Most real estate purchases start with a property catching your eye, either by online search, advertising, or even spotting a likely candidate while driving around. Typically, you make an offer through the agent, call your bank for a loan; and a month or so later, you are the proud owner of a new home!
Sounds just fine, right? Well, you may have made three mistakes without even knowing it.
- Dual agency equals divided loyalty. When you make your offer through the listing agent, you are already behind the negotiation curve. Despite assurances to the contrary, your agent is not 100% in your corner. They can’t be. They promised the seller they were in the seller’s corner! An experienced real estate attorney can help you negotiate the best deal for you without leaving money on the table.
- Traditional financing might not be best for you. You may have stellar credit and plenty of down payment; if so, you’ll get the best rates from a traditional lender. But if you fall a bit short in either category, you should consider private financing. A knowledgeable real estate attorney knows of private lenders who are willing to consider financing your purchase.
Alternately, your attorney can help you explore an equity share agreement in which a partner shares the cost with you for a few years in exchange for a percentage of the increased equity. Talk to your real estate attorney about this amazing alternative.
- Your agent may cost you more than an attorney. It’s hard to believe, but your real estate attorney is likely to be less expensive than an agent. Let’s do the math: A 5% commission on a $500,000 home is $25,000. If you use the listing agent as your agent, he or she will pocket all of it. If you have your own agent, he or she will get $12,500. But an experienced attorney should cost several thousand dollars less than that.
In summary, a knowledgeable, experienced real estate agent will be loyal only to you, have alternate lender resources available, and save you money. It’s a triple win for you!
Roy Johnston is a real estate attorney and senior partner with the law firm of Johnston Thomas. He has been assisting buyers and sellers for over 18 years.