The Number One Mistake to Avoid When You’re Buying a Home
House hunting can be fun. But, do you know what’s not fun? Paying thousands of dollars extra for the wrong home that you’ve settled for after months of fruitless searching.
Allow me to introduce you to the home buyer’s number one mistake: not using a buyer’s agent.
I get it. We live in a DIY culture. Everyone wants to do it themselves to save a few extra bucks and earn that invisible badge of self-accomplishment. But, when it comes to house hunting, DIYing can cost you time and a lot of money.
If you want to buy a home, you need to work with a buyer’s agent. He or she is determined to find the right home for you—and they have the experience to deliver. Let’s discuss what a buyer’s agent does and how hiring one will help you find your own slice of NYC.
What is a Buyer’s Agent?
The buyer’s agent is your partner in finding the right home at the right price. A buyer’s agent will help you through every stage of the home buying process, from house hunting to signing on the dotted line.
In house buying, there are primarily two types of agents that you’ll encounter: the seller’s agent and the buyer’s agent.
Nine out of 10 sellers understand the benefit of working with an agent to sell their home. So, as a home buyer, you’ll almost always deal with the seller’s agent, and not the seller directly.
But, the seller’s agent won’t help you get the lowest price for the home. They have a fiduciary responsibility to help the home seller earn as much as possible. So, everything you tell them can and will be used against you to get the seller the best price possible.
The buyer’s agent is your representative. Instead of dealing with a seller’s agent, you’ll work with your buyer’s agent. He or she will take your list of needs and wants and find the right property.
You can speak confidentially to your buyer’s agent. You can even divulge the max amount you’re willing to spend for a home to your buyer’s agent. He or she will not use that information against you when negotiating the purchase of a home—but a seller’s agent will.
What are the Benefits of Hiring a Buyer’s Agent?
Let’s take a look at the biggest reasons why you should work with a buyer’s agent.
You’ll Have a Representative Who’s Invested in You
A buyer’s agent is just that—someone who works on your behalf.
While the listing agent has a responsibility to be ethical with both the seller and the buyer, always remember that they don’t work for you, the buyer. The listing agent protects the seller’s best interests. In fact, they’re legally bound to do so. The listing agent won’t work against their client, the homeowner, to get you, the buyer, the best deal.
However, that’s exactly what a buyer’s agent does. He or she will keep your best interests in mind when they find suitable listings, negotiate with the seller, and help you navigate the closing process. Your buyer’s agent will represent you (including your needs, wants, and special requests) through it all.
One of the biggest benefits of hiring a buyer’s agent is experience. It’s their job to find purchase-worthy homes. Hopefully, the buyer’s agent you choose will have a proven track record of finding homes for their clients.
Because your buyer’s agent will have walked through exponentially more homes than the average buyer, they’ll be able to spot red flags quicker than you might be able to. They’ll use this knowledge to help you when it comes time to place an offer.
The buyer’s agent will also have more knowledge of the real estate market, including comparable home pricing in your desired neighborhood and the recent history of home sales.
Get the Inside Scoop
Often times, a buyer’s agent will have the inside scoop. It’s very likely that your buyer’s agent will know about “For Sale” homes that aren’t yet listed on the major sites that you have access to. Agents network with each other, and listing agents provide special open house showings just for buyer’s agents.
When you work with a well-connected buyer’s agent, you’ll be able to find homes before they get listed on the well-trafficked listing sites.
House hunting is an emotional process, and you’re bound to lose your objectivity in the middle of your search. You’ll find ways to settle for X so that you can get Z, but a good buyer’s agent will help you remember your core wants and needs and steer you toward the right solution.
Your buyer’s agent should act as the voice of reason. He or she will know what to look for. They’ll see the cracks in the foundation that you can’t (or won’t) see, and will warn you accordingly. Or better yet, not even show you a listing that wastes your time.
Your buyer’s agent won’t form an emotional attachment to a home, and will be able to help you consider and compare homes fairly and based on the merits of your wish list.
Free Up Your Time
You’ve got a lot of things going on. You juggle work, family, friends, and social engagements. Sure, house hunting is fun, but it can start to feel like a part time job after a while—and no one likes working a part-time job on top of a normal nine to five. Plus, with the fast paced home listing and selling environment in NYC, house hunting here is a time commitment.
Do you really want to spend every waking hour scouring the real estate ads to see which new houses have hit the market?
Of course not. That’s why you should work with a buyer’s agent. It’s their job to spend hours on end searching for the right home for you.
Have you ever tried to schedule a showing? Here in the city, it can be quite difficult to coordinate your time with the seller and the seller’s agent, and then there’s the madness of back and forth phone calls.
Avoid all of this by working with a buyer’s agent who can organize multiple showings and fit them into your schedule and not the other way around.
Help During the Buying Process
It’s one thing to look for a home, but it’s another to actually buy it. If you’ve never purchased a home before, or you’ve never done it in NYC, you’re going to get overwhelmed.
But this is why you need a buyer’s agent. The buyer’s agent is not only for helping you find suitable listings. He or she will also help you with the following:
- Price negotiations: Your buyer’s agent will help you stand out from other competing offers. It’s not just about making the highest offer, sometimes including concessions in your offer can make it look more attractive to the seller.
- Deadlines: Your buyer’s agent will make sure you stay on track and never miss a deadline that could delay or disrupt your purchase.
- Contracts: Your buyer’s agent will be able to write a well-crafted real estate contract that protects you as the buyer.
- Resources: Your buyer’s agent should help you find the right mortgage broker, real estate attorney, home inspector, moving company, and more.
Oh, did I forget to mention that hiring a buyer’s agent is free?
So, what’s up with the asterisk? What’s the catch? How can a buyer’s agent provide a free service for you?
Here’s how it works:
While working with a buyer’s agent is a free for you, that doesn’t mean that the buyer’s agent works for free. The buyer’s agent is usually paid through the listing agent upon the sale of the home.
You see, the listing agent agrees with the home seller to make a commission on the sale of the home, which is usually around 6% of the final price. The listing agent usually shares that commission with the buyer’s agent—most commonly at a 50/50 split. So both the listing agent and the buyer’s agent receive 3% of the final price of the home.
The fine print? Sellers consider and factor in a listing agent’s commission into the pricing of their home. So, although the price of the home affects the seller’s bottom line, you’re still the one who’s technically paying for the agents’ commissions because you’re the only one who’s bringing money to the table.
Even if you don’t work with a buyer’s agent, the home seller will still agree to pay the listing agent a set commission. So that 5% to 6% is still tacked on to the home’s listing price, whether you work with a buyer’s agent or not.
If you do work with a buyer’s agent, you won’t have to pay for it separately. It will come out of the commission that’s already built into the home’s listing price. Think of a buyer’s agent as a built-in, complimentary service that comes along with house hunting.
You get free representation in the home buying process, so why not use it?
What are the Drawbacks of Hiring a Buyer’s Agent?
Not all buyer’s agents are equal.
Because you’ll need to rely on this agent to find you the best home for the best price, you need someone who understands your unique wishlist.
And because you’re going to work closely with this agent, you need someone who’s fits your personality.
Don’t just sign a contract with the first buyer’s agent you come across unless they meet a set standard. Check out our resource below on what to ask a potential buyer’s agent during your interview.