Ah, home ownership—the dream we all chase. Owning your own home is freeing, but it certainly catapults you quickly into the adult world of bills, brokers, and banking. There are so many things to know before buying a home, and even if you have owned and sold homes in the past, there may be things that your realtor never revealed to you.
Here we attempt to share with you the tricks of the trade, and perhaps the secrets behind the scenes, revealing what may really be happening when you hire your realtor. Here are the top then things that you will wish your realtor would have told you:
While this seems to defy logic, there is some merit to spending a wee bit more than you initially intended. Say your budget is $250,000 USD. Well, it really won’t break the bank to buy that dream house for $275,000. Why?
Well, for one— your monthly mortgage payments will really only be around $15-20 more per month (depending on interest rates). Perhaps just give up your daily high-end coffee? Plus, that dream house has everything you want; it has the granite countertops; the walk-in closets; the finished basement. These are the things you will eventually add to the less expensive house; thereby, spending that $275,000 in the long run. (Although, always be sure to stay within your means—see affordability calculator below)
Maybe you are single and buying your first home. Most likely, this isn’t going to be the home you raise kids in. We still encourage you to buy in a growing family neighborhood where schools are established or are in the phase of being built.
This is the perfect investment scenario. A home where families are flocking and schools are growing is only going to go up in value. So buy that family home even if you don’t plan on staying in it for the long haul—your wallet will thank you in the end.
Of course, realtors and sellers have a legal obligation to reveal pertinent things they know about the property. Things such as past floods, restorations, and future building proposals in the vicinity are all topics that should be revealed to a potential buyer. Wouldn’t we all like to know if a baseball field is proposed for construction across the street?
Although, sometimes the realtor is in the dark just as much as the buyer. Perhaps the seller has hidden some of the less attractive events that have gone on in the home—such as mice infestations or toilet overflows that soaked into the drywall. Your best bet is to hire a trustworthy realtor. Ask your realtor to do some leg work for you (that’s their job after all); ask them to look into city plans, future schools, roads or other construction proposals, and past insurance claims. A trustworthy, reputable agent is paramount to discovering the real truth behind the walls of your potential dream home.
We have mentioned that stretching yourself a bit when it comes to price can increase your profits in the long run, but you still need to be very careful that you are buying something that leaves money in your budget to buy food. Avoid rich house, poor man syndrome.
Your realtor should be able to help you decide whether or not the home is truly affordable and within your means. They can point you in the direction of a reliable online affordability calculator, but they can also help by listing all the known costs that come with the house. Home owners insurance, property taxes, typical monthly electrical bills of past owners, home association fees etc… These are all items that must be included in your affordability calculations. Buy smart and don’t dive into something that ends up drowning you in debt.
Ugh! The offer. This is the most stressful part of the entire home buying process. Here is where you hand it all over to the realtor and expect them to negotiate like a shark. But here’s the thing— the higher the selling price, the higher the commission for the relator. Did your realtor tell you this? We doubt it; its up to you to know these little facts.
The scales are already balanced against getting the best price (unless your realtor takes a flat fee no matter the selling price— and not many do). How do you fix this? You need to stay firm when it comes time to barter the price. Have a number in your head that you are willing to pay and stick to it. Don’t allow anyone to negotiate a price that you are uncomfortable with and be willing to walk away if you don’t get what you want. Keep emotions at bay and know there are always other houses on the market if you lose this one.
While the home inspection doesn’t normally happen until an offer has been accepted (contingent upon what the upcoming home inspection reveals), we think it would be wise for your realtor to suggest that you the seller get a home inspection done before even listing your home.
A lot of money, grief, and unplanned surprises can be avoided by hiring a home inspector before listing your home. Imagine if the home inspector finds improper wiring? A window that won’t open? A poorly insulated attic? All of these are things that may either turn away a potential buyer or cause the potential buyer to drastically reduce their offer. By fixing these items before hand, you can save yourself a lot of money as it is often cheaper for sellers to make the repairs themselves rather than bartering at the negotiation table.
Yes, it sounds cynical but its true. That open house where you run yourself ragged cleaning every corner of the home actually has a mere 2% success rate according to the National Association of Realtors study.
What the open house does allow for is many work opportunities for your realtor. Just think, they get to mingle with tons of potential buyers! Perhaps your home isn’t right for a certain buyer but we bet your realtor knows “Just the right home for them, let’s schedule a time to meet so I can show it to you. Here’s my business card”. Cynical but true. This doesn’t mean that you shouldn’t have an open house, as your home can most certainly sell from one of these events; it just means that you should be cautiously optimistic and perhaps not feel pressured to hold an open house every weekend.
Did you tell your realtor that your absolute buying limit was $300,000 but you instructed your realtor to put an offer in of $ 275,000? Be careful, as your realtor will talk to the selling realtor. Yes, they get on the phone and discuss everything. While a reputable realtor will not disclose your wants/needs, a less than reputable realtor will.
A fair realtor is hard to find. It’s a business and the quicker the deal closes, the sooner the realtor gets their money. They don’t want long drawn out negotiations or months of showings. Again, just do your research, follow your instincts when hiring a realtor, and be careful what you reveal to even the most trusted realtor—they have a hand in this game, as well.
Of course, what realtor is going to say, “don’t hire me, you don’t really need my services”. However, it may be true. Do you really need to hire a realtor and pay a hefty commission to sell your home? And do you really need a realtor to help you buy a home? The latter is a bit tougher. A realtor can be invaluable when it comes time to gain access to homes for sale. The former is a bit more open to debate.
You can go at it alone and sell your house successfully by yourself. Just be sure it is something you are willing to do as it involves some work on your part, and perhaps the hiring of a good lawyer to draw up legal papers, and an appraiser to help you decide the homes value.
After all this talk of home buying, it’s easy to get caught up in the dream of owning your own home. But perhaps your realtor should stop and ask you if you are truly ready to by a home?
Are you really financially ready to take on all the bills that come with home ownership? Are you really ready to mow a lawn every weekend? Shovel snow every winter? Do you have a nest egg for when the roof needs repair or the carpets need replaced? Home ownership is expensive! Maybe your realtor should give you a wake-up call before you sign the dotted line?
Are you still feeling ready to buy or sell your home? We suggest you continue to review our ten realtor “secrets” and hire a trustworthy realtor with plenty of years under their belt in this business. Don’t be shy about asking questions, and certainly be willing to walk away from negotiations no matter what your realtor or anyone else says. Despite all the negative things that can take place behind the scenes, home ownership is an exciting prospect when you are truly prepared.