My next topic was inspired from a recent thread over on frugal in which a redditor asks a very good question: “How difficult would it be for a first-time home buyer to purchase a home without representation by a Realtor? Is it worth it?”
First off, it’s not difficult to buy (or sell) a home on your own, my wife and I have successfully bought and sold our own homes in the past quite easily. In my opinion, a Realtor is a middle man in many regards, if you can avoid them, you will probably save money. Sometimes however, they are unavoidable if you’re interested in buying from someone who is being represented by an broker or agent. Even though we’ve never used a Realtor, there could be several instances where it does make sense to hire someone to help.
Below, I will provide answers to the following questions: What does an Realtor do for you if you are buying? What about selling? What type of education is required to be an agent or broker? How can you determine if you should work with a Realtor whether you’re buying or selling?
Find some helpful tips for a first time home buyer these days.
What does an Realtor do for you if you are buying?
A real estate brokerage attempts to do the following for the buyers of real estate only when they represent the buyers with some form of written buyer-brokerage agreement:
- Find real estate in accordance with the buyers needs, specifications, and cost.
- Takes buyers to and shows them properties available for sale.
- When deemed appropriate, pre-screens buyers to ensure they are financially qualified to buy the properties shown (or uses a mortgage professional to do that task).
- Negotiates price and terms on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyer’s agent acts as a fiduciary for the buyer.
What about selling?
Upon signing a listing contract with the seller wishing to sell the real estate, the brokerage attempts to earn a commission by finding a buyer for the sellers’ property for highest possible price on the best terms for the seller. In Canada, most provinces’ laws require the real estate agent to forward all written offers to the seller for consideration or review.
To help accomplish this goal of finding buyers, a real estate agency commonly does the following:
- Listing the property for sale to the public, often on a Multiple Listing Service, in addition to any other methods.
- Based on the law in several states, providing the seller with a real property condition disclosure form, and other forms that may be needed.
- Preparing necessary papers describing the property for advertising, pamphlets, open houses, etc.
- Generally placing a “For Sale” sign on the property indicating how to contact the real estate office and agent.
- Advertising the property. Advertising is often the biggest outside expense in listing a property.
- In some cases, holding an Open house to show the property.
- Being a contact person available to answer any questions about the property and to schedule showing appointments
- Ensuring buyers are prescreened so that they are financially qualified to buy the property; the more highly financially qualified the buyer is, the more likely the closing will succeed.
- Negotiating price on behalf of the sellers. The seller’s agent acts as a fiduciary for the seller. This may involve preparing a standard real estate purchase contract by filling in the blanks in the contract form.
- In some cases, holding an earnest payment cheque in escrow from the buyer(s) until the closing. In many states, the closing is the meeting between the buyer and seller where the property is transferred and the title is conveyed by a deed. In other states, especially those in the West, closings take place during a defined escrow period when buyers and sellers each sign the appropriate papers transferring title, but do not meet each other.
What type of education is required to be an agent or broker?
When a person first becomes licensed to become a real estate agent, they obtain a real estate salesperson’s license (some states use the term, “broker”) from the state in which they will practice. To obtain a real estate license, the candidate must take specific coursework (of between 40 and 90 hours) and pass a state exam on real estate law and practice. To work, salespersons must be associated with (and act under the authority of) a real estate broker.
Many states also have reciprocal agreements with other states, allowing a licensed individual from a qualified state to take the second state’s exam without completing the course requirements, or, in some cases, take only a state law exam.
How can you determine if you should work with a Realtor whether you’re buying or selling?
The answer to this question really depends on you. Are you comfortable doing this alone? Are you on a tight schedule to buy or sell? Are you good at negotiating? There are so many questions that you’ve got to ask yourself, the only person who can make the decision for you is you. If you’re not in a hurry to buy or sell and think you can do it on your own, do it! I’ve mentioned that I had no problems with the process without a broker or agent, but I used friends and relatives that have done this on their own as resources. There is no right or wrong answer to the question. I hope this helps make your decision easier!