This is a guest post from Kathy Tyson, Realtor, at Middle Tennessee Real Estate.
It’s true. Buying a home can be the single biggest financial decision most Americans make. In today’s real estate market, buyers will typically need to save several thousand dollars to purchase a home – where just a year ago, very little was needed. Lenders are tightening their belts and going back to basics, therefore they are again requiring a down payment. After that, out of pocket costs will include a home inspection, appraisal fee, loan application fee, possibly termite inspection and treatment (depending upon the contract), and more.
With this kind of money on the line, you want to be absolutely certain that the people you work with are qualified to represent you in the transaction. Here are some questions to ask your potential agent if you’re planning to buy a home:
1. Are you a REALTOR®?
Agents must be members of the National Association of Realtors (through their local association) to be able to say they are a REALTOR®. Members are held to a high standard and follow a strict code of ethics which includes putting your interests ahead of their own, to be honest at all times, and to be truthful in all communications with the public.
2. How long have you been a REALTOR®?
How many times have I heard, “My cousin just got his license so I’m going to use him or her.” I agree that every agent must start somewhere and it’s important that they be given an opportunity, but if you use a new agent do make sure they’re under the wing of a more experienced agent.
3. Do you charge an administrative fee?
Several companies now charge buyers a fee of $175 to $500 to work with their agents before they ever sit down in a car to look for homes. My company does not, but my guess is that this ensures customer loyalty. Who would pay that amount and then go to another agent, losing their money? This administrative fee insures that the money agents spend driving lookie-loos around can be recouped if the buyer walks away to someone else.
4. What is a CLUE Report and why is it important?
The CLUE Report (Comprehensive Loss Underwriting Exchange) is a database containing the history of insurance claims filed on the house. This report allows insurance companies to see if there has been water damage, a fire, or other claims made by a homeowner, which will be considered when the price for the insurance premium is set.
5. Do you have testimonials from other agents (your peers)?
Perhaps the biggest indicator about what your agent is really like comes from within the real estate market. If other agents take the time to comment on your performance to your broker, it means you’re either pretty fantastic or quite terrible. Of course, if an agent is bad it is unlikely that they can produce a testimonial from another agent on their behalf.
6. Can I call your last buyers or sellers and ask their opinion of your work? Or ask to see copies of letters or thank you cards given to you from buyers or sellers.
Never be afraid to ask for references. Or better yet, see if your agent provides references in advance through either a buyer book or on their web page. But in addition, it can be just as important to speak to the agent’s latest customers to see if their work still holds up two or ten years down the road.
7. Do you personally look at my income and financial situation?
While it is important for an agent to know that you have the ability to purchase a home through adequate income, good credit, and not too much debt, an agent should not have to personally look at your pay check receipts, bank account, or other financial documents. The lender is the one who will collect this information.
8. What is agency?
Even after years in the real estate business, this one question could potentially stump an agent. Defining agency can be confusing, although it shouldn’t be. For example, in Tennessee there are specific responsibilities owed to all customers. There are additional duties owed to clients, including loyalty to the interests of the client and obedience of all lawful instructions made by the client.
9. Do you hold the ABR designation?
Being an Accredited Buyers Representative (ABR) means your Realtor® has completed specific coursework on behalf of a buyer, in addition to having successfully represented at least five buyer-side transactions. It is considered the benchmark of excellence in buyer representation.
10. Would you hire yourself? Why?
When you select an agent to help you find a home, it is a job interview. And although we all hate answering these types of interview questions, it could be an early indicator of how well you’ll like working with the agent. If they take the question in stride - yet provide a good answer – you’ll know they will be smart and easy to work with. If they have a mini-meltdown or talk in circles, then that’s how they might react when it comes down to the wire for contract or inspection negotiations.
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