Tuesday, April 28, 2009

Buying an Existing Home with a Buyer's Agent

Going along with my last post, I've heard of some buyers who don't understand the value of using a buyer's agent. In this case, as opposed to new builds, there are much fewer buyers who try to buy without an agent because it's a lot more work for the buyer. These days all of the homes for sale are online, so buyers have access to information and pictures. The biggest drawback there is that there aren't any websites that allow you to narrow your search as specifically as a Realtor can using the MLS. Having an agent send you all (and only) the houses that meet what you are looking for saves you a lot of time. Second, when you work with one agent the agent gets to know you and your likes and dislikes as you go through several homes. They may be able to recommend a home style or location that you hadn't thought of, but is a great fit.

The biggest savings a Realtor can offer is in the amount of time you will need to research. You need a purchase contract plus all of the other legal documents required to purchase the home. If you don't have a Realtor you'll need a lawyer to make sure you have all of the documents and have them filled out correctly. Then, you'll have to research and select lenders, home warranty service providers, inspectors, contractors and maybe others. All Realtors have people in all of these categories that they recommend to make sure you get the best deal and the best service.

Just like with the new builds, the number one reason that some buyers don't use Realtors is because they think they can keep the 3% that the buyer's agent would receive. Again, this isn't the case. For example, the seller signs a contract with their listing agent saying that upon closing the listing agent will receive a 7% commission. When there is a buyer's agent that agent will receive 3% of the 7%. When there isn't a buyer's agent the contract still states that the seller's agent will receive a 7% commission. So, the seller doesn't keep it and the buyer doesn't get it in the form of a lower price.

Therefore, why would you create so much more work for yourself when you're not saving any money?

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