In many areas across the country, a real estate inventory shortage combined with rising interest rates has buyers scrambling to secure the homes they want. Buyers are rushing to make offers and competitively priced properties are selling quickly.
The process of finding a home, submitting a winning offer letter and shepherding the deal through to close of escrow can be grueling and stressful. It requires careful attention to detail and follow through. That’s why you need a highly motivated, ethical and experienced real estate professional on your team.
First, some homework
Before getting involved with a real estate agent, it is wise to figure out how much you can spend on a home. There are many online calculators that can give you a sense of how much you may be able to afford given your current income and the amount of debt you owe. Just don’t forget to consider how much money you might spend on property taxes, homeowners association fees, utilities, home insurance premiums and other costs as a new homeowner.
If you already own a home, you’ll have to get ready to sell it. If you need money for a down payment, you could use the equity you’ve built to take out a home equity line of credit. You can visit websites like Movoto, Zillow, Trulia, Redfin and Realtor.com to see listings for homes with similar values. Don’t forget to factor in the costs that go along with selling a home, including real estate commission (often 6% of a sale), closing costs (as much as 5% to 10% of the sale price in certain areas) and the cost of repairs.
If you are a first-time buyer or you don’t have enough equity in your current home, you’ll need to make sure you have enough savings to purchase a house. You should also get pre-approved for a mortgage loan and check your credit score.
If you are buying a home with a partner or spouse, discuss the features you want and the ones you need. You may have dreams of buying a home on a cul-de-sac or other expectations about the home’s location or square footage. Once you and your significant other are on the same page, you’ll be ready to speak with a real estate agent.
What does a real estate agent do anyway?
The specific tasks a real estate agent performs will depend on whether they are helping you sell or buy a home.
When representing a seller, a real estate agent will show them how to price their home, usually on the basis of “comps,” or comparable homes for sale in the surrounding area. They will take pictures of the home and list it on the Multiple Listing Service (MLS), a database used by real estate agents and brokers. They will also show the home that’s for sale to prospective buyers. They may host open houses so that buyers and agents can tour the home.
When representing a buyer, a real estate agent must find homes based on their client’s preferences and budget. They will look for homes in the buyer’s price range and show properties. Once a buyer has found the home they want to buy, the agent will formally make an offer.
Ultimately, whether you’re buying or selling a house, your real estate agent should represent you, negotiate and guide you through the process.
Finding an effective agent
Most of us know a real estate agent or two, but it’s best to be selective when picking someone to represent you. It’s wise to avoid agents who are either inexperienced or seem content with having very few clients. Look for a successful real estate agent who’s not stretched too thin and has found many buyers and sellers through referrals.
Before you commit to working with a particular agent, you’ll want to establish whether a potential candidate is familiar with the areas you are interested in and has found (or sold) homes in your price range. You’ll also want to make sure you’re working with a seasoned veteran who can negotiate effectively.
Ultimately, you want a professional, capable and hungry real estate agent who will carefully manage your real estate transaction until it’s completed.
When you’re ready to select a real estate agent, set up interviews with a few candidates. Some initial questions you should consider asking include:
- What cities or areas are you most familiar with?
- How long have you been in the real estate business? How long have you worked with your broker?
- Can you show me your current listings and the most recent properties you’ve sold?
- Can you provide references for your most recent clients?
- What is your real estate license number?
- How do you approach negotiation?
- How will you help me find a home?
- Tell me about your approach to marketing.
In addition to learning more about a real estate agent’s background and skill set, you should evaluate the quality of the professionals he or she works with. Additional questions you can ask include:
- Who do you refer clients to for lending?
- Who do you hire for inspections?
- Who do you refer clients to when they need home insurance?
Once you have answers to these questions, you should read reviews and find out as much as you can about each real estate agent’s reputation online.
Ask about fees
For many years, the standard commission on the sale of a home has been around 6%. Typically, the listing agent’s broker gets 3% and the buyer’s agent’s broker takes home the remaining 3%. Home sellers usually pay commission, but many find that they can get a competent agent to represent them at a significant discount. As with many things in life, fees are negotiable, but only if you ask!
Wondering how buying or selling a house could impact your insurance needs? Speak with a Hippo specialist.