Do I need a Realtor? How much does it cost?
If you are like most buyers, you don't need a Realtor to find homes for sale... they are available online and you can easily click, email, text or call to set up a showing. What you may not realize is that rather than setting up 10 different appointments to see 10 different properties with 10 different Realtors you can just contact one Realtor to show you all the properties you are interested in seeing, regardless of which company has listed the property or which agent is listed as the contact.
Most buyer Realtor fees are paid by the seller at closing, so working with one Realtor can save you a lot of time and hassle with little or no cost to you.
Also, the listing agent is contracted to represent the seller and is legally obligated to keep the seller's best interests in mind. As a buyer, it makes sense to have your own agent legally contracted to watch out for you and keep your best interests in mind... and the seller pays for it!
What does a Realtor do besides show homes for sale?
Most people only buy a few homes in their lifetime, Realtors buy and sell homes all the time... they help guide you through the entire process. Some of the things Realtors do include...
- Provide legal representation, with the same fiduciary responsibilities as a lawyer
- Answer your questions and guide you through the process
- Help you clarify your wants and needs in a property at this point in your life
- Help you determine and match your priorities as you search for your home
- Coordinate with your lender to match properties to your financial needs
- Research and provide background information on properties of interest
- Help you objectively view condition and livability of the property and neighborhood as it relates to you and your lifestyle
- Provide a market analysis of comparable homes sold in the area in the last six months to assess price and value
- Write and present a purchase ageement when you find the right property, again coordinating with your lender to structure the agreement to match your financial requirements
- Negotiate the offer
- Connect you with professionals for inspections and other needs
- Monitor process from purchase agreement through closing
How much cash do I need?
Although 20% down is still the standard for not paying mortgage insurance, you may be surprised at how little cash you need to get a mortgage. Loans are available with as little as 3% down and down payment assistance programs are available with higher income limits than you may think. Bottom line is CHECK WITH A LENDER before you start your home search in earnest. Depending on which loan program(s) you use, you may only need about $1,000 of your own money. In our Twin Cities market, you must be pre-approved before making an offer so getting financing pre-approval should be one of your first steps regardless of financing needs. Keep in mind that although your financing and closing costs are due at closing, you will also need some cash along the way... earnest money at time of offer (about 1% of purchase price that applies to total due at closing)... inspection costs at time of actual inspection after accepted offer (about $400-$600 if you choose to have an inspection)... appraisal after inspection (about $425) ... and of course plan for expenses that go along with home ownership after you close on your new home.
How high does my credit score have to be?
More than half of buyers last year had credit scores of 600-749. Your score may indicate the kind of financing program for which you qualify. As you are probably aware, higher credit scores usually yield better lending terms. Again, talk with a lender to determine what makes most sense for you. You may be surprised to learn that paying cash for everything actually hurts your credit score! Your lender can help you make a plan to increase your credit score if needed to get the best terms.
Sharlene Hensrud, RE/MAX Results - Twin Cities Realtor