Why Should I Use a Hawaii Buyer's Agent?

There are so many questions for people who are thinking of buying a house and it really can help to have some knowledge before embarking on such a huge endeavor.

Most people have careers and families already taking up a majority of their time and attention. Adding the task of buying a home can seem like just too much to handle—that is just one of the reasons you may want some help. After a decade of assisting clients in this department, I have found that the questions are fairly consistent and once all the questions are answered, the process is much more manageable and fun.

Here are the most common questions:

1. How do I find the house?
2. How do I find an agent?
3. How much do I have to pay for a buyer’s agent?
4. How much house can I afford?
5. Will my payment go up over time?
6. How do I chose a lender?
7. How long will it take?
8. How do I navigate through the process with inspectors, escrow, agents, loan officers, appraisers, and all the other professionals involved in the transaction?
9. What is HUD and why do I hear people talk about that?
10. What kind of fees will I have to pay?
11. What are the differences between escrow fees and loan fees?
12. Why do I have to pay these fees?
13. How much down payment do I need?
14. Who do I talk to about all this stuff?

This is just the start of the questions. As you go through the process, you will have more questions.  Questions are good. The more questions you have, the more we can help you through the process and that is what a buyer’s agent job is—to assist you in navigating the entire process of home buying from “I’m thinking of buying a home” to “”Here are the keys to your new house.”

We all know there is a ton of work involved in purchasing what will likely be the most expensive item you will ever purchase in your life. With the amount of money on the line, this is not the time to shop for bargain professionals. You want the best person for the job, not the cheapest, because often times, you get what you pay for. 

Luckily, in real estate, the seller most often pays some or all of the buyer’s agents fee. However, as a buyer’s agent, your agent works for you and they have a fiduciary responsibility to act in your best interest. There just is no downside to making sure you are properly represented in such a large financial transaction.

Since there is so much information, we will go through these questions in a series. This time, we will go over question number 1, 2 and 3:

1. How do I find the right house?

Most people start searching on-line or at open houses, but keep in mind, not all properties have open houses, or are listed on real estate websites. In order to maximize your search, having someone who searches for property everyday as a profession is probably a good ally to have in this endeavor. You will have properties listed on MLS (Multiple Listing Service), FSBO (For Sale by Owners), foreclosures, short sales, and bank owned property. Usually, they are not all listed in one place—there are several avenues to use in finding a home.

What most people do is start their search on the internet and that is a great way to start. Technology is a wonderful thing and has allowed people to buy property they have never even seen because of photos, videos, and neighborhood research all at your fingertips. I would have to say though, that the people who get into their home quickest are the ones who hire an agent first.

Yes, I know—I am an agent, of course I would say that. I probably would have said to start on the internet prior to becoming an agent, but now I see that most people start looking before they even know what they are looking for. In the end, a lot of time can be spent looking at neighborhoods and homes that don’t end up being best suited for you. 

An agent…well, a good agent will know to ask the questions that you may not have thought of. They also have information that you may not be aware of, like where a rail transit system is going in, or a strange abundance of centipedes in a certain neighborhood, or a lawsuit pending in a popular condominium project. If a lawsuit is pending, many lenders will not lend money for that particular project until the lawsuit is resolved. Tidbits of information can drastically change the course of your purchase.

2. How do I find a quality agent?

I have been in this business a long time and like every other profession, there are good agents and there are…others (if I don’t have anything nice to say, I should keep quiet). With experience, I have learned about most seasoned agents and can tell which ones are high quality, but that is because I have had time to work the field. For someone coming in not knowing anyone—that is the tricky part. 

Luckily though, Google has provided us with numerous tools to check out a prospective agent. I have worked with quality agents from all companies large and small, so the company (to me) is not as important as the individual who will be working closely with you for 30-100 days (on average).

Here are a few of my prerequisites:

• Experience: I would want someone who has been in the industry for a few years. However, I would not be opposed to working with a new agent, as long as they have an experienced Broker assisting them. If they have an (R) after their name, which stands for Realtor, you know that they have many years experience as a full-time Realtor because those are required to be a Broker. (RA) is a Realtor Associate. That does not necessarily mean that a RA has less experience than an R, they may just not be interested in being a Broker, or are not full-time.
• Education: I would want someone who continues to educate themselves on real estate and has a vested interest in the field.
• Awards: I like quality awards, not production awards. I would want someone whose clients are happy. Someone with ethics is also a good thing. Aloha Aina Award is a good one as well as Most Quality Awards that individual companies offer.
• Market knowledge: This one is hard to gauge, but if they have done more than 10 transactions, they probably have some knowledge of the process. If they have lived in Hawaii for 5 years or more, they likely have a good grasp on the local neighborhoods.

3. How much do I have to pay for a Buyer’s Agent?

Many people think that agents get salaries paid by the company which they hold a license with, like Remax, or Centrury 21, but that is not the case. Agents generally do not get paid unless they represent a buyer or seller and the transaction closes. They usually do not get paid unless and until the transaction closes. 

Most agents are independent contractors and can set their own fee for service and that can vary depending upon their services. They work under the brokerage, but usually create their business model according to their own style. They usually will split their fees with the brokerage after closing. 

Often times, the seller pays most or all of the buyers commission, but not always. You can typically expect that a buyer’s agent fee is 3% of the sales price of the house you purchase. That number is dependent upon the individual agent’s personal business decision regarding what they charge for their services.

The biggest benefit of having a buyer’s agent is that there usually isn’t a time frame involved. If it takes 30 days to buy a house, or 3 years, the buyer’s agent works for you at no cost until closing. There usually is not an upfront fee for services. Most listings offer the buyer’s agent anywhere from 2%-3% commission, so there would be homes where your cost would be zero up to 1%. 

Here is a little insider hint that I often use for my buyer clients—I ask for a seller credit for whatever amount needed to cover that 1%. It usually is not much to ask for. In Hawaii, the average house is $650,000. If you ask for say $640,000 with a $6,400 credit to buyer for closing costs, that 1% is rarely too much to ask for. $633,600 is not a bad offer. 

Beware of trying to get an agent to work for too little commission, or getting commission rebates, because again, you usually get what you pay for. When dealing with such a large purchase, you want to hire the best professional and the best should be paid accordingly.

Stay tuned for the next installment of “Why should I use a Hawaii Real Estate Buyers’s Agent.” To ask me your questions: email me.

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Kelly A. Lee, (R) e-PRO, CHMS
Realtor-Broker
Hawaii Life Real Estate
4614 Kilauea Avenue, Ste. 206
Honolulu, HI. 96816
Phone: 808-225-0349
Fax: 866-590-3144
www.hawaiilife.com