First-time homebuyer specialist

A multiple listing service (MLS) is a database established by cooperating real estate brokers to provide data about properties for sale. An MLS allows brokers to see one another’s listings of properties for sale with the goal of connecting homebuyers to sellers. REALTORS® have spent millions of dollars to develop Multiple Listing Services (MLS) and other real estate technologies that make the transaction more efficient. An MLS is a private offer of cooperation and compensation by listing brokers to other real estate brokers. Multiple listing services provide more exposure to the selling broker and more options to the broker representing the buyer. In return, both brokers receive a commission on the sale.

So is it possible to buy a house without using a real estate agent and do you need one? I would advise anyone against buying a house without a real estate agent, and not only because I am a REALTOR® and hence must be biased. Real estate agents spend their days out and about, driving to different locations, researching markets, meeting with clients, talking to loan officers, inspectors and other real estate professionals. Part of their job involves reviewing paperwork, negotiating on behalf of their client, and networking with industry experts. All of these activities make a real estate agent an industry expert who can answer any questions you might have, and if they cannot they will direct you to the right place or connect you with the right professional. Another reason you should hire a real estate agent is because paperwork involved in home buying process can be overwhelming and confusing. And lastly, in case you need a great lender, contractor, home inspector, your realtor can connect you to any professional.

Many first time home buyers think that they have to pay their realtor a salary or a fee for their work. In reality the buyer’s agent is paid by a seller, yes you read it right. The seller pays the listing agent a certain percentage of the selling price which constitutes the commission fee. It is important to mention that commission is not fixed and is negotiable. The listing agent then splits his commission with a buyer’s agent. In the case of Dual Agency, the listing agent does not have to split his commission with anyone. So technically buyers do not pay anything to their real estate agent. So why would you want to decline a service for which you do not have to pay out of pocket?  

Dual Agency, commonly called “double ending” by real estate professionals, is essentially when the buyer’s agent and seller’s agent is the same person. Dual agency is illegal in some states, but California allows it.

After house hunting you found a property that you really like and you are ready to write an offer. Before deciding on the price you would like to offer, it is a great idea to look at the so-called “comps” or comparable properties. Seeing similarly sized recently sold properties in close proximity to the target house will give you a better idea of how much you should offer. Your real estate agent will provide you with this information to help you make an informed decision.

Some buyers submit several offers on different properties simultaneously in hopes that they will secure at least one. I would highly discourage you against this practice, unless you are planning to purchase all the properties. Once the seller accepts your offer and you are informed of the acceptance, you are legally bound by the contract. If you are in a rush and you need the response ASAP, let your agent know. There is a section on the RPA where you can set a deadline for response, and if the seller does not respond by the deadline that you choose, your offer becomes void. If you do not want to restrict the seller or put pressure to respond to you by a certain time and day, your agent may negotiate this with the listing agent verbally. A lot of time the listing agent has a day when she/he/they will be reviewing all the offers with the seller, and if you need the answer earlier you can ask your agent to negotiate that for you.

After your offer is submitted there are three potential scenarios: your offer is accepted, your offer is not accepted, you receive a counter offer. A counter offer is basically the seller telling you that your offer needs to be adjusted to the seller's liking. Let’s say Mary, the buyer, submits an offer on Ricardo’s house offering him $1,200,000. After reviewing Mary’s offer, Ricardo replies with a counter offer asking for $1,250,000. Mary does not have to agree to the counter offer, she can simply decline it, or she can submit another counteroffer, where she offers to pay, let’s say, $1,230,000. In case she agrees to Ricardo’s counteroffer, she will sign it and the escrow will open. Sometimes if there are multiple offers, a seller may choose to send out Multiple Counter Offer, which means that the counteroffer is sent out to all or select few buyers buyers who have submitted an offer (in these instances most of the time the seller will not request a specific price, but will ask for final and highest offers, among other terms the seller may request). I would like to emphasize that counteroffers do not necessarily have to do with the price, a lot of times the seller will try to negotiate with the buyer regarding contingencies, length of escrow, or other terms.

Most first time home buyers do not know what escrow is. Escrow is a neutral third party that is there to help with transaction instructions, title, financing, and paperwork. It is not the same as the title company. Title company simply ensures that the title is clear of liens, defects or judgements. The escrow company holds the documents and funds until the transaction is complete.

In California once the escrow is opened a buyer is given 3 days to submit Earnest Money Deposit or EMD. Most of the time it is anywhere between 1% and 3% of the purchase price, but it can be more. Earnest Money is necessary to show the seller that you are serious about purchasing a given property. The longer you wait to send EMD, the more worried and nervous the seller and her agent will grow. This money will be wired to Escrow, they will keep it until the transaction is complete and escrow is closed.

To put it simply, contingency is a condition that must be met for the deal to close. Both buyer and seller need to agree to the terms of contingencies in writing. There are several contingencies, but the main 3 are: Physical Inspection Contingency, Appraisal Contingency, and Loan Contingency. It is important to understand how contingencies work, because they essentially determine who gets to keep the Earnest Money Deposit in case the escrow gets canceled, or if a buyer backs out.

Finally the best and most rewarding part for any buyer: the escrow closes. The escrow company will make an appointment with you, where you will need to sign final papers in person. You will be instructed on when to submit the rest of your down payment closer to the closing of escrow. Once the loan funds, normally the following day the title is recorded at the County Recorder’s office. That means that you are the official owner and can get the keys right away. Congratulations!