Advertiser Disclosure

The Wrong Real Estate Agent Can Affect Your Finances for Years

April 29, 2016
Home Affordability, Home Search, Mortgages, Selling Your Home
NerdWallet adheres to strict standards of editorial integrity to help you make decisions with confidence. Some of the products we feature are from partners. Here’s how we make money.
We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

By Mazen Fawaz

Learn more about Mazen on NerdWallet’s Ask an Advisor

Every real estate agent is the same, right?

Wrong.

As the housing market rises and falls, new agents come and go, but the truly great ones hold steady. Like doctors, lawyers, mechanics and other tradespeople, great agents have honed their craft to become experts. They know the ins and outs of the neighborhoods they specialize in. They know the story behind each home on the block. They know how to help you make the best financial decisions. And their connections come in handy in a variety of money-saving ways.

Your home is likely your most significant asset, and working with the right agent can affect your finances for the better. Here are a few of the things that a truly outstanding agent can do for you.

Find the best home for your current finances

Not only is your agent your sidekick in the real estate process, he’s also part therapist and part financial advisor. He is your trusted partner during the homebuying and selling process, and he’s likely seen an overview of your finances. Not the nitty-gritty of how many times you buy lunch each week, but the preapproval that shows your household income and how much house you can reasonably afford.

With that knowledge, an agent working with your best interests in mind, not his own commission check, is going to help you find and buy a home that’s feasible for your current finances, not where you aspire to be in five to 10 years.

The reality is, when you close on a home, you’ve got to pay that first month’s mortgage with the salary you make now, not your “goal” salary for the next rung in your career. Your agent will help you see what’s realistic today and save you from becoming “house poor” — a grave financial mistake that could cause headaches for months and years down the line.

Save money when you buy or sell your home

OpenHouse’s research shows that when you use the most qualified real estate agent to buy a home, you can save 0.9% of the purchase price. Based on the average home value, that’s $4,000 in savings. When you work with a mediocre agent and pay an extra $4,000 for a home, it turns into additional principal and interest that you pay on your 15- or 30-year mortgage. Over the life of a mortgage, that can really add up.

When you sell your home with a qualified real estate agent who’s an expert on your neighborhood, the data shows that you sell for 1.3% more, or $4,400 on average. That additional money, when invested with average returns and compound interest, can grow over 10, 20 or 30 years. It can become your child’s college fund, additional funds in your retirement account, or home improvements that increase the value of your next home.

Do your current and future finances a favor and trust your home sale or purchase to the best real estate agent to make sure you don’t leave those precious dollars on the table. Keep them in your pocket and allow them to grow.

Use their connections to your benefit

A truly great real estate agent is connected. Social butterflies by necessity, most top agents know everybody worth knowing around town. How does that affect you? You can find value in your agent’s connections. Real estate is a relationships game, so your agent will be eager to foster a great relationship with you.

In the immediate future, that means that she’ll have excellent referrals for professionals who are likely to cut you a deal because you are your agent’s client. When a “power agent” sends over a client, lawyers, accountants and home-improvement professionals bend over backward and adjust costs because they know there’s plenty more where that came from in the future. It’s a constant flow of business for them, and everybody wins.

For your own business and professional network, your agent is a great resource as well. If you’re looking for a new job, a mentor, a subcontractor, a consultant or even to make a key hire for your own business, your agent likely can point you in the right direction. Those priceless connections may yield serious financial rewards down the road.

For these financial reasons — and for the most peace of mind when buying or selling a home — aim to work with the best real estate agent. The “best” agent varies by neighborhood, price point, type of home and other factors. Find the best agent for you here.

Mazen Fawaz is the founder of OpenHouse, a real estate agent search company based in Santa Monica, California. OpenHouse is a NerdWallet business partner.