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Buyer Resources
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Don't ever buy without agent representation!
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What's a Buyer's Agent & Why Do I Need One?
For a buyer - and especially a first-time buyer - a good real estate agent means the difference between a harrowing, stressful experience and a smooth entry into a new home. Here's a rundown on what a good agent will do for you.
What Can the Buyer Expect an Agent To Do?
>> Discuss your financial situation with you. It's wasted time and effort to look for a home without knowing what you can afford. Before embarking on your home search, agents get a general idea about your budget and can steer you to mortgage brokers who help you determine how much money you can spend. Note: Many buyer's agents will not work with you until you have been pre-approved for a loan. A discussion about your credit score and how to improve it might be in order. In the current lending environment, your credit score is more important than ever.
>>Familiarize you with your new location. If you are moving to a new locale, contact real estate firms in the area. Good agents call you promptly and help you make arrangements to visit and see properties. They recommend places to stay, meet you at the airport, show you the sights. Many good agents will have community information on their Web sites. They can tell you about schools, shopping, historical sites, restaurants, and religious institutions. An agent should not discuss ethnic or racial compositions of neighborhoods; they are prohibited from doing so by the Fair Housing Act.
>>Match your needs with the right home. A good agent listens carefully and tries to match your specific needs and desires with the right home. They should be patient and willing to show you a wide variety of homes without pressuring you to make an offer. You can assist, of course, by perusing the Internet yourself and zeroing in on homes you would like to see.
>>Suggest alternative options. Agents know the market better than you do and may come up with possibilities you haven't thought about.
>>Show you homes. Much of the agent's work is behind the scenes making appointments and gathering information. Good agents know their inventory and do the legwork for you to find homes that fit your needs. They can often tell you about deals when they come up or even before.
>>Help you price. Before making an offer, good agents compare similar homes in the area and estimate how much you should offer for the home you want. The agent can also help you determine how much the home will cost you each month.
>>Negotiate contracts. Until you and the seller agree to the price and the terms there is no deal. An experienced agent knows how to navigate these treacherous waters. For example, coming in too low at the beginning may turn off the seller so much they may refuse to deal with you altogether.
>>Work with your attorney/inspector. During the attorney/inspection period, there are a myriad of details that can arise that an agent should deal with promptly. The agent will keep in close contact with your attorney or inspector to make sure the deal is moving expeditiously.
>>Assist with mortgage applications. The agent can help with finding the right mortgage broker or lending institution and keep in touch with them during the application process.
>>Attend the closing. This varies from state to state, but agents often come to closings with you.
Considering an exclusive buyer agent will eliminate conflicts of interest, and always remember that the agent at an open house is loyal to the seller.
How much does a Buyer's Agent Cost?
The advantage to being on the buying side of the transaction is that the seller typically pays the commission for the buyer's agent. This practice became popular after sellers began offering to pay the buyer's agent commission as an incentive for the buyers to purchase their home. Over time, it has become common practice for the seller to pay the commissions for both agents involved in the transaction. The common fee received is 3% of the sale price.
What if I Want to Buy a FSBO?
For Sale By Owner properties are sold by individuals without agent representation.
Say you've been looking for homes for the past two months with your agent. Driving home from work one day, you drive past a FSBO sign in front of your dream home. You call, then go see it and sure enough, it's the house you want.
What do you do?
Call your agent and ask about comparables in the neighborhood to determine a fair price, and when you make an offer ask the seller to pay your agent's commission. Often, the seller will agree to pay the traditional 3 percent. If not, and you want the house, you'll have to pay it yourself.
What if I'm an investor?
If you are an experienced or novice real estate investor, a good agent is worth its weight in gold! You want to find a faithful and knowledgeable agent to guide you in the right direction. An agent can find you great deals, advise you about future home prices, assist you with landlord issues, recommend contractors, recommend the best types of home improvements, and will help you avoid making uninformed purchase decisions.
Will I save money without an agent?
If you do choose to purchase a home on your own, you're exposing yourself to increased risk for very little monetary gain. An agent will take on the liability that comes with transferring real estate and carries Errors and Omissions insurance for additional protection.
Sellers may also not see an unrepresented buyer as any type of benefit. The below situation is very common...
Who: An ambitious young couple who wants to trade up from their loft condo into a more expensive new unit across the street.
The tactic: They decide to low-ball on the asking price. They tell the listing agent they are representing themselves and will not pay a commission on the buy side, even though they did attend her open house. On top of that, they want the listing agent to receive a reduced commission so the seller will accept a lower price.
How it played out: The agent, of course, was obligated to present the offer to the developer, but it wasn't taken seriously. Neither the agent nor the developer wanted to deal with the couple. By coming in too low on the price and cutting down the commissions they insulted the agent and antagonized the developer. Without someone to negotiate for them, the sharp duo lost out on a great deal.
The result: A month later when the market picked up, the unit was priced $50,000 higher and sold to someone else. A little more experience and flexibility might have snagged the couple a great condo at a great price.
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Links
» Buyer's Guide Provided by the State of Ohio
Informative guide for Buyers explaining nearly every aspect of the purchase process. I highly recommend this for first time home buyers!
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