Brokers Blog

When buying a house, is it better to hire and pay one’s own home broker than to use the seller’s agent?

This is a question that enters the minds of individuals who are planning to buy a home but do not have the time to go around and view homes by themselves or persons who want to ensure that the home purchasing process is done professionally.

Most realtors and real estate consultants interviewed in an informal survey advise prospective home buyers to hire their own real estate brokers. They explain that there are only two key questions when choosing between hiring one’s own home broker and the seller’s broker — which of the two are you going to pay and which will look after your interest?

Realtors recommend that you hire and pay your own home broker so that he will look after your own interest and provide you with guidance in relation to your home buying preferences and requirements.

They also say that you can conduct your home search and purchase with the seller’s home broker or agent and you do not have to pay anything, but the loyalty of the seller’s broker will be to the seller and not to you, although he will do what he is obliged to do in typical home sales processes.

The seller’s home broker will try to get the highest home price that he can get from you, since home sales commissions are usually percentages of the final selling price.

Other real estate professionals also advise that sellers’ agents are not permitted to help prospective buyers on how to reduce the selling price; otherwise, they will lose their home brokerage license.

A smart home broker working for a buyer would work only for the interest of the buyer, thinking that if he satisfies the buyer, the buyer would refer him to his social network and would increase his business.

Real estate consultants also say that you have two options with the home broker that you are going to hire: sign a contract with the broker or have a verbal agreement with him in states that do not require home broker-buyer contracts.

But nowadays, it is best to have written and notarized agreements so that both parties are protected from unexpected developments. Remember to lay out expectations and obligations for you, the home buyer, and the home broker.

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Closing a deal is now more complicated, all thanks to the new appraisal rules. Property appraisals are now at arm’s-length, meaning transactions must be done by unaffiliated parties. It is now the national management company’s job to evaluate home prices, and communication between real estate brokers and the appraisers are discouraged.

Lenders, borrowers, buyers and real estate brokers are feeling the effect of the new rules intended to stop inflationary appraisals that caused the housing boom.

Real estate brokers from South Florida, along with their clients complain that the new rules bring appraisals down, risking refinancing applications and home sales. They fear that the new appraisal will interrupt the slow increase of home sales.

New York’s Attorney General Andrew Cuomo proposed these new appraisal rules applicable for Freddie Mac and Fannie Mae loans only. Many are affected since majority of home loans are sold to this government-ran mortgage businesses. But FHA and VA approved loans are not included.

But real estate brokers and lenders say that management companies put appraisers to areas in which they are unfamiliar. Then these new appraisers take most of the fees away from more experienced appraisers. Like in Oregon, Valuation Logistics only gets $25 from the $450 appraisal fee.

Appraisers were one of those blamed by the lenders for their huge losses in the past. So to please lenders, appraisers are valuing properties at the lower end of the range. But real estate brokers and mortgage brokers do not see it that way. Appraisers defend that they are just doing their job by considering short sales and foreclosures within the area, the big factors that bring home prices lower.

Real estate brokers and mortgage brokers are dismayed that appraisals are now out of their hands. Mortgage and real estate brokers’ income rely mostly on sales so their disappointments are understandable. But what can they do, this is the new rule.

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• Recession, the Housing Industry and Your Real Estate Broker

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