What Your Real Estate Agent Won’t Tell You
By: Jeff Tompkins
Last summer, I said those words to my wife that both excited her and made her cringe all in one strange facial expression, "maybe we should start looking for a new home." Many of you may be in the same boat this summer, whether it is moving into a new home or buying your first home. And most likely, you will be one of the 80% of people who use a real estate agent to either find or sell your home. Finding a real estate agent is not difficult, the yellow pages, Internet and even bus stop benches are crawling with them (I don't mean to pick on real estate agents, the same can be said of mortgage brokers). But finding a good real estate agent, and knowing what to ask and what to watch, will make all the difference in having a transaction that fits your needs and your wallet. So here are some things your real estate agent won't tell you:
1. "It's a buyers market right now."
Though this varies depending on your particular region and state, in general there are a lot more homes for sale than there are buyers right now. What does this mean? This means that real estate agents are clamoring for your business, and you are in the position to pick and choose. Does the real estate agent you are using charge too high of a percentage? There are 10 others waiting to take his place at a lower fee.
2. "My fees are negotiable."
Real estate agents like to make it sound as if their fees are set in stone, but in a competitive market, they should be willing to negotiate their fees or you should take your deal elsewhere. All you have to do is ask. Keep in mind that real estate agents put a lot of time and money into selling your home, or helping you buy another home, and are entitled to make some income from the deal. Just make sure what they are making isn't exorbitant...personally I would never pay over 4%. (To get what the broker makes, multiply their percentage times the purchase price — so on a $200,000 purchase, 4% is $8000 commission. That's plenty!)
3. "Your open house is a marketing party for me."
While I am not totally against open houses, according to the National Association of real estate agents, their success rate is only 2%. The open house though, serves the purpose of giving your real estate agent more potential clients. Think about it. The only one in your house during an open house is your real estate agent — most people coming to see open houses do it on weekends and they come without real estate agents — you see where I am going with us. Open house shoppers are perfect potential new clients for your real estate agent, and in some ways is his just reward for working over the weekend. Having one open house is not a bad idea, but having them continually is probably not helping you at all, it's only helping the real estate agent to more clients.
4. "Think you've had no offers? Actually"
Legally, your real estate agent has to inform you of any and every offer he receives on your home, but some don't. For a number of reasons though (the offer may be too low, it may cut into his commission, etc.) you may be unaware of offers on your home. When you first sign-on with your real estate agent, make sure to stipulate that you are to be informed of all offers, no matter how ridiculous they may be.
5. "I won't let a picky inspector kill a deal."
Always, always, always get an in-depth inspection of a house. For the most part, they cost about $100-200, and are worth every penny. It's also a good idea to get an independent inspector, rather than one suggested by your real estate agent. real estate agents have home inspectors that they are essentially in cahoots with, because they refer business to one another. And the real estate agent is not going to let some little thing found by the inspector kill a deal, so you want someone who isn't going to bow to the real estate agents pressure. After all, if you buy the home, they are your problems to fix then, and it's too late to get the seller to ante up for any damage.
6. "You probably don't even need me."
20 to 30% of people sell their homes themselves, and you can too. If your home is properly priced and advertised, it will sell itself without the help of a real estate agent. You can place online ads (many states have For Sale By Owner websites), hold your own open house, print your own flyers, put an ad in the paper, etc. When it comes to actually negotiating with the seller, most of the haggling is done over real estate agent's fees anyways, so without a real estate agent you will have less of a headache. As my wife and I found out, after contracting with a real estate agent, sometimes you just need to get the word out and things happen. Our next-door neighbor ended up buying ours as an investment, though we had to pay the real estate agent all the same.
All that to say, don't let this make you suspicious or distrusting of your real estate agent (like I said I don't want to pick on them), but come into the transaction with your questions and get them answered; come in with your needs and get them met. After all, a home is the most expensive thing most of us will ever acquire, so we should purchase and sell it on OUR terms, not someone else's.
Jeff Tompkins is owner and president of Teacher's Funding Group, LLC, a Colorado mortgage broker that specializes in providing home financing to those in the education industry and all those who need it. Visit http://www.teachersfunding.com/ for more information.