Hey Nerds,
Picture yourself sitting on a nice little nest egg. You’ve pinched those pennies, foregoing takeout and Starbucks. Now you’re ready to buy your starter home. What do you do? Great question! It’s not like they teach you about buying a home in high school or college. They closest my high school came to teaching me valuable life skills was the class that taught us how to write a check and made us write a letter to a college asking for more information.
Fun Fact: The above statement makes it sound like I went to high school before the internet became available to the general public. The world wide web boomed in the 1990’s after web browsers became easy to use and install. I was in high school in the late 1990’s/early 2000’s, so while we had the internet it wasn’t the internet of today. Want an example? Look below.
So if we didn’t learn how to buy a house, and we didn’t have the internet to Google “how to buy a house,” where did you turn? You turned to a realtor. Also known as a real estate agent, this person acts as agent on your behalf in the purchase or sale of buildings or land. In the state of Texas, to become a real estate agent must meet these requirements:
- Citizen of the United States or lawfully admitted alien
- 18 years of age or older
- Meet TREC’s qualifications for honesty, trustworthiness, and integrity
- 180 classroom hours of the following qualifying real estate courses
- Pass an exam
- Fingerprints on file and pass a background check
- Sponsored by an active Texas licensed broker to work
These requirements vary greatly from state to state (for example, Iowa only requires 36 hours of classroom hours). The important thing to note in the above criteria is that real estate agents are held to a higher standard for honesty, trustworthiness, and integrity. Your agent should work in your best interests and you need someone you can trust to act on your behalf.
Picking your realtor
So you know you need a realtor, but how do you find one? You may have a friend who is a realtor. This might work for you, if you feel like working together in a professional manner won’t impact your friendship. You could do what we did: venture out to open houses and meet realtors showing homes. We found my realtor on a Sunday in our neighborhood. Often you’ll find that realtors pass Sunday showings off to new agents. This can work in your favor. New realtors are motivated and eager to earn your business. Plus they have the resources of their sponsor broker to help amplify their knowledge.
Ask your realtor questions. You want to get to know them to see if you work well together. Upfront you should ask a variety of questions:
- What areas do you know best? It’s important for your realtor to know the area you want to look. We made this mistake with our first realtor who was assigned to us. She knew Dallas. We wanted homes in the mid-cities. She did not know the mid-cities. Consequently, it was hard for her to find homes, look for comps, and for us to generally believe in her abilities.
- How many houses have you sold and in what price ranges? This question helps you figure out a) if they have experience selling homes and b) if they have experience buying in your price range. Why is that important? Well if your realtor is used to buying/selling million dollar homes, they may not give you their full effort if you’re looking for a $150,000 home. Think of it as a payday–they are getting a much smaller payday when working with you rather than another client looking for a million dollar home. When our realtor finally realized we were committed to a certain price point, suddenly she stopped offering us water on trips out to look at houses or showing up for the walk through before closing.
- Do you focus on the buying or the selling side? Consider this an extension of the previous question.
- What type of buyers do you normally work with? Again, you want to see if they are used to working with first time buyers or retirees or families? You’re trying to make sure they are skilled to meet your needs and want to work with you.
- What’s the backup plan if you’re not available? Realtors have lives too. Shocking, I know! You may have to go see a home without your realtor and want to make an offer. Don’t put yourself in a bind trying to frantically get a hold of your realtor. Believe me when I say this happens. For example, our realtor couldn’t make it to the open house for the house my NP4L ended up buying and wouldn’t answer her phone when we called to try to make an offer. Not ideal, since they were only accepting offers through that evening! <insert wide-eyed emoji>
- What are your strengths/weaknesses as a realtor? You’re basically hiring a realtor for a new job and you have to treat it like a job interview. Upfront you need to know what are their strengths and weaknesses. Are they attentive to detail? How are they at negotiating? Learn from our nightmare where you show up with your realtor to a home and she realizes “whoopsie! I forgot my fob that unlocks the lock box to access the key to the house!” Then you watch her convince another realtor who is showing the house at the same time to piggyback off her fob. Sounds sketchy? Yeah, it was.
- Ask for referrals. It’s never bad to speak to someone who has worked with your realtor in the past. Consider it getting a sneak peak into your own search. Learn the idiosyncrasies of your realtor before you are committed
Expertise and connections
Realtors are a wealth of knowledge for more than just the search for your dream home. Think of them as a resource. A good realtor will have connections to home inspectors, general contractors, plumbers, electricians, etc. Just like your realtor, you should screen each of these professionals to make sure they fit your needs. (General rule of thumb, always get three quotes for a project and make decisions based on what works best for you.)
Also, your realtor can help you navigate the paperwork, negotiations, repairs you may want to request get made after the inspection, etc. Ideally, they are present at the end of the inspection to walk through the report with you. This gives both you and them an idea of what is wrong with a home and you can quickly determine how you want to counter to the seller or if you want to walk.
Treat it like you’re dating
When you start a new relationship, you want to build a foundation of strong communication with your partner and feel like they are responsive. However, you also don’t want them to cross that line to too responsive. The same goes with realtors! You need someone who communicates well with you, but is confident in their abilities and the process. Don’t mistake excessive communication or responsiveness for competence. Ensure that your realtor isn’t covering their lack of experience by making themselves hyper-available. Remember that the goal for your realtor is to help you close. So find a good fit to help get you over the goal line.
It’s not me, it’s you
We cannot stress this enough, you can fire your realtor. Hello! This is the biggest purchase of your life and if you don’t feel like it’s working out with your realtor, you absolutely can cut them loose. Never feel like you owe it to them to keep working with them. In fact, if you have doubts you owe it to yourself to fire them.
How can we sum all of this up? Simply put, you want to find a realtor who is nice and competent. Your realtor needs to work well with other realtors and get the job done. But a nice, incompetent realtor can sink your deal faster than a boat full of holes.
Stay tuned for part 4 of this series: tips for making offers and what to do after your offer is accepted.
Cheers,
Head Nerd