interfere with any established agency relationship you may have with a real estate professional.
Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible.
Steph Mickelson is a freelance writer based in Northwest Wisconsin who specializes in real estate, building materials, and design. She has a Master's degree in Secondary Education and uses her teaching experience to educate and guide readers. When she's not writing, she can be found juggling kids and coffee.
Last year, 90% of home sellers worked with a real estate agent to list and sell their home. Now the time has come for you to hire a Realtor. But with more than 3 million licensed agents in the U.S., how do you know which one is right for you? 041b061a72