Can I Trust My Real Estate Agent?
A real estate agent is generally the first and main contact for anyone who wants to either sell or purchase property. But the seemingly significant fees that a real estate agent often charges can make some buyers and sellers hesitate. Whether or not you can trust your real estate agent depends on a variety of factors -- but you should be aware that working with a real estate agent is almost always the preferred choice.
Why Is a Real Estate Agent Necessary for Buyers?
For a buyer, a real estate agent will be doing all the primary legwork of finding a property. The real estate agent will be coming through listings -- often through a proprietary system -- and trying to find the houses that match your needs. They will also be looking at local classifieds listings and interfacing with other professionals that they know.
Once a house has been found (and this may take some time), the real estate agent will identify any potential issues and will walk you through the process of purchasing the house. This can include arranging house inspections, finding homeowner's insurance, and getting a title and escrow company.
For a buyer, the price of a real estate agent is generally rolled into the seller's costs; there usually isn't any cost associated with working with a real estate agent.
Why Is a Real Estate Agent Necessary for Sellers?
For a seller, a real estate agent creates a sales listing and runs open houses. They find prospective buyers and show them the property, often without the seller having to attend the showings. The real estate agent determines the price point that the seller can list at and will be able to identify whether or not an offer is a good deal.
As offers do come in, the real estate agent will aid in negotiations. Once an offer has been accepted, the real estate agent will do much the same as they would for a buyer; they will walk the seller through the process and advise them on any potential roadblocks before they can become problematic.
Could a Real Estate Agent Affect My House's Price?
The largest concern most people have is that a real estate agent will unfairly alter the price of their home. Buyers worry that real estate agents could encourage them to purchase a home above market value in order to increase commission. Sellers worry that real estate agents may accept a below market value offer in order to close a sale.
Real estate agents are strictly governed by ethics committees who are able to prevent exactly this. Moreover, most real estate agents work by word-of-mouth and through return clients; they need to build a reputation within their industry as being trustworthy.
But that doesn't mean that an individual will always get what they want when working with an agent -- or that an agent is always trustworthy. Buyers and sellers alike need to be knowledgeable about the process and need to be cautious when working with an agent they don't know.
When Should I Forego a Real Estate Agent?
There's really only one area in which a real estate agent can become detrimental. In some areas, there are many homes that are for sale by owner. Some of these owners simply will not deal with a real estate agent; they don't want to involve agents at all. If you have your eye on one of these properties, working with an agent may be a hard sell. However, you need to keep in mind that there is a reason that these sellers don't want to work with an agent. Even if you forego an agent, you should still be working with a real estate attorney.
If you're trading properties between family or friends -- selling or buying with someone you know -- you may also be able to skip the services of a real estate agent. But a real estate professional could still be useful in order to explain the terms of the sale, and many of them may be willing to work on a reduced commission for that purpose only.
A real estate agent is almost always the smart choice. Though they might seem expensive, there's significant value to their work -- and they don't get paid until you get exactly what you want. That being said, in order to protect your best interests, you should also understand the process of purchasing and selling real estate and you should aggressively advocate for your own needs. Real estate professionals are governed by ethics committees, but they aren't mind-readers; they will do their best to get you what they believe you want.