Money Blog

10 things your Real Estate Agent wouldn’t tell you. And why?

All potential buyers are a tad skeptic about their agents initially, which is indeed natural, as buying a house is the most important decision as well a lifetime investment. First off, weigh all your options; get the facts and figures right, lap up on all the information available. There are a few things that your agent does not want to reveal to you, so get your antennae up, don’t necessarily rely on your feelings and gut, first get the facts right.

1. Whose side are they on? Who are they really representing?
Okay, let’s face it. It’s the buyer who puts the money on the table. It’s only fair for you to expect that the agent gets you a deal that would deliver your money’s worth without being too commission-hungry. Now, usually that is NOT the case. The agent in most cases is representing the seller and is not looking out for your best interests. He is in fact, representing the seller’s best interest. So, this the number one thing that the agent is not going to reveal to you, that he is in fact on the sellers side and is representing the seller.

However, you have an option of choosing an agent or broker who will represent you and your best interests. In all probability, it would not cost you much. He would charge you the commission just as he would charge the seller. Just make it very clear in the beginning, so you know that he would try and get you the best deal possible and preferably has no ties to the seller’s agents.

2. Are you paying too much for that house? Get your facts and figures together
This step is vital. You are about to zero down on the house of your dreams and now come the big decision. How much is it worth? Before you make the offer, do a thorough research of comparable sales in that area. Try to weigh the pros and cons by defining your search parameters and see if that suits your budget as well as convenience. According to real estate analyst Karl Case, “Check out comparable sales in the neighborhood, then drive by each house to make sure you’re comparing apples to apples.”

This is the one thing the agent will not tell if the house is well worth the asking price. Remember, the more you pay for the house, higher the commission the agent gets. So, he will not offer you anything lesser than the asking price. Therefore, research is the key. Reconnoiter the immediate vicinity, lap up on sale figures of houses similar to yours. So, before you make the decision, it should be based on facts and figures, not just blind trust.

3. Investment value of a house. Is your agent telling you the truth? Do not get fooled
Buying a house is a lifetime investment and the most significant one. Why? In most cases, people look at it as an asset because of property appreciation over a period of time. In other words, it is important to ascertain the investment value of the house before you close the deal. This is the other thing that the agent will not be able to explain to you, and may sound overly optimistic about the investment potential. That’s because it is not easy to predict the long term future value of a house, just as in the case of stocks. However, don’t get stumped. You could hire an expert to analyze the investment potential of your house. Although that would give you only a rough estimate. Alternatively, you could do an online research or get any real estate analysis firm to track past prices and sales. This again would only provide you sketchy details. Many factors come into play while making long term predictions like demographics, economic trends, population shifts, and crime rates.

4. A preliminary sweep of the immediate vicinity. Is the agent revealing everything about the neighborhood, location etc?
Reconnoiter the area where you are planning to buy the house. Chances are that many facts are likely to unravel that your agent might not tell you, knowingly or unknowingly. You would then want to rank the crime rate prevalent in that area as also things like whether you have a shrieking neighbor! Weigh all pros and cons. Do not rely entirely on your agent to give you all the information about the locality, neighborhood etc. Get a firsthand feel of the place.

5. Will I get my deposit back in case the deal goes bust?
Caution and awareness is the key here. Make sure that before you sign the purchase-and-sale agreement, it explicitly mentions to protect your deposit amount just in case the deal goes bust. There have been many cases in the past, wherein people have lost their deposit money due to lack of information. The real estate board issues the following warning; “Don’t sign any agreement or pay any money until you’re completely comfortable with all the terms and believe the agreement protects your interests”.

6. How old is this house? How much repair and mending does it need?
Get a thorough home inspection done; chances are many things will yet again unravel that your agent might not tell you. Check for electrical fittings, plumbing, wiring, heating systems, leaky faucets. Furthermore, ask the owner as many questions. Most importantly, make sure that the sale-purchase agreement does not prevent you from getting a home inspection done. This would save you tons of trouble and money in the long run.

7. “I am really a real estate broker with a great track record!”
Make sure not to hire an agent without a few reliable references. Make enquiries about him/her, he should be a renowned broker with credibility, lest your deposit amount should be at stake.

8. Don’t reveal too much about yourself to the agent
Don’t get schmoosing with your agent especially not if he is representing the seller. Chances are he could reveal all that to the seller. So, if you slip out your financial details or the urgency to buy the house; that could weaken your negotiating or bargaining stance.

9. You may want to check the piping, electrical connections etc. before finally closing the deal
Some sellers can be very petty and for all you know after completing all the documentation, they could shave off the house of a few essentials like the water pipes, fans, electrical gadgets, etc. So, make sure that you inspect the house thoroughly before signing the sale-purchase agreement and that you are buying the house with all accessories fitted which have been seen at the time of inspection. You could be unpleasantly surprised.

10. “My Commission is negotiable”
Most agents are not going to tell you that their commission is not necessarily fixed. So, just in case the seller and the buyer are not able to decide on the selling price, a little flexibility on the agent’s part will prove to be beneficial, as then you can make up some of the difference between the asking price and selling price. This would help you get a productive transaction, and most agents would agree for a few thousand, as even then the commission is substantial.