How to recruit a real estate agent, when purchasing a house

All of us, from around or not, born and raised here or in another place, have the same objective in life — “live long and prosper”. 🙂 Having a place to shed the body is one of the primary instincts leading to a very old phrase of home sweet home. Searching for a home, commonly called house shopping or apartment shopping, can be a daunting task. Purchasing a house is extra-stressful.

When we shop at Walmart, we are quite stress-less because there is no tension that we have to negotiate. Moreover, there is a ninety-day return policy for most of the commodities we buy from a departmental store; therefore, why stress on anything like shopping?

House shopping is quite different than shopping in a supermarket. A house purchase is final the moment we sign off the closing documents for a house. A house needs a lot of maintenance. A house is too expensive of a commodity for which we get a very little time to examine it.

Of course, one can do all sorts of inspections before buying a house but how would someone really guess whether a house is the most suitable one for her/his family without living in it for a few days.

Before we go deep inside this topic, one thing we should mention is that this article is NOT written to state negative things about any profession. We have good experiences; we have bad experiences; we also have experiences that are neither good nor bad. All that matters are what we learn and how many great friends we make in the process. One might find it surprising that the seller’s representative of the house we finally bought became an excellent friend of ours! Although he was not our representative, he was always there for us.

In this article, we are going to list a few items that we should think about long before buying a house.

Should we buy a house?

The first question to ask oneself when planning to buy a house is “should we buy a house?” We have asked ourselves this question many times before stepping into the market. Why did we ask this question? Buying a house is a long-term commitment. Life (age) goes too far by the time all installments of a mortgage are paid.

Mortgage payments must be regular. The earlier the installments are paid off the better it is for the homeowner because early payments will result in lesser interest payments. We may be eligible for a half-million-dollar mortgage but the question here is how much we have to pay per month? How long do we have to pay for it? If one of the spouses takes some time off from the job for any reason, will the monthly mortgage payments continue? Is monthly mortgage payment way higher than the current rent? Are our credit rating and history strong enough to get a competitive mortgage rate? Is the mortgage interest rate a competitive one? All these items boil down to one question: are we ready to buy a house? One needs to analyze this question, come up with a plan, and slowly progress keeping financial situations and unseen hurdles in mind. Family heads need to discuss these items because readiness is subjective and the definition of readiness varies from family to family.

Overhead cost in buying/selling a house

Let’s say that we are ready to buy a house. This means we are comfortable with the monthly payments. We have a maximum budget in mind. We also have a location preference. Location preference may be dominated by job location and school district for many people. One of our past articles describes how to narrow down preferences and analyze school performance for school district selection.

We went through an intensive house buying experience. One of the reasons why the process was intensive and stressful is our choice of not recruiting a buyer representative. Buyer’s representative is a real estate agent who helps the buyer in finding a suitable home. According to Texas real estate laws (apologies for our ignorance regarding the terms), the buyer representative gets a service charge of 3% of the sold price of the house. The representative’s fee is paid by the seller. Injustice, hah? Call it justice or injustice, that is how it is in most states. A seller generally pays 3% to the buyer’s representative and 3% to the seller’s own representative. Many times, the buyer demands closing costs. With a not so good mortgage deal at buyer’s side, the closing cost is sometimes more than 3% of the price of the house. That basically implies that there is around a 9% overhead associated with a house transaction. At least this 9% is what we know of. Who knows how many hidden percentages are there in the mortgage part.

Now, one might think that the seller is going through such agony because she/he has to pay these overheads. It is true as well as false. The agony may go to the buyer or the seller, or it may split to both parties. The seller will try to increase the price at least by 9% to gain as much to cover the expenses he/she is going to pay. Notice one item here — the real estate agent’s commission is defined as a percentage of the price of the selling price of the house. Basically, the real estate agent’s income will be higher for pricier houses. However, there are laws and regulations that every real estate agent will abide by. Buyer’s representative will have to work to maximize the buyer’s satisfaction and seller’s representative must maximize the seller’s satisfaction. It is that simple. Anyway, whatever is apparently simple may have millions of underlying complexities. The most painful thing is sometimes not knowing what is going on. Trying to understand the overheads associated with the process gave us a little bit of awareness-comfort. 🙂

What if we are the weakest entity in the food chain

Once someone takes a closer look, it is not hard to find that there are too many people involved in the process whose living depends on house buying/selling. If we are lucky, each and everyone in the process will be a good listener, a good worker, and an outstanding professional. If we are moderately lucky, some will be professional and some will be painstakingly hard to communicate with. If we are totally unlucky, … you know what. We will say, take a break the moment you feel that it is too much stressful and try a few months later. You are buying a house, not a laptop, nor a motorcycle, nor even a car. Buying a house is a long term investment. For most of us, a house is the largest purchase we will ever make in our life. We do not have enough money to buy an airplane or a small island. 🙂 Anyway, taking some time off the market when exhausted is a good idea because this allows us to think and reevaluate the events that happened during the previous attempt. A few of our friends who took a break after some stressful exploration had a wonderful experience during the second attempt. However, wonderful experience is an overstatement. The whole house buying experience is, on average, stressful.

Should we recruit a real estate agent to represent us?

We recommend, yes. One should recruit a real estate agent, to our opinion. However, we did not recruit anyone. Why? We were seeking the opportunity to explore, learn, and study the process. We thought that if we have someone to execute our thoughts, we will not be able to practically learn it (nor we will be able to write our extensive thoughts on this topic). Another reason is that we could offer a price of at least 3% percent less than the asking price because the seller will not have to pay for the buyer’s representative. Most of the times, the seller would be happy to find that she/he does not have to pay for the buyer’s representative. However, the seller’s representative might not be that happy if a buyer does not have a representative. We do not know why life is never as easy as it seems.

Let us do some calculations. Suppose the seller’s asking price is $300,000. If someone buys the house with this price, the seller will pay 3%, which is $9000 to the buyer’s representative. An additional $9000 will be paid as the fee of the seller’s representative. Now, suppose the buyer says that she/he does not have a representative and this is why the buyer is offering $291,000, which is exactly $9000 less of $300,000. If the house is sold at the offered price of $291,000, the seller’s representative will get 3% of $291,000, NOT 3% of $300,000. That is, in this case, the seller’s representative will earn $291,000×0.03=$8730. Notice that this is a few hundred dollars less than what the seller representative would have earned if the buyer had a representative. Therefore, the seller representative may not like to find that the buyer is trying to reduce the price because there is no buyer’s representative.

The commission is just one side of the coin. Oops, the opposite side also has benefits in the equation if someone is in Texas. Let’s discuss, how so. When the seller’s representative finds that there is no buyer’s representative, the seller’s representative may attempt to become the buyer’s representative as well. In most states, a real estate agent cannot represent both parties but Texas allows that. That is, the same real estate agent may get 3% commission as the buyer’s representative and 3% as the seller’s representative in Texas. Isn’t it quite attractive? One transaction, little (or ignorable amount of) extra work but double earning? If someone does not recruit a representative and decides to purchase by oneself, the person needs to directly deal with the seller’s representative, who is an expert in the relevant business, whose interest is only the benefit of the seller. It may sometimes become really painful if someone goes to the market without a representative and without extensive knowledge about the process.

How to recruit a real estate agent

How can we recruit a real estate agent? The answer is very simple. Prepare a short list based on reviews on the internet. Then interview them.

We did not recruit a buyer’s representative. We directly called the seller’s representatives whose numbers were given on Zillow or any other site as the Listing Agent. When the seller representatives showed us the houses, we asked them questions regarding the house and tried to understand how caring they were.

Some indications are quite simple. If there is a dog, does the real estate agent take care of the dog first and then invites you in? Or, the real estate agent does not even know about the dog when showing you the house and a sudden big bark scares you to the hell. Is the real estate agent a good listener? Is the real estate agent allowing you to speak without completing your sentences? Is the real estate agent in a rush? With every seller representative, we just asked ourselves one question, “Do we want this person to be our representative?” We had a pretty good idea about whom we would contact if we were to recruit an agent as our representative.

Conlusing remarks on our experience regarding recruiting a real estate agent

This article provides some information pieces that we think are important to know before stepping on the market. Our end-experience with our house purchase was good because we found the finest real estate agent who was not working as our representative officially. He was working as the seller’s representative but he did not try to talk us into recruiting him as our representative too. He provided us with a lot of information during, before, and after the closing. He did not get any monetary benefit for helping us. Definitely, we conveyed his name to some friends later.

From a Family Blog: Settle in El Paso

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11 thoughts on “How to recruit a real estate agent, when purchasing a house

  1. Thanks for telling me that buying a house might be too intensive and stressful if we won’t hire a representative who can work for us. I’m afraid to deal with paperwork since there might be some clauses in the contract that I won’t be able to understand, so it will be really better for me to work with a real estate agent. I’ll try to finalize a budget first before looking for an experienced professional who can help me purchase a house.

  2. I and my husband I also plant to buy a new house, as we want to relocate to Texas. The facts you have shared your blog is absolutely right. We have also heard about Online CRM they have a process of Recruiting Real Estate Agents through Softwares, I think we should also consider them before going for a deal.

  3. Hello, you are doing absolutely a great job by writing blogs. Your knowledge about is great and shared the right information for Recruit Real Estate Agent. I will read more blogs on your website.

  4. I and my husband I also plant to buy a new house, as we want to relocate to Texas. The facts you have shared your blog is absolutely right. We have also heard about Online CRM they have a process of Recruiting Real Estate Agents through Softwares, I think we should also consider them before going for a deal.

    1. Thank you for visiting and commenting. Software-solution seems like an exciting choice. Thank you for sharing the idea. We wish you a wonderful new year.

  5. Agents, that’s those that are involved in negotiating for the purchase of a new house, can make things quite expensive for those that are interested in buying a house especially when it is happening as a result of these buyers being new to the business. So, I wouldn’t consider dealing with them unless I can’t connect to the direct of the house that I’m interested on.

  6. I live in a house built by my grandmother. After grandmother passed away, my father owned this house. I live in this house with my parents, my father made me the owner of this house a lomng time ago. This is my house. However, I don’t think I am the rightful owner of this house. Since a long time I am thinking to build my own house, This article certainly helps.

  7. To be honest I would not choose a buyer representative and I would try to buy the house from the seller directly. I choose this way because a buyer representative as a percentage of the selling price and that is something I want to avoid!
    I prefer to treat directly with the seller!

    1. Definitely, I am with you on this. However, if the seller has a representative, I will need to contact the seller-representative not the seller because the seller signs an agreement that the seller-representative will do all the negotiations. Thank you.

    1. Thank you for visiting our site! Yes, there are excellent neighborhoods in El Paso! Many of these areas have mountain view. Hope you enjoyed your stay in El Paso!

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