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Like we discussed in one of our previous blogs, one of the most important steps a home buyer should first take is determining their budget. With an appropriate budget you, as a home buyer, can have a better idea of what you can afford and what features you can expect from a home. We also mentioned the benefits of working with an agent to help you in the home buying process.
This question may arise during your search: should I let my agent know the amount of money I can spend on a new home
The question proposed in the introduction may seem like an easy one to answer. Why wouldn't you want to tell your agent the amount that you can spend on a home? After all, they need to know in order to help you in your search for a home right? This seems like it should be 100% true, but it isn't. Of course, an agent needs to know a ballpark estimate of the amount you can spend, but you shouldn't tell an agent the precise amount of what you are willing to spend. If you've kept up with our blog, or are familiar with the types of real estate agents, then you'd know that agents have a legal responsibility to either a seller or buyer, never both. This is why you should keep quiet on the amount that you can spend on a property. We'll elaborate further.
When working with an agent, many home buyers aren't aware of the type of agent whom they are doing business with. This is because they both act in similar ways, such as showing you a certain property and keeping in touch with you to alert you of other properties you may like to investigate. If the agent you are working with is a seller agent them they have a legal responsible to the seller even if they bring you to multiple properties. If you tell this agent the most that you will spend on the property they have not only the right, but the obligation to inform the seller of this number. This is how you can easily end up paying way more than you would have if you wouldn't have disclosed this amount in the first place. Even if you are working with a buyer's agent who has the legal responsibility to you, disclosing the most you can spend can also end up badly. This is because a buyer's broker isn't only working for you, but could have many other clients who are looking at the same properties. In this case, an agent could let the amount slip by accident, giving the other buyers the opportunity to "one-up" you offer.
When working with an agent, make sure you keep your budget confidential and only give your agent a range instead of specific amount or maximum amount. This way you are protected from the disadvantages that can occur when others get a hold of your budget.
Work Cited: Glink, Ilyce R. Questions Every First-Time Home Buyer Should Ask. New York: Three Rivers Press, 2005.
NEXT BLOG: Be sure to check back with us for the next blog topic: "How did you if my broker is doing a good job?"
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