Do I Need a Broker to Buy a Home?

You’ve decided you’re ready to enjoy all the benefits of owning a home and here at KB Home we want to help you take the proper steps that best suit you in your home buying search.

According to a recent study done by Chase Bank, “Insights from the Mind of the Modern Homebuyer,” advances in technology and an abundance of listing sites like Trulia, Zillow, and HotPads are changing how people approach house hunting. Now, 68% of folks begin the journey flying solo, but 77% still believe the services of a broker are essential to their process.

So, do you need a broker to buy a home or can your just do it yourself? To help you with this decision we have outlined the process of purchasing a home that is “for sale by owner” vs broker.

Ready. Set. Search!

After you’ve checked in with your preferred lender or financial professional and have been pre-approved for a loan you now have a price range. Due to the many overlooked costs when buying a home like inspections, appraisal fees, title and attorney fees, escrow fees, insurance costs, taxes, and interest most homeowners don’t realize that these costs typically equal between 2 to 5 percent of the home’s purchase price.

DIY

Sites like Trulia, HotPads, and Zillow are designed to help you get into the nitty gritty details of your quest. Each site will allow you to search for neighborhoods by zip code, house amenities, and features. A closer look at the property will reveal pictures of the house (some will even provide virtual tours), school districts the house is zoned for, and the listing agent’s contact information.

Trulia:

Trulia focuses on community safety. They go as far as grouping “good” neighborhoods together per zip code. Each house you click on will have a very detailed report on the crimes in the area, a listing of a few local restaurants with ratings, and a commute calculator.

HotPads:

While the other sites will often include information on who your utility providers are for cable/Wi-Fi, home security, or home insurance, HotPads takes the focus on utility budgeting one step further. Their helpful “Utility Score” meter shows not only the average bills for electricity, water, and gas, but also if that house’s utility use is above, average, or below.

Zillow:

Zillow is all about transparency. Their comparison features allow you to compare similar houses for sale (or have been recently sold) in the area with the same features and the conditions of the current housing market. Their buyers vs. sellers meter is helpful in showing the current supply and demand of the market which ultimately affects how much final price negotiating power you’ll have.

Developers

Most homebuilders, like KB Home, will also have an option that allows you to buy directly from their inventory. The KB Home website, much like the listing sites, offers substantial search options to get you started. You can search the KB Home “Quick Move-In” page by state and region for newly built homes. Once you’ve found a home you’re interested in, you can view pictures and get to know the neighborhood with provided information on school districts, local shopping, restaurants, grocery stores, parks, and hospitals. KB Home additionally provides a mortgage calculator so you can stay within your price range.

Broker

Whether you begin your search on your own, using the above sites, or opt for a broker right away, there are two important facts you need to know.

One, as a home buyer you do not pay for the services of the broker. Huh? How can that be? No one works for free. You’re right, and they don’t. The listing agent (who works for the seller) is required to share an agreed portion of their commission with the buyer’s agent. This commission doesn’t affect the sale price of the home, but how much the seller will make off the home per escrow and closing costs.

Two, a broker’s job is to operate in your best interests. They will help you navigate the closing costs, and the paperwork associated with buying the home. They’ll take your financial arrangements (yes, even if you are paying cash) and criteria into account from beginning to end. Using their resources and network, they will do the grunt work of the listing sites and help you narrow down the list.

What’s the best way to find a real estate agent? All agents work purely off commission, and they need positive reviews and referrals. The best avenue for finding an agent is to ask friends and family for their recommendations or check the reviews on listing sites. Don’t hesitate to interview several agents until you find someone you click with.

 

Home Tours – Is All That Glitters Gold?

DIY

Once you have your list of interested houses you’ll need to contact the listing agent and set up an appointment to view the home, unless it is “for sale by owner.” If the seller is using a broker, then either the listing agent or buyer’s agent is legally required to be there to let you into the house and lock-up again after you leave, but the homeowner is typically not present. If you want more flexibility, look for open houses. When a home is first listed, many agents will make themselves available for a day to show the home during set hours. Anyone interested in the home can pop in and take their time touring and asking questions.

If you prefer ultimate flexibility, virtual home tours could be the option for you. KB Home provides an entire video gallery that showcases homes. This allows homebuyers to preview homes online, providing an idea of what the space could be like for them and their family. Although this option doesn’t allow for spatial recognition and truly feeling if a home is right for you, it is an excellent way to initially sort through options during your home buying search.  

Broker

A broker will set the appointments, let you into the home, and answer your questions during the tour based on the seller’s disclosure. This disclosure reveals anything the homeowner is aware of from features to needed repairs. This report will not be conclusive in revealing everything about the house (that’s what an inspection is for) and it doesn’t have to be a deal breaker. Your agent will be able to advise you how to negotiate the cost and handling of the repairs.

 

Negotiations & Contracts – Signatures. Ink Stains. Keys!

DIY

This is where going DIY gets a little tricky. Unless you go straight to the builder’s showroom to build your home from the ground up, much like the KB Home ‘personalized for your life’ experience, attempting to wade through the legal process of buying a house alone can cost you.

Not only will you need to understand the legalese of a home contract and the amendments required to cover your best interests, but you’ll also need to follow the filing deadlines and rules. The consequences could mean an obligation to a price set by the seller or could lose your earnest money (a good-faith deposit). You will also need to navigate the tax, financial, insurance, and legal forms required by the title company.

Broker

After studying and passing a state-mandated licensing exam, a broker is legally able to operate. This stringent process ensures that they are aware of the laws governing real estate and will be held legally responsible for not acting in the best interests of their clients. With this knowledge, they will be able to explain everything you need to fill out, sign, and help you negotiate closing cost fees and repair requests. They will also be able to recommend reliable inspectors, help you file financial forms, and required title documents.

Using a broker keeps you in the safe zone, legally, and will take all the leg work out of your home search, however taking the DIY approach allows you to be fully in the driver’s seat of the process from beginning to end. Maybe the best approach is to do a combination so you get the power of the internet when searching for your dream home and the expertise of the broker when filing all that paperwork.

 

In the end, no matter which route you take, no matter the highs and lows of the entire process, nothing beats the feeling of those house keys in your hand as you unlock the door and walk into the house you will make a home.

Think you’re up for the task? We know homebuying can feel overwhelming, but if you follow these key steps, you will be unlocking the door to the home of your dreams in no time!

What other house buying questions do you have?