The process of buying or selling a home can be overwhelming — most of us only do it a handful of times throughout our lives. Real estate agents are there to hold our hands, offer their expert advice, and help us get the best deal. In a competitive real estate market, you need every advantage you can get to come out on top and avoid making costly mistakes. We've compiled nine of our best tips that every home buyer or seller needs to know before hiring a realtor.
Before you buy or sell your next home, follow these little-known tips for a better experience with your real estate agent. They'll save you money, make the process easier, and reduce your stress.
Their commission is negotiable
Buying and selling a home is one of the few situations in life where almost every part of the deal is negotiable. One of the first things to negotiate is the fees that your real estate agent will charge for their services. The industry standard is 3% each to the buyer's and seller's agent. While that is the norm, there's nothing requiring you to pay that much.
Homeowners selling their property can negotiate a lower fee to increase how much they'll keep when the home sells. Buyers can negotiate a rebate of a portion of the agent's 3% fee. This rebate covers some of the closing costs and other items during the buying process.
A shorter contract is better – for you
Many real estate agents automatically assign a term of 12 months to your contract. This gives them a full year to earn a commission from you, even if they aren't performing or you don't like their approach. Instead of agreeing to such a long timeframe, demand something much shorter — like 3 to 6 months.
A shorter timeframe incentivizes the agent to act quickly and prioritize your transaction over other clients. And, if the deal doesn't close before the contract expires, you can always renew for another 3 to 6 months. Make them earn your business, otherwise, you'll find a new agent.
Use a ‘buyer's agent’ if you want to buy a home
There are many real estate agents for you to choose from, but not all specialize in representing buyers. A "buyer's agent" is a real estate agent who is legally bound to help buyers. Not only do they have a fiduciary responsibility to you, but their expertise is also focused on the home buying process.
A buyer's agent's experience is especially important if you're a first-time homebuyer or if it has been many years since you've bought a house.
You should hire your own, independent inspector
In most situations, we're taught to accept recommendations from people who we trust. However, you should skip that advice when picking a home inspector. In some situations, inspectors get blacklisted by referring agents if they catch large problems and cause a deal to get complicated or fall apart.
Seek out friends and family who recently bought a home in your area or look for objective advice online. Having an independent inspector who you've interviewed and selected ensures they're looking out for your best interests, not trying to keep the agent who referred them happy.
You don’t really need a real estate agent to sell your home
Real estate agents offer valuable advice, but are they really worth the added cost? In a hot real estate market where homes are selling as quickly, some homeowners are selling homes themselves instead.
Online resources make it easier than ever to research comps, stage your home, book a photographer, and get it listed on the MLS. And services like FSBO and Zillow allow homeowners to list and sell their houses for a low, flat fee.
Open houses aren’t for your benefit
Using an open house to market the sale of your home sounds like a great idea. Your home is open for several hours on a weekend afternoon. It allows interested buyers to walk through your home without needing a real estate agent. They can linger, have frank discussions, and not feel pressured to hurry up or make a quick decision.
The problem with open houses is that sellers have to vacate their homes for large portions of the weekend with no guarantee that a prospective buyer will show up. But an even bigger problem is that the real benefit isn’t for you, it is for your real estate agent.
Always read the fine print
Buying or selling a home is one of the biggest transactions you'll ever make. While the fine print of a contract can be boring and tedious, you need to focus and understand what you’re agreeing to. Pay special attention to how much your agent gets paid and how long the contract is for.
As you read through the terms of the contract and special clauses, make sure that you aren't being asked to sign a waiver of rights. You want to retain the right to sue or cancel the contract if the agent is not behaving appropriately. Since contracts are full of language that most consumers aren't used to, hiring an attorney to review the contract for unfriendly terms can be worth the small fee that they'll charge.
Sellers can hide the length of time a house is on the market
When a home is on the market for too long, potential buyers tend to think that something is wrong with it and bid less than they would otherwise. Worse, they might skip bidding on it altogether.
One of the tricks that real estate agents use is to take a property off the market for 30 days, then relist it. This hides how long the property has been for sale and removes the history of past price drops. Potential buyers have more difficulty tracking the home's history, and this obscured pricing information affects their bidding strategy.
You can avoid a commission if you bring your own buyer
If you know someone who’s interested in buying your home before you sign with an agent, it is possible to avoid paying a commission if they buy. Before signing your contract, explain the situation to your agent. Ask for a disclosure form to list all potential buyers in writing. If the potential buyers follow through with the purchase, you don’t have to pay the agent’s commission.
The real estate market is hot right now for both buyers and sellers. With so many people buying and selling homes, it helps to use insider tips to gain an edge against the competition (and your agent). Knowing your rights, building a team that's focused on your interests, and negotiating everything possible will help your transaction go smoothly and hopefully get the best deal possible.
When shopping for your next home, being pre-approved for a mortgage can make the difference in getting your offer accepted or not. Our list of the best mortgage lenders will help you find a loan with the best rates, fees, and terms so that you're ready to make the winning bid.