A real estate agent can provide valuable services to both new and experienced home buyers. Agents know the neighborhoods and selling trends of homes and can help guide you through the many steps involved in buying a home, including recommendations on mortgage lenders, home inspectors, and other service providers.

Seller's agents work for the house seller
In some states, there are different types of real estate agents, each with a different set of legal responsibilities in a real estate transaction. As a buyer, you may end up working with a seller's (or listing) agent, one who works for the seller of the home and whose commission is paid by the seller.

Buyer's agents work for the house buyer
Or you may be able to find an exclusive buyer's agent to represent your interests in the transaction. To be represented by an exclusive buyer's agent, you must sign a contract.

Doing It On Your Own
You may decide to buy a home without the help of a real estate agent. You'll want to choose good legal counsel (check with your local JAG office for help/advice; they may be able to refer you to a reputable local attorney) if you do. As a new homebuyer, though, you would be best served by working with a real estate agent with whom you are comfortable—one you know or that you found through friends.

Look for Satisfied Customers
Finding a good real estate agent is like finding a good dentist or doctor. Begin by asking your family and friends for referrals. Once you hear the same name several times, you are ready to interview. Ask the following questions:

• How many years have you been in the real estate business?
• How long have you sold houses in this area?
• How many houses did you sell last year?
• What is your commission?
• If I were to work with you, how would you market my house?
• Please provide names and contact information for other families whose homes you have sold.

As you talk with prospective agents, determine your comfort level with each. You should feel a sense of confidence and trust in your real estate agent.

What should you know about the real estate commission?
The real estate agent's commission is a sizeable sum, so be clear on the details. Ask questions until you understand how the rate is established, when the commission is considered earned, and how you can be obligated to pay the commission, even if you don't buy or sell your house.

• Commission rate. Real estate agencies set their own commission rates. The rate is not regulated by law or regulation, but you can expect it to be around 6% (can be as low as 5%, or upwards to 7% in “hot” real estate markets). This means that commission rates vary by region, and that rates are negotiable in every circumstance.



• When commission is earned. The commission is usually considered earned when a completed sales contract has been executed by a buyer; accepted and executed by the seller; and copies are in the possession of all parties. A real estate agent's commission is paid at the house closing or settlement.

So you found a home you want to buy.
Early in your house-hunting process, you will want to plan your negotiating strategy, which involves knowing your bottom line, and assessing the real value of the home you want.

• Your bottom line. Based on the amount you can borrow and what you can afford, the bottom line is the highest price you would pay to the seller of a home.



• Real value of the home you want. Determine the value of any home on the market by asking your real estate agent for a competitive market analysis. It's a comparison of the asking price of three or more comparable homes that have sold recently in the same area.

A buyer's agent can help you develop your negotiating strategy. [Don't expect any help from a seller's agent, whose loyalty is focused on the seller.] In a seller's market the houses in the neighborhood you like are in great demand, you might start out with an offer that meets the asking price—or even exceeds it. Your offer-to-purchase contract can also include an "escalation clause" that would automatically increase your offer (to a maximum price you set) to meet any other competitive bids. On the other hand, in a buyer's market, your negotiating strategy would be very different. The key to any successful negotiating strategy is understanding your own "bottom line" before you begin.