Written by Sean Pollock

Saturday, 12 September 2009 04:00

As the house prices significantly decreased and with the mortgage rates nearing the historic lows, many families, including these who never owned a home are considering buying one. The first time buyers may also qualify for a tax credit of up to $8000. In short, this may be a perfect time to buy a house. Shopping for a perfect home, as intriguing as it sounds, is really a hard work. Fortunately, help is available: realtors, real estate professionals, are readily available. They find the properties listed for sale in MLS (municipal listing service database) that match your requirements and budget. They suggest you the bidding price, negotiate the details of the contract and follow you all the way to the settlement. They make the entire process easier for you. Or do they?

Remember, realtors make money buying and selling houses. The realtor who works with the buyer is called a buyers agent. If they close a deal, they get paid, and if not, they do not get paid. Their commission is a fraction (typically, 3%) of the house’s price, but it is paid by the seller, and not you. Because you do not have to pay for their service, most people do not spend time to find their agent, and end up with their agent at random. The usual way for the people to find an agent is to call a listing agent of the house they liked the most. The truth is that most of the time they do not get to buy that property. What they get is… you guessed it right, the realtor. This might be a mistake, because you want your deal to be in your advantage, and you want your realtor, who will influence the deals lot, to help you make it that way. The right choice of realtors could save you thousands. Here is how.

1. Because a realtor gets paid a fraction of the sales price, it is in their advantage to make you pay more. As much as you can possibly afford. Therefore, often realtors try to sell you the most expensive home, as long as you qualify (even barely) for a loan. Even worse, they might encourage you to engage into “price war” – that’s when several buyers write offers on a house at the same time, and the house goes to the highest bidder. In the today’s “buyers” market with the excess of supply one cannot make a bigger mistake. If your realtor shows your only expensive properties, and talks you out of seeing cheaper homes that could still satisfy you, beware: you might need to find a new realtor.

2. Every property has problem spots. Finding them before closing the deal can help you negotiate a better price. Beware if your realtor starts to remind you a salesman, his job is to find potential problems, help you find the best course of actions and present the case to the seller. Options usually are: making the seller to fix the house, or drop the price down.

3. Your realtor should “speak your language”. Certainly, agents know much more about the houses and the process than you are. But they should listen to your needs and never intimidate you “because they know better”. Never let the agent decide by themselves what happens next. Always ask about your options. If you think your agent made a mistake, openly talk to them and try to resolve the issue to your satisfaction.

4. Make sure your agent is a good negotiator. Writing a contract is 99% negotiation. Everything is negotiable. This includes price, settlement date, repairs not originally included in the contract, etc. In some cases one can get seller to partially (or fully) cover your closing costs, leave you furniture, extra appliances, clean ducts or gutters. In the current market condition sellers often respond to these requests to make the deal happen. Your success here depends on your realtor’s negotiation skills.

5. Never, ever use the listing agent for the property you want to buy as your realtor (also known as double agent). Because buyers and sellers agents split commission 50/50, this is a great advantage to receive twice the usual commission for the lucky realtor, but there is no advantage for you. Even though dual agent cannot disclose to the seller what the buyer is willing to pay and cannot disclose to the buyer what the seller is happy with taking, negotiations may become difficult, that usually leaves the buyer at a disadvantage.

Remember, it pays to have your own, personal agent whom you can trust. You do not want to go shopping for the most expensive purchase of your life with the agent that you are not comfortable with.