They are on your side. They are also paid when you buy. Keep both things in mind.
The American residential real estate transaction is one of the largest financial decisions most people make in their lives, conducted with the help of professionals who are paid only when the transaction closes. This does not mean real estate agents are dishonest — the vast majority are genuinely trying to help their clients. It does mean there are things about the process that agents do not always volunteer unless asked. Here is what you should know going in.
The Seller Pays Both Agents’ Commissions, But You Are Paying It.
The traditional structure of American real estate commissions — where the seller pays a commission that is split between buyer’s and seller’s agents — means that technically the buyer does not write a check for the buyer’s agent. But the commission is built into the price the buyer pays. Recent legal settlements have begun to change how these commissions are disclosed and structured, but the fundamental economics remain worth understanding.
The Inspection Report Is Not a Deal Breaker List — It Is a Negotiation Tool.
A home inspection almost always reveals issues. That is what inspectors are paid to find. The question is not whether there are issues but which issues matter, what they cost to fix, and how to use them in the negotiation. Many buyers panic at inspection reports and abandon good purchases. Many buyers ignore important issues and regret it later. Learn to read an inspection report before you need to.
The Neighborhood Matters More Than the House.
You can renovate a house. You cannot renovate a neighborhood. The quality of the school district, the trajectory of property values in the area, the walkability, the noise, the neighbors, and the direction the surrounding community is heading will affect your daily life and your investment far more than the kitchen counters or the bathroom tile.
Get Pre-Approved, Not Pre-Qualified.
Pre-qualification is a quick estimate based on information you provide verbally. Pre-approval is a verified review of your actual financial documents by an actual lender. Sellers and their agents treat pre-approval as a serious signal and pre-qualification as approximately nothing. In a competitive market, showing up without pre-approval means losing houses to buyers who have it.
The Listing Price Is an Opening Offer, Not a Fixed Value.
In a buyer’s market, houses sell below list price regularly. In a seller’s market, they sell above list price regularly. The relationship between list price and transaction price is determined by local market conditions that your agent should know and share with you. Ask your agent what houses in the specific neighborhood you are targeting are actually selling for relative to list price.
Closing Costs Are Larger Than Most First-Time Buyers Expect.
The down payment is the number buyers plan for. Closing costs — which include lender fees, title insurance, attorney fees, prepaid taxes and insurance, and various other charges — typically add 2 to 5 percent of the purchase price to the amount you need to bring to closing. On a $400,000 purchase that is $8,000 to $20,000 in addition to your down payment.
Homeowners Insurance and Property Taxes Will Change.
The property tax assessment on a house often changes when it sells — because the sale price becomes the new assessed value. In high-tax areas this can significantly increase monthly costs beyond what the previous owner was paying. Research the actual current tax rate and understand that your payment may increase after closing.
The Best Time to Buy Is When You Can Afford To, Not When the Market Is Perfect.
Trying to time the real estate market is a strategy that has failed most of the people who have tried it. The best time to buy a house is when you are financially ready, you intend to stay for at least five years, and the house meets your actual needs. The market will do what it does regardless of your timing.
Ask Every Question You Have and Then Ask More.
Real estate agents are licensed professionals who are legally required to act in your interest. They are also human beings who do not always know what you do not know. Ask why the previous owners are selling. Ask how long the house has been on the market and whether the price has been reduced. Ask what is included in the sale. Ask about the HOA. Ask about the utility costs. Ask everything.
The biggest financial decision of your life deserves more questions than you think to ask.
