Use an Agent or Go It Alone?

A young woman is considering buying her first condo. She does her homework. She knows what she can afford, surfs the online real estate sites, and has some idea what’s available where she wants to live.

She sees an open house sign on her way to a friend’s house. Out of curiosity, she stops in, and signs a sheet that says she is not working with a real estate agent. Looking around, the home seems to have everything she wants. How can she be so lucky?

The agent enthusiastically presents the features of the unit. In addition, she intimates that several people have expressed interest and she expects to have at least one offer before the end of the day.

The first-time buyer feels pressured but doesn’t want to lose the unit. It has everything she wants. The asking price isn’t at the high limit of what she can afford so she decides to go with the agent and signs a purchase agreement for full price in anticipation of competition from other buyers.

This is an example of someone who really needs a real estate agent.

Emotions and Pressure

For starters, the young woman lets her emotions overcome her. She buckles under pressure from an aggressive agent who is earning a commission on both sides of the contract without informing her about dual agency. Without a good agent to negotiate for her, the first-time buyer is paying full price for a condo without finding out prices of comparable units . In addition, she's accepting the agent's word about the competition, while the truth is that many people express interest at open houses without coming through with contracts.

Neophyte real estate buyers need expert advice when diving into the real estate process. Pitfalls are many. In addition to presenting a variety of suitable choices, a good real estate agent knows how to estimate market value, skillfully negotiates contracts , and stays on top of contingency removals and the many details attendant to the purchase.

As stalwart as most people consider themselves to be, emotional issues play a major role in purchasing a home. Buyer’s remorse is a common affliction and sets in more often when buyers don’t carefully weigh all of the factors involved in ownership. Issues may include underestimating payments, closing costs, and maintenance fees. Commitment phobia creeps in and the responsibility of assuming a mortgage gets overwhelming. An experienced agent often sees reactions like this and allays fears as they arise.

On the Other Hand …

Buyers with more experience have other options these days. If you see a For Sale By Owner home, you might save a lot of money because the seller is not paying a commission (though it does not necessarily mean all of the savings are being passed to the buyer). On the other hand, without careful consideration of the comps and thorough inspection of the property there can be trouble. In this situation, you can hire an attorney to help you. Or ask an agent to analyze comparables for you; sometimes they will charge a small flat fee. Be confident in your negotiating skills as these deals possibly can develop bumps in the road.

During the past few years, new ways of doing business have evolved. There are a lot more ways to save money when buying real estate if you are an experienced buyer or investor. The Internet offers an abundance of sites for discount brokers, FSBOs, and fee-for-service brokers. There are even bidding sites where brokers can bid for business and competitively reduce commissions. These sites are growing daily so keep up on the real estate trends.

Some states, including Florida, Illinois, Iowa, Oklahoma, Texas, and Utah, restrict discount real estate companies. Also, FSBOs are not allowed to post in Multiple Listing Services in some states. Many of these rulings are being struck down by the courts and the next few years should see further proliferation of these types of services.

Education is your best offense when buying property. Avail yourself of the many books, seminars, tapes, and Web sites available. Armed with valuable information, you might just put more money in your pocket when buying that new home.