Choosing a Real Estate Agent: Guide for First-time Homebuyers
Congratulations! You have made your first grown-up decision, you are going to be a homeowner! This is not an easy journey you are embarking on, mind you. It will take a lot of your effort, time and more than considerable money. As a first-time buyer of a house, you wouldn't know anything, naturally. So you'll need help. Who, where and how, so many questions on home buying, from your personal finance to maybe needing to make a home loan, etc. - you'll learn as you read on.
Where Can I find a Real Estate Agent?
With internet technology, that is not going to be hard nowadays, even for first-time homebuyers. Real estate agents have an online presence. It's not difficult to find them on the internet. Plus, there are associations they belong to and they would be in the roster of members and a government agency listing the licensed professionals.
That's the easy way. Search them on the internet and find one with the most listings. In real estate jargon, a listing is an agreement that gives the real estate agent the exclusive right to represent the seller to find a buyer for his property. Getting to the point of many listings would have given the agent a lot of experience with many, various clients and properties. There's a caveat here, though. Acquiring those many new listings means the agent is a go-getter and ambitious. That will not assure you of his priority, time and effort.
A common strategy, not just for first-timers, is getting personal referrals from family and friends. Word-of-mouth promotion from or opinions expressed by people close to you can be reassuring because those would be from their own experiences with the said agent. Especially when you ask, "Would you get that person again to be your real estate agent?" and they'd say yes. Another possibility for the right real estate agent for you would be getting an agent from your family or friends circle if you feel that they take care of your interests.
What is the Job of a Real Estate Agent?
A real estate agent is a licensed real estate professional supervised by a real estate broker. They have the training to guide you, whether you are a buyer or seller of a property, in every phase of the sale or buying process - scouting properties up until closing the deal. There will be some differences in the responsibilities of the real estate agents in dealing with a buyer or seller. But there are general duties on administrative work, marketing and research.
Buyers agents versus Listing agents
When selling real estate or any residential property, the real estate agent is known as a seller's agent or listing agent. Thus he will have responsibilities that include market research and analysis (of the housing market), etc. As first-time homebuyers, it would help you a lot to understand their responsibilities and the benefits to you from hiring one for your property goal.
As home sellers agents or Listing agents, real estate agents have several responsibilities that include:
Conducting a comparative hot housing market research analysis (not a regular or "ordinary" estimation) to be able to set a realistic purchase price, not just simply the lowest price
Pinpointing the top-selling points of the property in its neighborhood and, at the same time, where to invest money in major repairs and/or improvements to the house.
Preparing the house, interior and exterior, to make it attractive to buyers, in photos and actual viewing
Having the property listed on listing services as well as advertising it to gain buyers' (and prospective buyers') attention
Scheduling property viewings/showings and open house events and supervising these
Establishing communication with appraisers, mortgage lenders, escrow companies, and home inspectors
Preparing the necessary paperwork - offers, contracts, closing statements, etc. for the real estate transaction
Real estate agents who help their clients in purchasing a property are the accredited buyer's representatives and are called Buyer's agents or Selling agents. With their knowledge of and expertise in the real estate market, they are the best people to consult and seek help from, to get the property that suits the clients' needs and wants and guide the first time homebuyer in the whole home buying process.
When working with prospective buyers, the real estate agent's responsibilities in the homebuying process, to secure the best interest of the first time buyers in the home purchase include:
Coordinating open houses and viewing, and supervising these processes
Arranging meetings with the prospective buyers and interviewing them regarding what they want/need/look for in a home.
Scheduling property showings
Coordinating the appraisals and inspections of properties the clients are interested in
Negotiating any requests or offers for repairs on the structure on behalf of the buyers
Preparing necessary documents like contracts, etc.
Guiding the buyer through the home buying process closing (from asking price to other closing costs to moving, etc.)
Real Estate Agent vs Realtor
A Realtor is an active member of the National Association of Realtors (NAR), the largest trade association in the US. Real estate counselors, real estate brokers, property managers, home appraisers can also be NAR members, as well as some Real estate agents. But not many real estate agents are realtors.
Most states require from 30-to-90 hours of classroom instruction in real estate fundamentals in an accredited college or university or technical school, after which an exam covering real estate standards, practices, national real estate laws that affect their particular state, must be taken and passed. There is an annual fee for the license and it must be renewed yearly or every two years. There are even states that require additional education for license renewal. Only around half of the licensed real estate agents in the US are realtors, i.e., members of the NAR. You can also learn more about the difference between a broker and an agent.
Questions to Ask a Real Estate Agent
To be among the first time buyers, you would want to get the best deal for your dream home. Here are some questions you need to ask when you decide to go through the process of getting homeownership through a real estate agent. Answering these questions should be part of your agent's services that you pay for and would guide you as you search for the agent with the right fit for you.
Before hiring:
How long have you been working as a real estate agent? Time would have provided the agent with expertise in the home buying process, from negotiations to connections with other professionals in the real estate industry.
How many homes do you help buyers purchase successfully, each year? The NAR average for an agent to close is 10 homes/year
Are you a full-time or part-time agent? This is often a recommended first question to ask. Full-time agents, in all probability, commit more time to you than someone who's doing the job on the side.
How long do you work with buyers, from house-hunting to deal closing? It is considered almost a red flag if an agent's timetable with clients is six months or longer.
Can I see your professional license? This should be an SOP to be sure you get the service you want and to avoid being scammed.
Other questions you might want to ask would be answered on the agent's website. Online reviews would be his/her references. Working with buyers and sellers and the ratio, the current number of clients (too many clients would not give him/her sufficient time to take care of you), finding homes for buyers in particular areas or price ranges, if he works by himself or with a team, his connections/collaborations with other professionals in the industry like an appraiser, mortgage broker, inspector, real estate lawyer, realtors, other professionals in the market or members of the National Association of Realtors.
The following questions are recommended to be asked after hiring the agent, but as a first-time homebuyer, it would give you more "peace of mind" to ask these also Before hiring. Can you explain the whole home buying process from beginning to completion? As a first-time homeowner, the process could be quite a complicated maze for you. Mr. Jenkins (barry@yourfriendlyagent.net) could explain the whole process to you, in basic terms that a newbie in the property market could easily understand.
What is the best way to contact you and your typical best available time any day of the week? Even after a comprehensive but simple explanation, you could not possibly be expected to absorb the whole process immediately. Along the way, you'd be having some by-the-way questions too.
When you've found the neighborhood and the house you decide to buy
Finally, your search is over. Can I see the CMA, the comparative market analysis for this house? The average number for a realistic analysis is 10 in one neighborhood, to help you decide if you are paying a reasonable price for that house.
What amount should I offer, or what would be a good start-off offer? Then, what compromises can I make or ask along with the offer? Should I offer earnest money and if so, how much should I offer? Here again, the agent's experience comes into the picture, significantly.
What if the inspections will uncover issues? Or, if the appraisal comes out lower than you first thought. Ask your agent how unforeseen problems will be handled.
Now, to payment. Ask how much the closing costs you will have to pay. These costs are on top of the property's price, included are attorney's fees, lender costs, payment for the title and other documents. This is an important question, which your agent should be able to answer to avoid any shocks for you.
The First-time Homebuyer Advantage
As daunting as the prospect may have seemed and a bit eased by all the information and tips above, you are not at a disadvantage as a first-timer in the home buying process. It may be unfamiliar territory to you but so far, you've been reading tips and a lot of FYI. Here's more to reassure you that you aren't wrong in taking this step to fulfilling one of your long term goals.
Financial benefits.
Newbies to homebuying are, expectedly, wary of having to take out a mortgage plus the responsibility of owning a home. There are more than a few first-time homebuyer programs that you can avail of, to relieve you of the financial burden (or even the mere thought of it) and even walk you through the process. There are perks in these programs too, like electronic mortgages, lower down payments or even no limitations on income. These can also help you calculate how much the mortgage could affect your monthly budget.
Tax benefits: The government provides tax breaks that motivate homeownership and ease their financial burden, like deductions on the interest and property tax payments, neutralizing or even nullifying the taxes on the assigned rental value of the property. These give you healthy tax returns that can only lead to savings!
More retirement security.
First, your property becomes an asset, especially when your mortgage has been fully paid off. And, that asset could increase in value over the years, that is, the payments you've made on it become an investment instead of a monthly bill, and you could sell it later, at a higher price than you paid for, including repairs and improvements. You could rent it and downsize and receive a supplemental income!