Most home buyers automatically take their agent’s recommendations on service providers in a real estate transaction. They do this for good reason: they hired this agent because they have experience and expertise in buying real estate. On a lot of levels, it makes sense to follow the advice of your agent when buying a house. The question to ask in each instance is, “does my agent have the same interest in this part of the transaction as I do, or are our interests opposed to one another?” Think this through on each step:
The Lender: Much of yours and your agent’s interests are aligned when choosing a lender. Many buyers seek the best interest rate when choosing a lender, which is obviously important. Your agent will be much more focused on the reliability of the lender: Can this lender come through with the money on the day of closing? While many buyers think that all lenders will come through, agents know from difficult experiences that this is simply NOT true. Long delays are not uncommon and put the home buyer in a position where they can’t following through on the contract they signed. They are in DEFAULT. If you use the lender your agent recommends, this will happen much less often. Understand that a lender getting just your loan that messes it up, doesn’t keep commitments, or simply can’t make the loan happen loses your business. The lender that works regularly with your agent would lose a whole stream of business if they didn’t follow through. In other words, you will be a top priority with a lender your agent works with regularly, and a lower priority with one you meet on your own.
The Home Inspector: Much of yours and your agent’s interests are NOT aligned when it comes to home inspectors. You hire a home inspector to stop you from buying the wrong home. Your agent is interested in getting the house to closing. It makes sense for you to go out and find your own inspector. Over the years I have had home inspectors let me know that they won’t “kill my deal.” Well. If the house has something major wrong with it, that’s exactly his job. Note: There are agents out there, including myself, that would rather see a contract die at the home inspection than go to closing when a faulty house is involved. If you have an agent that thinks that way, it’s fine to take their recommendation. If you have a hard-selling, get-the-deal-done kind of agent, get your own inspector.
The Title Company: Home buyers only notice title companies when they mess up. There are a few out there that bring something special to the table, but for the most part they simply need to do the little things right to bring the closing paperwork together. I would take my agent’s recommendation on title companies simply because agent’s know who handles everything smoothly.
A Note on Appraisers: Appraisers have received the most flack of any real estate service provider the last several years. At one time, appraisers received the bulk of their business from certain loan officers at certain lenders. Many felt there was pressure on them not to “kill the deal” unless the price being paid was way out of line. These days, neither the buyer, agent, nor even the loan officer takes part in choosing the appraiser. There have been systems put in place at banks and other lenders to assign appraisers randomly to certain cases. There are rules against loan officers even talking to appraisers. So you won’t be choosing your appraiser.
Always remember that you are in charge of your home buying process. Your agent is getting paid to work for you. You can hire the lender, home inspector and title company of your choice. If your agent is giving you good advice take it. If not, always feel free to make your own decisions.
Written by Jeff Royce of Frankly Real Estate, Inc. Fairfax, VA, 703-585-5663