Mistake 5: Blindly Following Your Realtor's Advice
As we've seen, first-time homebuyers have a lot of confusing matters to deal with. From fixing credit to trying to figure out complex housing market trends, they have a lot on their plate during what is already a stressful financial decision. This is why real estate agents, who try to facilitate the process, appear as godsends to some buyers.
However, this means that confused, trusting homebuyers often forget to consider the motivations and the limits of a real estate agent. First, to understand the role of real estate agents better, let's take a look at different kinds:
- Seller's Agent: A seller hires a seller's agent to help him or her sell a home. These kinds of real estate agents are very common, and chances are, if you look into several houses during your search, you will encounter one. As they were hired to help sell the house, take note that they might embellish its positive features and play down the negative aspects of the house.
- Buyer's Agent: As a buyer, you can hire a buyer's agent. Unlike the seller's agent, a buyer's agent's job is not to sell a particular home, but to find you a home you'd be interested in and help you along in the purchase. But finding the appropriate buyer's agent for you is crucial. Interviewing several and finding one with significant experience would probably be wise. Also, avoid signing with a buyer's agent who requires a long-term contract [source: Brodrick].
- Dual Agent: These agents represent both the buyer and the seller in a negotiation. A dual agent can't divulge confidential information about one client to another. However, this type of agent could face a conflict of interest. So you may be better represented in this transaction by an agent who's working just for you.
So, as you deal with real estate agents, remember whose interests they represent. Although an agent may offer financial advice, take it with a grain of salt and keep in mind that they're not experts in personal finance. Also, a seller's agent may not tell you the true reason why the client is selling the house. He probably won't tell you how low of an offer a seller is willing to accept. Likewise, if you'd rather not buy a home at the highest price, don't tell the seller's agent the most you'd pay for a house.
Just as gullible first-time homebuyers may too willingly follow the advice of a real estate agent, they may also consider a handshake a done deal. Read on to find out how to avoid that pitfall.