Buying a new home is an exciting prospect. If you are new to the home buying process, learn the steps to purchase a home in California. When you are prepared with your priorities and target neighborhood(s), a licensed California real estate agent can be an invaluable tool to help you achieve your home buying goals.
Real Estate Education: Practice, Principles, Law and Appraisal
To become a licensed real estate associate in California, you have to take a number of classes regarding real estate law, practice, principles, appraisal, etc., as well as pass a state administered exam. Licensed real estate brokers have additional training, a state administered broker’s exam, and a minimum of 2 years working in the industry as an associate (agent). If you have never dealt in real estate before, a real estate agent is a good resource to help understand and navigate the legal process in the transfer of real property.
Entering into a contract with a licensed California real estate agent should give you a sense of security. Your agent is bound by common law to a fiduciary relationship; meaning she is bound by license law to act in your best interest. Your agent will walk you through every part of the process and help you to understand all the legal documentation as if they were making the investment themselves.
Knowledge of the Local Market
A licensed California real estate agent is a local community expert. She will have past, present and future knowledge of the residential and commercial landscape of your target area and details that may effect your property value. Only licensed real estate agents have access to the multiple listing services (MLS) which your agent will use to sort through all the available homes to find those that meet your specific criteria.
When searching for a home, you will want to see as many available properties that fit your criteria as possible to find the one that most closely meets your needs. A licensed California real estate agent will have access to lockbox codes, contact information, and other details about the home that are often hidden from consumer sites. Your agent will be able to arrange showings around your schedule and coordinate multiple showings to most efficiently view as many properties as possible. In most cases you will not need to interact with a stubborn seller or pushy seller’s agent to view available properties with your agent.
When you are ready to make an offer on a property, some negotiation will likely be involved. A licensed California real estate agent will have negotiation experience and techniques to help draft the purchase agreement with terms in your favor.
Negotiating with an uncooperative seller can be an extremely unpleasant experience. You can avoid some of that stress and frustration by allowing a your agent to handle negotiations on your behalf.
Typically, the Seller Pays Agency Commissions
Talk about getting the most bang for your buck! In most cases, the seller pays for the real estate agent’s commission. It can take months to find your “Goldilocks” property, during which time, your licensed California real estate agent will be busy:
- searching, screening and showing you multiple properties on a regular basis,
- running comparative market analysis (CMA) to make sure you are getting a fair deal,
- helping with repair estimations and company referrals,
- writing up offers and negotiating on your behalf,
- making sure you receive all the required disclosures and property information to perform your due diligence,
- strategizing over any requests to be made while in escrow,
- keeping track of escrow to make sure the sale is moving smoothly,
- and much, much more…
Your real estate agent works on commission alone and will not be paid until you have successfully purchased your new home and have received the keys!
Why NOT Work with a Licensed California Real Estate Agent?
There is only one reason you might consider foregoing the help of a licensed California real estate agent: money. But beware: attempting to purchase a home on your own does not always translate into cost savings.
Sometimes (not always) a seller may be willing to accept a lower purchase price if s/he is able to save some money on agency commissions. This can get complicated as most sellers have a listing contract with another licensed California real estate agent which sets the agency commission. This commission is divided between both the buyer’s and seller’s agents. If the seller is working with an agent but you are not, usually the listing agent will adopt a “dual agency” to represent both the buyer and the seller to ensure a smooth escrow process. This may mean the listing agent will accept a reduced commission, but it is not required. And although the listing agent is representing both buyer and seller in this circumstance, know that the fiduciary relationship still resides with the seller. The listing agent is not a true advocate on your behalf at this point.
There is a reason roughly 90% of home buyers choose to work with a licensed California real estate agent; it is likely in your best interest and it will make the home buying process a whole lot easier and hopefully will let you focus on the fun parts of buying a new home. Not all agents are created equal, so be sure to interview several experienced agents in your target area to find the one that will work best with you.