by Michael Ertem
It is in our nature to cut costs in most cases. Buyers somehow think that if they do not use a real estate agent, they will be in a better negotiating position and capitalize on buyers agents' commission. The truth is far from it.
If the house is listed, then the listing agents job is to get the highest price for his homeowner. If there are no agents on the buying side, listing agent simply keeps the commission buyers' agent supposed to receive. So in most cases, 99 percent of the time, there are no savings for the buyers at all. You do not get the representation, and you do not get the savings. This approach is like traveling 100 miles to save $25 on an item but spending time, gas and energy that exceeds the savings where you could have bought it a block away. You end up navigating in an area that you have no expertise and possibly make a lot mistakes along the way.
You can however, realize savings by using a realtor. You can get advice on the price, repairs, general costs, negotiable costs, receive incentives, finding the facts about the house that may cost an arm and a leg later, avoid other costly mistakes and the list goes on. Each one of those pointers above, one can write a whole book.
Do you build your own home? No, you get help from a builder?
If you are hospitalized, Do you operate on yourself? I do not think so; you go to the doctor?
Do you grow your rice? No, you go to Safeway for that.
Every day you use goods and services that are provided by others, and you offer the same in return in the form of goods, services or labor that you are the expert. So why is it any different for Realtors? Think about it, there is absolutely no reasonable justification or benefit of not using someone who is an expert in his or her field especially when you are not forking the cost of those services.
Besides this most important point, read on for other reasons why you should use a real estate broker, agent or consultant.
Ethics is the first and continually the most important repeated theme from licensing to the affiliation of local and national associations during the agents' career. California Bureau of Real Estate (BRE), National Association of Realtors (NAR), California Association of Realtors (CAR) and local associations and MLS are all keen on ethics. The code of ethics demands us to make full material disclosures about the problems with a property and be truthful in advertising. Unethical agents usually are weeded out sooner or later by losing their licenses. I believe most agents are ethical and some, even extra noble than what it is required by law.
Repairs; Should I Ask Sellers or Live With It?
Even, newly constructed homes need repairs sometimes. Not every builder is the same, nor every homeowner. You can break the deal by requesting repairs, or you can realize savings by it. A home inspection is imperative for not only as a negotiation tool but knowing what might be the potential problems in a short term and long term. Can you afford to fix those issues? Is it going to be a burden on your budget? Can you fix some of them yourself to save labor costs?
As you see, there is no right answer for anything, it is always specific to the buyers finances and motives. Again, if you have an experienced agent representing you, you can, at least, brainstorm and plan your strategy and navigate through the process.
Maze of Paperwork
Are you familiar with the amount of paperwork involved in a home sale? Do you understand industry specific language? Do you read hundreds of pages you are signing? How about timelines, contingencies, offers, counter offers, extensions, coordinating everyone involved in the transaction from loan officer to escrow officer to termite inspector to the appraiser to the notary.
So many people are involved in a single transaction. Realtor is like an orchestra conductor that makes sure everyone work in harmony and on a timely manner. You would be emotionally drained just to tackle the paperwork. It is supposed to be the happiest time in your life with the expectations of being a homeowner and raise a family, or live peacefully and creatively in your retirement years. Why would you want to handle this? Let the experts handle. Again, at no cost to you.
Expertise in Pricing
Most successful agents know prices of the homes in their market. Pricing is relative to the market conditions. What is a good price? I believe, a good price is what the buyer is willing to pay, and the seller is prepared to accept. If it is sellers' market where more buyers are competing, then the price is favorable to the seller. In a market when roles change, then the price is more favorable to the buyer. I have had many buyers and sellers in different markets conditions regret that they penny pinched and, as a result, they did not sell their home or buy a particular property. An experienced agent will help you and most of the time eliminate such bitterness.
Not All Homes Are on MLS
Most homes for sale are on the MLS, but there are even though it is rare there are instances that homeowner for one reason to another, they do not like to publicize the sale of their home. Reasons might be; financial problems, privacy due to divorce, health issues and many other personal reasons as we are all unique. Realtors, since they are always talking to potential sellers, they may have knowledge of a property that is just for you but not available in the market.
Leaving The Emotions Behind When Negotiating.
There is an art of negotiation, and emotions have no place in it, especially in real estate transactions. Sellers and Buyers sometimes lose the sale for silly little things. When you have the agents in between, negotiations happen between them and then they relay their clients' wants and wishes to the other side. Although I have dealt with very immature agents in my life, most are professionals. Realtors can take the heat without involving our emotions.
City, county and state specific disclosures and codes.
Sellers usually take enormous risks when they are trying to sell their own home. They do not know about specific disclosures, local zoning rules and city codes. This alone exposes them to litigation that could turn financially ugly later. Unless both parties are relatives or very close friends, buying a home from a seller without an agent may cost you more than you can save. Let's say you loved this little charming house with huge lot, it does not have a garage, and you thought you could build one since the lot is big enough to accommodate that. You finalized the sale and applied to the city for permits. They declined you request citing the easements for gas, water, and electrical lines on the property. Now you have to redirect them which would be costly and not worthed due to the value of your home. By using a professional Realtor, you will not assume things, you will know before hand if you communicated your plans to him. Information is in the preliminary title report usually, but how do you know where to look? Also, a short visit to the building and permit department of your city would have eliminated this all together. That is why you need to use an agent, and it is free service since the seller is compensating him.
I cannot tell you enough how many problems arise especially at the time of closing.
Here are some samples:
*Escrow has wrong documents.
*Promised repairs not completed.
*Termite clearance required by the lender but not even addressed.
*Loan terms are changed, so disclosures need to be re-sent with at least three days rescission.
*Sellers cannot move out Tenants, did not vacate the property Last minute material facts are uncovered that are not acceptable to you.
*Appraisal value came in lower than sales price.
*Unforeseen damages happened during the process.
*The source of funds are not sufficient and not handled timely.
*You went ahead and bought a brand new car that changed your debt ratio and no longer eligible for a loan.
I can tell you hundreds of those problems because I have experienced hundreds of them. They are challenges not problems for us. By anticipating the possible problems earlier which are unique to each buyer, we can help you save your hard-earned money. By the time you arrived at the end, you have already spent money on inspections, credit report, and appraisal and possibly facing to lose your deposit on top of it.
Seriously, why would you take a chance and do all these and more yourself when you can hire an agent and use his skills and expertise at no cost you? There is no valid rationale for not hiring a buyers agent when you are involved in the biggest purchase in your life. Benefits are not limited to the pointers above. Your time best spent on planning the move, choosing the paint and possibly improvements you can make to the property. Let us handle all of it, life is too short to be aggravated at a time you are supposed to be happy. So pick up that phone and call me or your favorite realtor nearby. Realtors will not bite you. They are professionals with years and years experience to help you. Take advantage of it.
© Michael Ertem