If you're a first-time home buyer, you'll quickly discover that there's a lot to buying a home. There'll be a lot of market data to comb through, an excessive amount of choices to make and a mountain of paperwork to understand. Then when you do find a home, you'll need to know how to negotiate and make the best offer. After that you'll have to go through inspections, title search, and mortgage approval before finally arriving at closing day. Getting through all this on your own can be tough, which is why it makes sense to hire a qualified buyer's agent. But when choosing an agent to hire, how do you know what to ask them? You'll want the best agent, so asking the right questions and discussing the right topics will help you narrow the search down. If you're new to real estate, here are six essential topics you'll want to discuss with your buyer's agent.
1.) The Current Market Conditions
When discussing the housing market there are two types. There's the national market which can encompass the whole nation or just your individual state, and then there's the local market which can mean anything from your city to your neighborhood. Ask your agent about the current state of the market with an emphasis on the local neighborhood. You want to know things like current inventory levels, buyer demand, and housing prices. This will help you gauge how much money you'll need to bring to the table and what you can expect ahead.
2.) The Services They Provide
There's a lot to buying a home so you'll want to know exactly how your agent will be helping you. Not all buyer's agents are the same. Therefore, you'll want to quickly assess the different services provided by each one you talk with. An agent who has received their Accredited Buyer's Representative designation will have specialized training and experience in representing buyers. If you already know what neighborhoods you're interested in, then ask them for advice or information on them. Just remember that due to Fair Housing Laws, there are limits to what an agent can tell you. Buyer's agents can only point you in the direction of information, but they can't answer direct questions about demographics, crime rates, and school quality. That's for you to assess, not them.
3.) Your Needs and Wants
If everything else looks good with the agent, then now is the time to start discussing your own needs and preferences. An agent can't help you if they don't know what you're looking for. Tell them about your preferred housing style, what amenities you desire, the number of bedrooms/bathrooms, and commuting considerations. Make it clear to your agent what things are essential and what you would like but can do without. There will almost always be a few tradeoffs when choosing a home. At this point, it is also important to discuss your budget and loan options. Ask your agent if they can recommend any lenders or mortgage plans that worked for other buyers in a similar situation.
4.) The Buyer Representation Agreement
Every state has its own unique laws that real estate agents must comply with. For instance, in some states, it's a requirement for agents to use buyer's representative agreements. In others, it's optional or may have different laws concerning buyer representation. Ask your agent about how they handle buyer representation. Having a written agreement can be incredibly helpful in clarifying expectations and avoiding any misunderstandings. This way you'll know exactly what's expected of your agent and what they expect from you in return.
5.) Compensation
Last but not least, compensation. How and what is your agent charging for their services? Most agents work strictly on a commission basis and won't take any payment until the end of the sale. This will be done in the form of a commission which can be 3-6% of the purchase price and will be split between them and the seller's agent. Technically, the seller will be paying this, but they may factor in the cost of the commission into the sales price meaning you'll also pay for it. Make sure to ask your agent about how they expect to receive compensation for their services. The more you know about their expectations, the better you'll be able to work together in the search for your dream home.