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Real Estate
Working with a Real Estate Agent
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Advice on Buying a Home
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What they do for you
Buying a home is a very complex and difficult proposition without the help of a professional. Because buying a home is probably the largest financial transaction people usually make in a lifetime, it isn’t surprising that most hire a real estate agent or broker to assist and guide them through the process. If you were to attempt to do this on your own you would have to learn and put into practice a special set of skills real estate professionals spend years honing. From finding a home and matching you with adequate financing, to negotiating the contract and closing the deal, the real estate agent's numerous duties and responsibilities reflect the often-esoteric nature of home buying. Ultimately, you can expect your agent to help and counsel you through this home-buying adventure. He or she will help you avoid potential pitfalls, and in the end, hand you the keys to your new home.
A Good Agents’ skills and responsibilities
  • Skilled agents have a great deal of “street smarts” and can educate you with the psychology of home buying and the stresses that can accompany. A good agent will have a vast knowledge of your “area of buying interest” including market value, price trends, surrounding schools and shopping areas, zoning issues, taxes, and insurance. Additionally they will be well versed in real estate law, financing and negotiating.
  • A good agent will help shape your expectations on the type, size and location of homes based on your financial situation and current market conditions. Your agent will also devise a strategy or shopping plan based on these needs and preferences.
  • As the home buying search begins, your agent will likely tour the different homes giving you the pertinent details of both the home and the neighborhood, including floor plans, expansion ideas, the neighborhood's crime rate and community proximity to schools, shopping centers, cultural activities and work centers.
  • Part of your real estate agent’s duties are to obtain disclosures regarding the property, verifying that the home inspection and necessary repairs are completed, coordinating the activities of your lender, attorney, roof inspector and other professionals engaged in your purchase. If bargaining over the price is necessary, your agent will be your negotiator, and when it's time to sign the final closing documents, they will accompany you to make sure all the necessary documentation is correct.
  • A good agent has many important contacts who can answer almost any question that arises that the agent is unable to answer.
Who and how your agent will be paid
In most instances your agent is working on a commission basis; meaning they don’t make any money until you buy (or sell) a home. The person selling the home will usually pay the commission for both the buyer’s agent and the selling agent. Commission rates can vary and typically the seller can negotiate the commission rates ahead of time. Because most real estate transactions involve two brokers - the broker who finds the buyer and the broker who finds the seller -- the commission is usually split 50-50, between the two brokerage offices. Then, within each office, the agent who handled the transaction gets a share, usually half of the 50 percent or about 1.5 percent. Some buyer’s agents will ask you sign a contract that may or may not require a fee for service in addition to their commission. In most cases, the buyer and sellers agents will simply split the commission. In any event, the buyer's agent contract stipulates that the agent works exclusively for you and is more likely to work with your best interests at heart.
Can an agent represent both the buyer and the seller?
There is no legal reason prohibiting an agent to represent both the buyer and the seller on the same transaction; but there are inherent risks involved. Part of an agent’s duty is to advise and guide you through the process. If they represent both sides there is added incentive to make sure the transaction goes through without problems. Some question whether an agent can be unbiased to both parties in this situation. When an agent, brokerage or company represents both the buyer and the seller it is referred to as “Dual Agency”. Some buyer's agents, however, split their time acting as a listing agent. To completely remove the potential of any conflict of interest, exclusive buyer's agents work with buyers and do not list homes for sale.
How do discount brokers differ?
Some individuals who have previously gone through the home buying experience choose to go with a discount broker to assist in their real estate transaction. A discount broker usually charges a lower commission rate (sometimes it can be as low as 1%) or can offer a list of other services that you would pay for as you used them; some will charge by the hour. If a discount broker represents both the buyer and seller it does not remove the potential for conflict of interest. While some franchise operations offer discounts and agents are often free to charge less as they see fit, most discount brokers are independents or discount chain operations.
One of the major disadvantages to using a discount broker is that you will have to pay for all of the services used even if you do not buy a house. Also, traditional agents/brokers usually offer a sort of “one-stop” shop for ancillary services that help speed up the process that discount brokers don’t offer. A service that doesn't satisfy customers isn't one a broker is likely to retain in his or her business circle.
With the advent of the internet a new "virtual" broker has developed offering reduced commissions and rates for services. They can offer a slew of ancillary services through affiliation partnerships that typically only a traditional broker could provide. Virtual brokers may or may not have brick and mortar facilities from which to hold your hand, should the need arise, but they are able to cut costs because of the automation and smaller overhead. The so-called "click and mortar" brokers typically offer their own listings and come with a dual agency potential, but they typically also align themselves with a larger online MLS or listing site.
In conclusion
There are many different options when it comes to hiring an agent/broker. Needs, services and how much you are willing to pay will determine the type of agent you want to hire. Talk with family and friends who have recently gone through the experience to give you their recommendations on the type of agent to hire.
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