What's the most common thing you've heard about working with a real estate agent?
Many people might answer that they've heard real estate agents aren't that helpful with finding a home and they're just in it for the money. Others would say that real estate agents get you to sign a Faustian-like contract that is impossible to get out of. However, both are just myths, and working with an agent can be very helpful for a first-time homebuyer.
Before you write agents off completely, learn a bit more about their roles and the truth behind these myths.
Myth #1: The selling agent will get me the best deal.
That agent is contractually bound to represent and get the best deal for the home seller. Work with the agent in a fair and professional manner, but do not disclose confidential information to themt.
If you tell a seller's agent the top dollar you will pay for a house, the agent must pass that on to the seller. Take time to learn about the agent's duties and loyalties before you start home shopping.
"Most states require any agent to disclose the roles an agent can have in any given real estate transaction the second the conversation turns to price, terms or motivation of the customer," said Amethyst Albert, a military spouse and real estate broker at Keller Williams Fayetteville in North Carolina. "Disclosing this protects the consumer and the agent is legally responsible to do so."
Myth #2: I'm stuck with an agent I don't like.
You may know you're a good match with an agent on the very first day you meet, but what if you aren't sure? The laws regarding buyer's agreements vary from state to state, and some states do require an agreement before homes are shown. You can dissolve the agreement, but you may be liable for commission if you buy with another agent.
If you don't live in a state where this is legally required and an agent asks you to sign an agency agreement before you feel comfortable about it, ask for an alternative. If your state requires a buyer's agreement before an agent shows you different homes and you aren't comfortable with your current agent, it may be best to work with someone else.
"Until a formal agency agreement is signed, an agent technically is a sub-agent of the seller," Albert said. "Most buyer-agency agreements protect both the client and the agent, and set up clear expectations for both parties through the course of the transaction. Consider it an employment contract where your agent's work and support will only be compensated at the end."
Myth #3: More agents mean more options.
Maybe, but maybe not. If you're home shopping in a specific area, and the agencies belong to Multiple Listing Services, it means they all have access to the same properties. Ask agents what areas they cover. Small-town agents may cover a multi-county area. Agents in a city may restrict themselves to certain neighborhoods or subdivisions.
If you sign agreements with more than one buyer's agent, make sure the contracts are worded so that areas and duties do not overlap. For instance, Agent X works for you only in County A. Agent Y works for you only in County B. Researching and showing properties is time-consuming, so you'll get better service if you find an agent you like (within a given area) and stick with them.
"Chances are, as your agent gets to know your personal preferences in a home, they will be able to keep a closer eye out for houses that match your criteria. Third-party websites are missing about a third of the current inventory, so having a dedicated agent sending you homes the second they hit the market will give you a competitive advantage," Albert said. "I always ask my clients if I can add a 'wild card' home to our viewing list and, nine times out of 10, the house I hand-select for them is the one they purchase."
Myth #4: A busy agent equals the best agent.
Think about that. If an agent has a great many listings to deal with, how much time do they have for buyers, especially buyers who may want to look at properties other than theirs? Many top agents are turning to team systems, so time may not be an issue, but it's something to ask about when you interview an agent.
A brand-new (competent) agent can be every bit as effective as a seasoned pro. Someone working with fewer clients will have your needs in mind constantly. Hire the person, not a lineup of listings.
"When interviewing agents, ask them what a typical experience with a client looks like. If you have specific needs or expectations, definitely ask if the agent is able or competent to handle," Albert suggested. "Don't be afraid to ask a potential agent to connect you to a previous client to chat about the process. If an agent is newer, what type of support do they have behind them? If the agent is part of a team, who will be your main point of contact? Most real estate agents are completely self-employed, so most agents have their own process for the client experience."
Myth #5: Suggesting I offer more money means the agent just wants to make more.
In competitive markets, real estate agents may suggest you offer over asking price because there are multiple offers. Agents all over the country are reporting houses selling for over asking price and buyers paying their own closing costs in what is often called a seller's market.
"A sign of a good agent is they will have these tough conversations with you to educate you on the current market conditions. We spend a lot of time educating our clients so they achieve their goal of homeownership and not just make offers," Albert said.
Finding the right real estate agent is important, if only because you'll be spending quite a bit of time with them while looking for and purchasing a home. Take time to educate yourself on the process and the agent, so you can make the best choice.
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