Home Buyers

Home Buyers

Gustan Cho Associates

With so much information on the internet and hundreds of real estate websites such as Realtor.com, Zillow.com, Redfin.com, and Trulia.com, many first time home buyers as well as veteran experienced home buyers often ask themselves why should they hire a real estate agent.  Any home buyer does not have to hire a real estate agent to purchase a home or have a home under contract as long as they have a solid pre-approval letter from a mortgage lender.  With a pre-approval letter, any listing real estate agent or home seller will be gladly show a home buyer a home and will accept their purchase offer.  However, if you are not represented by a home buyer’s real estate agent, you will not have a representative to act on your best interest.  Real estate agents are professionals and they need to disclose defects associated with the home and by no means will there be a probability that the seller’s real estate agent mislead you, however, you need to remember that the seller’s real estate agent only has the home seller interest in mind and is only representing the home they are selling.  If you are a home buyer, especially a first time home buyer, I strongly recommend that you hire a real estate agent to represent you when shopping for a home.  You do not have to pay the real estate agent anything.  Real estate agents are paid by the home seller when they sell the home.  By not hiring a real estate agent will not save you any money.  Whether the home seller has the listing agent get their own home buyer or whether another agent brings the home buyer, the seller pays the same amount.  For example, if the seller is paying a 6% sales commission to sell their home, that 6% commission is split between the home buyer’s real estate agent and the listing real estate agent.  If the listing agent brings his own home buyer on the property they have listed, the listing real estate agent will keep the whole 6% commission.  The 3% split of the commission does not go to the home buyer nor does it get refunded to the home seller.  Most listing agents will try to sell their listings themselves so they can keep the whole 6% commission.  However, most real estate agents are professionals who have the mission to do what is best for their clients and will entertain the best purchase offer from the best qualified home buyer whether it is their own buyers or home buyers from other real estate agents.  There are priceless advantages of hiring a realtor than house hunting by yourself if you are a home buyer and I just cannot think of any disadvantages.

Real Estate Agents Have Experience And Knowledge

Real estate agents know real estate and deal with home buyers and sellers for a living.  They know the communities, market prices, geographics, school systems, foreclosure rates, [roperty tax rates, appreciation rate, and other aspects of real estate.  The key is hiring a real estate agent who you can work with and feel comfortable with.

When you first consult with a real estate agent, he or she will interview you and take notes on the type of home you are looking for, your budget, the areas, the ammenties that is important for you, and the school district you like your home.  The realtor will do a regional search on all properties that you might find interest in and will email you the listings and specs of the homes.  You will then review the properties that interest you and like to physically visit.  The realtor will also do due diligence to see whether the home has been properly prices by scanning the current comparable listings as well as the recent sales in the past 6 months to one year.

If you are a home seller, the realtor will be qualifying the potential home buyer whether or not they have a solid pre-approval letter and if the pre-approval letter seems shakey, many professional realtors will call the mortgage loan originator who actually issued the pre-approval letter.

Location And Neighborhood

Location is the key when it comes to real estate.  Realtors know the areas and neighborhoods they do business in and will know which school districts are ranked the best and know the area’s crime rates.  They will know whether a home is priced right for the particular area as well as the demographics.  For example, if a home you are looking for is priced at $400,000 and the home down the street that is similar to the home your want to purchase sold for $300,000, the realtor will tell you why the home you are interested is much higher priced.  Maybe the lower priced home did not have a finished basement, pool, finished attic, and no custom features like the home you are looking at.

Writing The Right Offer

If you are a home seller, your realtor can help you price your home right.  You do not want to under price your home and you do not want to over price your home.  If you over price your home and the home buyer’s appraiser cannot appraise the property at the purchase price, the deal will be dead at that price.  You would need to lower the purchase price to the appraisal value in order for the transaction to go through unless the home buyer is willing to pay for the higher than appraised value price.  If you are intending on purchasing the home, your realtor will guide you on what to initially offer and request a sellers concession towards the home buyer’s closing costs so you do not have to come out of pocket for closing costs.  If you purchase offer is too low, the home seller might get offended and not even look at your offer and not counter back.  On cases of multiple offers, your real estate agent will guide you in preparing a solid purchase offer that stands out from the rest where you can get the winning bid.  Realtors are professional negotiators and if you have a realtor represent you during negotiations, your realtor will try to get you the best deal and act on your best interest.

Values on home purchase

Professional realtors are experts in market conditions.  If you are a home seller, the realtor will look at comparables and analyze the recent sales in your surrounding area and tell you homes that have been priced too high and that have been sitting on the market for months.  The price you had in mind to sell your home may be under market value and your realtor will tell you to price it higher.  Your realtor will recommend to you on what you should price your home to maximize your profit.  If you are a home buyer, your realtor will do a price analysis from data collected on what the going price per square foot is and what the land value is.  Your realtor may also know properties that are for sale but not on the multiple service listing.  Realtors communicate with other realtors and have a network.

Other Services Realtors Offer

Professional realtors have a business network of professionals.  Your realtor can refer you to a mortgage lender, attoney, home inspection company, insurance agents, title companies, and other reputable professionals.  For example, if you got turned down by multiple lenders due to the mortgage lender overlays but you meet federal mortgage lending guidelines, your realtor may refer you to a mortgage lender who have no mortgage lender overlays and just goes off minimum federal mortgage lending guidelines.  Every mortgage lender has different mortgage lending requirements and just because you get denied by one mortgage lender does not mean that you do not qualify for a mortgage loan from a different mortgage lender.  Realtors have databases of dozens of mortgage lenders.  If you cannot qualify for a mortgage because your debt to income ratios are too high due to your insurance premiums being too expensive, your realtor can give you other insurance agents where the premiums may be lower.  If your home needs a well and septic inspection or termite inspection, your realtor will have access to all home inspectors.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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