First time home buyer: Should I use a real estate agent? If so what should I ask

[mrtimo]

Should I use a real estate agent? If yes, what should I ask my agent before we begin?

[senecando]

In the same position myself. I've been making heavy use of this site: http://michaelbluejay.com/house/decide-on-agent.html

Following to see what others have to say about selecting one.

[Catbert]

I would definitely use a RE agent. 

 Don't pick an agent b/c they are someone's wife or SIL or nephew.  Don't pick an agent b/c you stumble across them at an open house.

Look for someone who specializes in first time buyers and/or the area you want to buy in.   

[socaso]

Although I have never bought a house I have house-hunted in 3 different cities and used real estate agents each time. All three were lovely people and we never felt pressured to buy something but the third agent was exceptional and to me the things that set him apart were his experience in the neighborhoods we were looking in and his previous experience helping people purchase income properties (which was what we wanted.) He was also extremely knowledgeable about potential problems with houses, he often pointed out thing that were going to need repairs. We came very close to closing on a house with him. The inspection came back with a ton of problems and the lender would have let us go ahead so we were very conflicted and the real estate agent told us he thought the repairs were a lot for first time home buyers to take on so we passed on the house. I very much appreciated his honesty. Although we didn't buy a house we have referred other people to him.

[pzxc]

You absolutely should use a real estate agent if you don't yourself have a license --  if you don't use one, then you'll end up paying the entire 6% commission to the seller's agent, rather than 3% to her and 3% to yours.

Since it essentially costs you nothing, you might as well have someone on your side to draft the purchase agreements, pass along negotiation communication, schedule the showings, etc.

[RH]

Yes, use an agent. It doesn't cost you anything since you are the buyer.

[frugaliknowit]

Yes, use an agent.  If you actually buy something from him/her, have them show you comparable sales (in writing/computer printout) before making any offers.  Also MAKE SURE you hire an inspector and make sure you do not use the realtor to refer you to one (they have their list of "easy inspectors"...).

[TerriM]

Where are you buying (city/state)?

Are you already familiar with the neighborhood(s) you want to buy in or do you need advice on neighborhoods?

Have you been to open houses already?  If so, were there one or more houses in your price range that you liked?

Are you a DIY or do you want someone to do the research for you--ie, do you want to select places to see from the MLS listings, or are you expecting the RE agent to find the places for you and drive you around on a tour?

Do you already have a mortgage broker or a bank that is providing your mortgage?

[Annf]

I used to be a Realtor so I'm a bit biased. However, as a first-time buyer you need to understand there are all sorts of things that can come up during the process of buying a home. Mainly with inspections/testing and issues with the appraisal and loan. It's good to have someone in your corner to help navigate through the negotiations. We are really good at being emotion filters so you can look at things objectively. 

I think the main thing is working with someone you like. You will be spending quite a bit of time with them. It's like a short term marriage!  So don't sign a buyer agency agreement until you've gone out with them at least once. You will know really quick if they know what they are talking about. If they are looking up and down and checking out the roof/HVAC system/foundation and pointing things out like proximity of highways/industrial areas/parks etc then they are probably pretty good. I always told my clients I'd talk them out of buying a house but never talk them into buying one. I never wanted to get a call to sell I house I sold 5 years prior and not be ale to sell it. That means I sucked as a Realtor.

[Annf]

That is not true. I have thanked home inspectors I've recommended for "killing the deal."  Think about it....90% of my business was from referrals from past clients. They would not refer to me if I was suggesting crappy inspectors.

So that would be a good question to ask. How much of your business is from referrals by past clients. And can I call some of your past clients? 

[TerriM]

One clear answer is to choose an agent that can afford to lose the deal.  Not someone too busy, and not someone too hungry.

[seattlecyclone]

We went with Redfin. The whole process was very easy and they refunded part of their commission at closing. I recommend them if they're operating in your area.

[mozar]

Use an exclusive buyers agent.
http://naeba.org/
The house I bought fell below redfins minimum.

[pzxc]

That is not true. I have thanked home inspectors I've recommended for "killing the deal."  Think about it....90% of my business was from referrals from past clients. They would not refer to me if I was suggesting crappy inspectors.

So that would be a good question to ask. How much of your business is from referrals by past clients. And can I call some of your past clients?

You may be an honest, honorable realtor -- but that doesn't change the fact that many realtors aren't, and a buyer really doesn't have any way to tell the difference.

DO NOT USE THE INSPECTOR RECOMMENDED BY YOUR REALTOR.

EVER.

[AlanStache]

yes use a agent.

What is going on that you think maybe you should not?

Re Home inspector:  You pay them but they dont work for you, they work for the bank.  If you are friends with some home owners have them take a look at the place.  Pay them in pizza/beer to give you honest notes on what is good/bad.

[BlueHouse]

I think it's worth it.  Don't sign a buyer's agent contract -- why should you?  If they threaten that they "have to have it signed", just say "sorry, not gonna sign it".  I've never had anyone turn me away because I didn't sign it.  There are too many bad realtors out there and if it's just not working out, you need to be able to walk away. 

I agree not to use a friend or a relative.  I've worked with agents pushed on me by others and I've never been impressed.  One time I thought I'd have better luck throwing a dart, so I used the AAA service because at least they offered cash back.  Lo and behold, that was the best agent I've ever worked with and would gladly recommend her over and above any agent I've worked with before or since. 

I would also work with Redfin or any other online agent.  I think the old way of brokers/agents is so outdated.  It's obscene to pay 6% when you do most of the work.  (and of course you pay it ...it's built into the price of the home)

[southern granny]

When my daughter bought her first house she met an agent at an open house.  She liked him although she wasn't interested in that house.  He became her agent and he really worked hard for her.  We actually found the house she bought by searching on line, but he was still a lot of help with putting in the offers and countering the counter offers.  She didn't have to pay him anything, he got a portion of the sellers commission.  She did send him a gift certificate to a popular restaurant.  More important than the agent is the housing inspector.  Make sure you get a good one.  The inspector found several problems that we were able to get the sellers to pay for and saved her probably $2,000 in repairs.

[Rage]

I strongly agree with the comments above about not using an inspector recommended by your agent.  You want an inspector who knows that you are his/her client, not one who views your realtor as his client.  I have done this both ways and deeply deeply regretted using an agent-recommended inspector. 

Remember that the agent, while pretending to be on your side and in your corner, their loyalty is always to the transaction.  They want that transaction to go through.  Yes they have a fiduciary responsibility to represent your best interests, but they rarely if ever do, they represent the transaction.

Read that buyer's agreement carefully.  It's full of bullshit.  If it's a 3 page agreement, most of the bullshit will be on the 3rd page.  Your agent will pretend to explain it to you.

Some example bullshit:

• You agree that they are your exclusive agent no matter what for 6 months or 1 year.  This is bullshit, why would you agree to that?  1 month tops.  They might say, "hey, it's no big deal, if you want to leave I'll let you go", to which you should respond, "then why is it in the fucking contract?"
• If you find a house on your own (for sale by owner or whatever), you agree to pay them a commission even though they didn't find it.  Think about whether you are cool with that.
• If you the seller refuses to pay them a full 3% commission, you agree to make up the difference.  That's bullshit, it's between them and the seller.

Having bought and sold a few houses I sometimes get impatient with this stuff. It's super annoying.

Don't make the mistake of thinking that using an agent is free for you.  It's obviously not true, I don't know why people are saying that.  It costs you 3 to 6%.  Always remember that.  Imagine you see the perfect house just biking around.  You walk up to the door and say, hey, can I buy your house?  I'll give you $310K for it.  The owner might be like, that's crazy, it's worth $325K.  And you can say, yes, but you would pay $20K in agent commissions if you sold it for that.  If you sell it to me now you'll wind up with more money.  Everyone would win.  This isn't just a crazy scenario, I know a person who did this (though you have to knock on an awful lot of doors first).  And they still went through the full inspection/escrow/loan/etc stuff, just no agents.  In many states you can do a real estate transaction with just a closing company.

So it costs you money, it's just easier because agents have done everything they can - including lobbying your government representatives to act against the best interests of their own constituents by passing laws that benefit real estate agents - to make it that way.

[Mr. Frugalwoods]

We went with Redfin. The whole process was very easy and they refunded part of their commission at closing. I recommend them if they're operating in your area.

We also used Redfin and would recommend it.  All realtors are snakes, but redfin is less terrible than the others and at least gives you some money back.  They also weren't annoying.  We interviewed too many "old blue-hairs" who I swear talked to us like we were 5 years old. 

I didn't need someone to walk with me through a house and say "Oh, what a nice bedroom!  Couldn't you imagine a mirror hanging here?"  Seems like 70% of realtors are that type, and they drive me insane.

I needed someone who:

1) Understood technology and embraced it to make the process efficient
2) Wouldn't care if I wanted to see a ton of properties.  I did, and they earned their commission in gas alone.
3) Would be an effective negotiating consultant and present my offer
4) Could manage the process after the offer acceptance

For me, Redfin hit all those points.  I'd use them again.  The only catch is that they are only available in some markets.

[MsFrugalista]

Similar to Mr. Frugalwoods and seattlecyclone, we also used Redfin for our first home purchase earlier this year.  We found that Redfin does have a pretty good guide that covers most aspects including what to look for in a mortgage agent and all that. We had a relatively experienced agent who was very helpful throughout our search and process. I enjoyed doing much of the legwork and research (finding homes that fit our needs, setting up open house appointments, etc.). Redfin was perfect for this since they don't push you to go visit open houses or make any decisions. Our agent was very hands off, but always there when we needed her (even when our current home's offer was due within 24 hours of the open house!).

Another site we came across later was http://hungryagents.com/ - similar to Redfin but doesn't provide a 'full -service". If you find a place on your own, this may be a good option.

All the best to you!

[Spondulix]

Do you know any homeowners in your area? Ask them for recommendations. Working with a realtor is sort of like dating - you don't just marry the first one you meet. Meet a few and see who you like.

I think when you're looking the first time, realtors just seem like tour guides like you see on tv shows like House Hunters. What you are actually hiring them for is when things get ugly (which will happen at some point in escrow). My agent pointed out on every house things that would have come up in an inspection - roof problems, foundation problems, termites, signs of water damage or mold... Things I never would have known as a first time buyer. Nothing is worse than spending money on an inspection and negotiating over issues that should have been picked up on the first viewing!

I would also recommend meeting with a mortgage broker. Initially, that seemed like a real waste of money to me, but she saved our ass on the deal (not to mention dealing with problems with the bank  lost paperwork, etc - stuff that happens every time). I know what to expect now and probably won't hire again for the next purchase, but for the first one, it was totally worth the cost.

[Spondulix]

Re: inspector - I used a couple inspectors that my agent recommended, but they were people that she personally used on her own homes. If someone has been in the business 20 years and that's who they hires, I'm going to trust that over someone I find on Yelp or Angie's List (some of those vendors turned out to be awful)

[TerriM]

We are using Redfin now, as well, and I like them.

The nice thing is that when I tour, agents will point out both the good and bad things.  I've had them point out cracks in the ceiling "just painted, and the crack is showing already.  That's not good."     Also, the people writing the contracts have a *very* good feel for the market as they could be writing 100 a month and they see where the market is going, and how each house sold.

The drawback is having less time with the agent writing the proposal and doing everything by email/phone.  There are times I wish I could sit down and look over their shoulder and just correct things as we go.

[iris lily]

We've done deals with and without real estate agents, but mostly "with." Either one works. And for the last couple of deals we had our close friend do the deal and he made very little money because our properties are shiite.  :)

But for a newby, having an agent helps a lot. When I was single and bought my first house, I used a professional real estate agent and I really liked her. Now we use our friend who is very good and professional and knowledgeable. The pros are really good and they do provide real service.

Be sure to choose someone who
1) is full time in the business
2) has worked full time in the business for several years.

part timers and your sister's brother-in-law who happens to have his real estate license--they are amateurs, stay away form them.

[Another Reader]

I think you should turn this around and ask yourself how you would buy a house without an agent.  Are you going to buy a house that's listed on your local MLS?  You can probably find most or all of the listed houses on-line.  How will you make arrangements to see the house?  If you decide it's the right house, how will you determine what amount to offer?  Have you talked to a lender?  Do you have a prequalification/preapproval letter you can include in your offer?  Do you have an escrow agent/title company lined up?  Will you have the house inspected?  If so, do you have an inspector in mind?  What will you do if the inspection reveals a significant problem?

Are you considering houses that are FSBO?  Most FSBO's are not listed because the seller wants too much or there is not enough room in the price for them to break even if they hire an agent to list the house.  Buying those houses for the correct price can be difficult.  The same questions apply.

If you have an answer for every question and are confident that you can do this, then give it a try.  You should realize that the listing agent will probably collect the whole commission if the property is listed, so getting a price break for not using an agent is difficult.  You also need to understand that the listing agent's duty is to the seller, not to you.  The listing agent is not obligated to assist you in any way and in fact must act in the seller's interest.

If you decide to use an agent, find one that is experienced in representing buyers in the area you want to buy.  I would never sign any contract with a buyer's agent.  If an agent finds me the house and handles the negotiations, great.  If the agent does not perform and I find someone else that does, the non-performing agent should not be entitled to compensation from the seller.

[APowers]

Disclaimer: no experience buying/selling houses, other than our current home which was FSBO and we didn't hire an inspector. That said...

I'm not sure what real value a real estate agent brings, other than providing a listing service and providing a secure way to unlock a house for strangers to walk around in. Kind of like car salesmen, IMO.

If I want to buy a house, _I_ will have figured out how much/what kind of house I want; _I_ will be evaluating a particular house to my satisfaction, or hiring an inspector to do so;_I_ will be the one researching the neighbourhood to decide if I want to live there; _I_ will be the one initiating an offer of purchase; _I_ will be the one deciding if I can afford it; _I_ will be the one arranging the financing; and _I_ will be the one signing the papers.

What does having an agent benefit me, as a buyer? Or am I abnormal in the respect of how much of the process I intend to be in control of?

[chasesfish]

I'd use an agent, but be sure you pick one based off how many transactions they've done.  You can usually figure out who the top 10% of agents are by doing a Google search for your local association of realtors and lookup the producer awards.

Regarding the inspections, I will always get multiple home inspections from this point going forward.  1 person for 3 hours isn't enough time,

[Spondulix]

Disclaimer: no experience buying/selling houses, other than our current home which was FSBO and we didn't hire an inspector. That said...

I'm not sure what real value a real estate agent brings, other than providing a listing service and providing a secure way to unlock a house for strangers to walk around in. Kind of like car salesmen, IMO.

What does having an agent benefit me, as a buyer? Or am I abnormal in the respect of how much of the process I intend to be in control of?

I think you missed out on the really ugly part of the process by not having to go through inspections, negotiations, etc. Home repairs always show damage and problems. Appraisals can come in below your agreed price (so you have to re-negotiate). In those cases, representing yourself is like going to court without a lawyer. You could do it, and you might get lucky and get everything you need, but the odds are against it. Emotions run high, communication breaks down, everything is on a tight deadline. It's a huge learning curve the first time, even without the stress and emotions.

One other place an agent can benefit is inside knowledge. In a competitive market, some agents will know about homes before they show on the MLS. Really connected ones can get you a showing before, also. Agents are really like politicians too, so they might be able get information about the deal (like what someone needs to get in an offer) info that you would never find by talking to the seller's agent at an open house, or calling them yourself for information.

[APowers]

Disclaimer: no experience buying/selling houses, other than our current home which was FSBO and we didn't hire an inspector. That said...

I'm not sure what real value a real estate agent brings, other than providing a listing service and providing a secure way to unlock a house for strangers to walk around in. Kind of like car salesmen, IMO.

What does having an agent benefit me, as a buyer? Or am I abnormal in the respect of how much of the process I intend to be in control of?

I think you missed out on the really ugly part of the process by not having to go through inspections, negotiations, etc. Home repairs always show damage and problems. Appraisals can come in below your agreed price (so you have to re-negotiate). In those cases, representing yourself is like going to court without a lawyer. You could do it, and you might get lucky and get everything you need, but the odds are against it. Emotions run high, communication breaks down, everything is on a tight deadline. It's a huge learning curve the first time, even without the stress and emotions.

One other place an agent can benefit is inside knowledge. In a competitive market, some agents will know about homes before they show on the MLS. Really connected ones can get you a showing before, also. Agents are really like politicians too, so they might be able get information about the deal (like what someone needs to get in an offer) info that you would never find by talking to the seller's agent at an open house, or calling them yourself for information.

We did inspect our house (several times, actually), and we did negotiate-- with the owner. Not sure how emotions would run especially high, or communication would break down (I guess the owner could refuse to respond to phone calls or emails...), and not sure how anything is on a tight deadline just because it's a home purchase.

Agents are like politicians, yes....they both wear suits and behave like used car salesmen....:P

[downtownshuter]

First time around I recommend having an agent (and every time thereafter if you aren't one to read legal agreements in detail). If Redfin is in your area I would use them. We bought our last house without an agent though and it was the easiest deal I've been through.

But don't sign any exclusivity agreements unless you've met with at least a couple agents and love the one you're signing with. IMO if they need to lock you into an agreement they aren't doing their job well enough.

[Spondulix]

We did inspect our house (several times, actually), and we did negotiate-- with the owner. Not sure how emotions would run especially high, or communication would break down (I guess the owner could refuse to respond to phone calls or emails...), and not sure how anything is on a tight deadline just because it's a home purchase.

Agents are like politicians, yes....they both wear suits and behave like used car salesmen....:P

You really can't see how a sale could be difficult (or know anyone who's had that experience)? That spending large amounts of money and making major life changes can cause stress, escalate emotions, or cause poor decision making? I'm not talking about you or me - I'm talking about those times when you get in a deal with a narcissist, a jerk, or whatever insecurity comes out when they are under stress. Some people do irrational or stupid things out of desperation - baby is due and they need to close escrow before. One house is sold and all their belongings are in a truck (or storage) until the other one closes. There's a reason escrows have a time set to close, cause most people have to do some sort of life and financial planning in order to move!

A recent story I heard was a home that had $10k of mold damage discovered in inspections. Both the buyer and seller had all their cash tied up in escrow (downpayment). They went back and forth (directly at first) for a month negotiating who would pay for the repair, and eventually got so frustrated they quit talking to each other. You know who saved the deal? The agent - who used his commission to pay the repair.

As for the tight deadline, if you're supposed to close on a certain date and the bank ***ks up and doesn't fund the loan, it's pretty stressful. Plus, there are penalties when escrow closes late. It's a total waste of money!

[gobius]

When I was buying my first home, at first I was trying to go without a buyer's agent.  I had to call each seller's agent and schedule a showing with him/her; they wouldn't just give me the passcode to get the house keys.  Then they would give their spiel to us while showing the house, and you could tell they didn't want to give complete answers.  Sure, if you're only looking at a few houses and already have a decent amount of experience, this may not be a big deal.  I thought it'd be easy, but after looking at 10+ houses this way and still none that we 100% wanted to buy, I found a seller's agent.  He was recommended by my boss and was worth it.  We ended up looking at many more houses and he made it a lot easier.  He had 30 years' experience in the area and knew the market really well, including the quality of neighborhoods.  He also got to know our preferences and ended up finding our first house right when it went on the market.  We've recommended him to everyone and used him again when buying our 2nd home (the 1st home was great but I decided to downsize and move into town after living there for about 5 years).  Each time we looked at probably over 30 houses with him.  He gets most of his clients from referrals; we were a referral and he has gotten at least 3 successful referrals from us.

One house we really liked during our first experience was an old farmhouse on what used to be a dairy farm; it was now a 3-acre lot and a good price.  We had previously looked at it with the seller's agent and had it on our original short list.  When we walked in with our buyer's agent, he said, "all the floors are sloped", and once he said it, it was obvious.  He found a lot of other issues in the foundation and the rest of the house that we didn't see the first time, so we decided not to buy it.  If not for that, we may have bought the house.

As for using inspectors, since we got to know our realtor really well and knew that he wasn't just in it to take our money and relied on referrals for his business, we trusted his judgment with inspectors each time.  Our first one was particularly picky, which was good for us.  Our second one was also pretty picky and found a lot of stuff; our buyer's agent even found a few things and negotiated the seller paying for the fixes for us.

So all in all, with the realtor we had, he was 100% worth it.  If I were retired and knew the market well I would perhaps change my mind, but being a working stiff and with no RE experience, I am glad we went with a RE agent.  A coworker was trying something similar (going on his own) and was getting frustrated so he ended up using our RE agent too.  Like someone upthread said, it's like dating: you don't marry the first one you meet.  It took a bit of asking around before finding one we really liked.