WHY SHOULD I USE A BUYER’S AGENT?
When you purchase a home in the State of Michigan, the seller actually pays real estate commissions; in fact prior to you seeing any home, the seller has already signed an agreement outlining these commissions. As a result, purchasing a home only costs you a broker’s transaction fee to have representation on the buying side. However, if you are wise in selecting a talented agent, the financial benefits could be in the tens of thousands to hundreds of thousands of dollars if your agent is a market expert and is a skilled negotiator.
Please note: A residential home purchase is likely to be the most emotionally driven purchase you will make in your life. Sellers and listing agents know this and once they have you emotionally committed enough to a home to write an offer, they’re going to squeeze you up as much as possible. Having an aggressive, experienced Buyer’s Agent as a buffer to unemotionally read the situation will ALWAYS be in your best interest.
A well-versed Buyer’s Agent has a thorough understanding of the local market, specifically how an area has reacted to past market corrections and how it is currently trending relative to active inventory and average price per square foot.
Regarding your timeline, you always want to buy strategically. If there is a chance you’re going to get transferred for work in the next 5-10 years, it’s important that you steer clear of homes located on high traffic roads or in less desirable areas where you risk having the sharpest downward correction in value if a market shift occurs.
Below are the common points we regularly analyze with our clients:
- Location (block, neighborhood, walkable to downtown area, etc)
- How did the city fare in the last market crash
- Land value appreciation
- Quality of construction
- Era of build
- Who was the builder if constructed in the last 10 years
- Ceiling height and door thickness
- Trim and millwork
- Cabinet quality and appliance integrity
- Floor plan and functionality
This is the second most important skill for a Buyer’s Agent to possess after market knowledge. You need someone who can do thorough due diligence and is able to find out the following:
- What are the leverage points we have on the seller? i.e. Why is the seller selling? What is their timeline and how important is it to them?
- Are there any terms and factors that are more important to the seller than price?
- Have they had a Buyer fall through or a deal fell apart yet?
- How many days has the property been on market?
- Does the Buyer’s Agent have a relationship with the Seller’s Agent? This can carry an extreme amount of weight in the negotiation in regard to gaining intel; with a pre-existing relationship with the Seller’s Agent, we can subtly push this agent (and in turn their client) to get a deal done with you. It pays overwhelming dividends to be respected and continuously trusted amongst other agents in this business.
In a hot (sellers) market tying up a property quickly is an art. Tasks like drafting a legal right to purchase with multiple outs to protect you and tactics on how to strategically avoid bidding wars will be integral to you as a Buyer.
Always discuss the below points with your agent before agreeing to work with them; ie. How would they handle these pieces in your transaction if they arise? Ask for examples on how they’ve dealt with these pieces in the past to vet their experience:
- Bidding Wars
- Appraisal Guarantees
- Inspection Waivers
- Off Market Properties
- Offer Letters
In a slow (Buyers) market it’s important to understand where you’re at in the current market cycle and if the market is still trending down or if it’s slowly starting to trend upward again.
Discuss with your agent:
- What is the ratio of active to sold properties?
- How many months of inventory are currently available?
- Who are the most motivated sellers and why?
- Does the seller have debt on the property you’ve selected? How much debt?
- If the seller has no equity, can you negotiate a short sale if the debt on the property exceeds the market value / purchase price?
We take pride in providing these facts and data points to our clients. If you have any questions regarding the buying of a new home, the process, negotiation, market conditions, or any of the other pieces we’ve mentioned above please do not hesitate to reach out to us directly.