My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally.
See Part 2 – Down Payments and Financing
Going it alone or choosing a realtor
With the availability of information online on MLS (Multiple Listing Service), how necessary is an agent? After all, agents work on commission and are paid a percentage of the value of a home. The fee is paid through the seller, but a buyer indirectly pays through the negotiated selling price.
For myself, the decision came down to the practicality of having an expert do the initial culling through the listings. Because our top priority is to stay along the subway line, my husband and I are dealing with the “hot” neighbourhoods where houses can sell within a week of being listed. As home buying novices, we wanted the advice of an expert in finding the right home and not overpaying for it. Real estate professionals have access to MLS properties before the public and can fine-tune searches. Agents are also experienced in negotiating offers, have access to a plethora of specialists such as home inspectors, lawyers, and mortgage brokers, and can lead one through the intricacies of closing costs and legal requirements.
Choosing a real estate agent
Choosing the appropriate person to work with was therefore not a decision that we made lightly. Start with the recommendations of friends and people you trust. Look at an agent’s online profile and their recent listings to evaluate if they work in the neighbourhoods you are targeting and at your budget. How long has the person been in the business? Although I was confident about a friend’s referral, I still met with the agent to interview her and to determine if she was someone with whom I would be comfortable working. I was impressed with her frank advice and that we could sign a buyers’ representation agreement for as short a term as two weeks. My husband and I decided to begin with a one-month contract instead of a longer commitment to see how it goes.
Dual Agency or Buyer’s Agency Agreements
Several of my friends were fortunate enough to find their homes without an agent and then worked with the listing agent to negotiate the buying price and finalize the offer. Such a situation, whereby the seller and buyer use the same agent, is referred to as a dual agency. The seller must also agree to this arrangement. From the agent’s perspective, dual agency is advantageous as s/he would earn a double commission. However, the worry is whether the agent has your best interests in mind, especially in terms of price.
Engaging in a buyer’s agency agreement is a contract to use the services of a particular agent or company for a specified length of time. The advantage of such a contract is that the realtor has agreed to work for you and is obliged to disclose all available information.
Realtors also have a network of other experts they can connect you with such as home inspectors, mortgage brokers and lawyers. A real estate agent’s job is to make things easier for you, so do not be afraid to make use of their network if you don’t already have access to such professionals.
Read the next post in this series “What to Buy?”.