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My wife and I are looking to buy our first home. While I've been doing quite a bit of reading--online and paper published--I wanted some opinions from real people to supplement what I'm learning. I'd love to hear your thoughts, opinions, and experiences in general. I also have two specific questions for anyone with input.
1. Buyer's Agent - What are the real costs of purchasing through a RE agent? Can anyone give an honest assessment of the advantages and drawbacks? Has anyone ever gone it alone?
Most of what I read suggests it's a foregone conclusion you will buy through a realtor, but we try not to use agents in our transactions due to their lack of legal obligation (except in the case of fraud by the agent). We normally handle our own litigation, write our own contracts, etc. I see that it's possible (though uncommon) to do the same with homebuying. Thoughts?
2. This is more of a Mortgage question; my credit is top-tier but my wife's history is short so she's in the second tier. I'm the only steady wage earner. Are we more likely to get a lower interest rate with just myself on the mortgage? Is it possible to have one spouse on the mortgage, but both on the house title? I'm guessing "no" or that there's no point in this as the bank will surely review the paperwork. So it's probably just between one spouse with excellent credit's name on everything, or two with mixed good and excellent credit.
1. Buyer's Agent - What are the real costs of purchasing through a RE agent? Can anyone give an honest assessment of the advantages and drawbacks? Has anyone ever gone it alone?
If you have a good RE agent, they can save you a lot of paper headache. They tell you "you don't pay for that, the seller does" of course you do, who is paying the seller, the buyer. So if you can cut a deal with your agent to give you a kick back at closing, this would be good.
I don't think most home buyers should go it alone on their first purchase. There is a general process and each state has its own real estate laws and customary practices. Unless you are reading books about real estate specific to the area you are wanting to buy, you may find that you are missing some crucial pieces.
I have 1-2 buyers every year that buy one of my listings and represent themselves. It isn't common, but some do. That said they have all been attorneys, contractors, or mortgage industry pros who have owned homes before.
I would suggest using a buyers agent. He/she is paid out of the seller's agent's commission. Some might argue that this means that the buyers agent is ultimately working for the seller. But, I've found that buyers agents generally want to make their buyers happy. Also, they do all the annoying leg work of calling to make appointments, driving you around, finding out details you want to know more about, etc. But, using an agent is optional.
On the other hand, I absolutely would never purchase a home without hiring a real estate attorney. I would not write up these contracts myself. No way. The attorney is someone you hire, so they will absolutely be required to represent your interests.
As to the mortgage, you can have your name on the mortgage and both of you on the deed. That's no problem. For the house we just bought, the sellers had that exact same set-up. The only thing is that then the broker will only be able to use your income to qualify you for the loan.
Last edited by NotAPrincess; 08-10-2011 at 07:36 AM..
Reason: clean-up
Why not use a buyer's agent if they are paid by the seller? It will save you a lot of time and money.
You will not necessarily get a "better deal" if you don't have an agent. Builders do not discount their prices if you don't have an agent. They rely too heavily on the traffic they get from Realtors.
Homes that are listed by agents have the commission negotiated upfront so if you don't have your own representation, the listing agent will get both sides of the deal and won't help you negotiate the best price.
I know you didn't ask this question but someone commented and suggested asking for a "kick back." Not sure about other states but in NC, an agent can only pay money/commission to another agent. So you won't get a kick back. And why would you want one? It didn't cost you anything for the buyer’s agent to find you a home and guide you through the process and in the end, you ask for money from their salary? Hmm, how is that fair?
If you buy the house in a short time (i.e after 2-3 months or 2-3 times viewing the houses), it seems that the buyer's agent job is easy, so should you ask for a kick back?
Will the buyer's agent help you with the offer or anything else to negotiate the price?
Why not use a buyer's agent if they are paid by the seller? It will save you a lot of time and money.
You will not necessarily get a "better deal" if you don't have an agent. Builders do not discount their prices if you don't have an agent. They rely too heavily on the traffic they get from Realtors.
Homes that are listed by agents have the commission negotiated upfront so if you don't have your own representation, the listing agent will get both sides of the deal and won't help you negotiate the best price.
I know you didn't ask this question but someone commented and suggested asking for a "kick back." Not sure about other states but in NC, an agent can only pay money/commission to another agent. So you won't get a kick back. And why would you want one? It didn't cost you anything for the buyer’s agent to find you a home and guide you through the process and in the end, you ask for money from their salary? Hmm, how is that fair?
"KIck back" = "Commission Rebate" and is very much legal in North Carolina.
I bought 30 and sold 29 properties before becoming a licensed agent. I could not imagine going it alone.
Let's cut to the chase, shall we. Those ( non professional investor ) buyers who prefer to go it alone, do so because they usually have a belief they can pocket the money that would have compensated the buyer's broker and agent. This is an "Old Craig's List Wives Tale. There is no factual information, anywhere to support this.
Use of attorney by both the buyer and seller for contract review is customary in my area. Both pay nominal professional fees to respective attorneys to review the contracts, explain terms and represent them at closing. A DIY contract written by an unrepresented buyer would not be well recieved in my area.
The primary role of a buyer's agent is educating the buyer, matchmaking and negotiation. Just as there are sellers who persist in the belief that what they paid, invested, need or want out of their sale matters to anyone but them, many buyers think that what they can afford or are willing to pay matters to anyone but them. It's all emotion.
The solid buyer's agent will know the local dirt and have the pulse of the current local market. Closed comps often represent dated information. By this I mean a 3 month old closed sale comp might be 6 months stale, given when the property went to contract. Inventory and markets constantly change. What's going on in this block may not be what's happening a few blocks over.
Professional investors are sharks and rarely need the assist of a buyer's agent. They have cash and are going in for a kill. They tend to target FSBOs, for the obvious reasons.
#2 is a really basic question (yes is the answer by they way). Based on such a basic question up front I highly suggest you use an agent. Your cost is debatable but you don't pay anything out of pocket and if you hire a good one they are probably going to save you money, not cost you money.
This debate is very informative, thanks to all who've responded, thus far.
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