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So you want to hire a real estate agent

Buying a home, including in Malaysia, can be a nerve-wracking experience especially when it comes to negotiating the price. The more so for those who are just about to purchase their first houses without the assistance of any real estate agent.

Unless you are good at haggling, the probability of getting the seller to come into agreement with your proposed price is quite slim. Even worse, you may skip negotiating after being dazzled by the glittering first impression the house gives you.

The most convenient way to keep those butterflies away from your stomach when confronting the seller is by hiring a real estate agent.

An experienced and honest real estate agent will be your worthy companion in the process of negotiation since he or she knows every trick of the game in the industry. Besides, they speak in the same language as the seller or his or her agent.

That is understandable because they make a living by negotiating for the best price on behalf of their clients and most importantly, they help you make an informed decision.

Why hire an agent?

There are a number of reasons for hiring a real estate agent. First, they are well-trained and experienced in the art of negotiating the most favorable price possible for their clients.

Maybe you are a good haggler yourself and capable of persuading the seller to give you a 3% discount. Yet, hiring a real estate agent may get you a better deal, let say, a 5% discount on the final price.

To make it clearer, if the seller opens the price at RM500,000, you may get the house at RM485,000 after you are done haggling by yourself.

In comparison, the agent may get the seller to agree to part with his or her property at RM475,000. Do the simple math and you will find there is a RM10,000 difference between those two approaches.

Second, real estate agents can also be your only true friends in this cruel and wicked world. Well, that sounds a little bit melodramatic.

In some ways, a good real estate agent performs better than your Facebook BFFs. He or she is willing to go the extra mile to ensure you get the best deal for the house by checking the defects, applying for a home loan and insurance, identifying nearby amenities or finding out the crime rate in the area.

The fees ain’t free

The best things in life are free, so they say. But, that saying is not applicable to real estate agents. That is understandable because negotiating for the sale and purchase of real estate is their main source of income.

As stated by the Malaysian Institute of Estate Agents (MIEA), the commission fee for real estate agents is set at a maximum of 3% of the property sale price. That rate is only applicable for the sale and purchase of properties in Malaysia.

How about the minimum rate? Well, the least you must pay is RM1,000 per property. Let say the sale price of the property is 30,000 and if you apply the maximum commission fee of 3%, by rights you are supposed to pay only RM900 to the agent.

But, in this case, you still have to pay a minimum commission fee of RM1,000 to the real estate agent.

So you want to hire a real estate agent
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So, take some time to do the calculation first to help you decide whether it will be moneywise to appoint a real estate agent to deal on your behalf.

Technically, the burden of paying the agent’s commission fee is borne by the seller. Nevertheless, the seller may transfer the cost to the buyer by adding the commission fee to the final price.

Don’t be surprised, you may end up paying the very same price that the seller asks initially.

Calm as a cucumber

After some deliberate thinking, you agree to appoint a real estate agent. Then, comes the moment for both of you to take a look at the house you are interested in buying.

The best thing to do is to let the agent do all the talking and negotiating. After all, that is the main reason you hire him or her.

Yes, you may chip in once in a while but keep it at a bare minimum. Avoid being perky and showing you are very interested while inspecting the house; otherwise, the agent will have a hard time to get the best price from the seller.

So you want to hire a real estate agent
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Taking a picture of the house or a selfie in front of it is definitely a no-no. Don’t do that, even when the seller is not around.

Some nosy neighbors may see you doing that and relay the information to the seller. Once the seller learns you are excited about the house, it will be hard for the agent to get the best deal for you.

Words of advice

Please make an effort to verify you are dealing with a REAL real estate agent. If someone approaches you and present his or her business card with the Real Estate Negotiator (REN) number printed on it, don’t take it at face value yet.

Run a check with relevant authorities such as MIEA first. In fact, you can go to the MIEA website and perform a search there.

Or, to save you from the trouble of appointing a fake real estate agent, just pick one that suits your criteria from the long list of REN members listed on the MIEA website.

Happy hunting and may you get the best deal for your dream house.

So you want to hire a real estate agent
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Tips for First-Time Home Buyers

Buying your first home can be nerve-racking and confusing. Getting into the right mindset can save you future troubles. A careful research and good planning always pays.

These tips will help you navigate the process and avoid common mistakes. We break them into three categories:

  • Mortgage tips.
  • House search tips.
  • First-time home buyer mistakes to avoid.

Mortgage tips

Start saving for a down payment early

It’s common to put 10% down, but some banks now allow much less, and first-time home buyer programs. Allow yourself some time to to save up. Do not overstretch your credit.

Understand your affordability, down payment and mortgage options

There are lots of mortgage options out there, each with their own combination of pros and cons. If you’re struggling to come up with a down payment, check out:

The amount you put down also affects your monthly mortgage payment and interest rate. If you want the smallest mortgage payment possible, opt for a 30-year mortgage. But if you can afford larger monthly payments, you can get a lower interest rate with a 15-year mortgage loan.

Research for government programs

Research on government house ownership programs. Federal government l
program like PRIMA can benefit you greatly if you qualify. Research on state level program as well. Sometimes it is available only for the state that you live in.

Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range and which area that you can afford. In order, to make life easier for you we have built home search tool. Use it to your advantage.

Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help to determine your margin of financing and possibly the loan terms.

Secondly, check your credit score and improve it. Update your arrears and lower down your credit card balance. Banks calculates credit score based on financial behavior, income, expenses, financial commitment and your demography like age, sex, year of employment, marital status, education level.

To keep your score from deteriorating when you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan approved.

Compare mortgage rates

Many home buyers get a rate quote from only one lender. You can compare mortgage rates from financial aggregator like imoney, gobear and ringgitplus. During campaign period you might get additional goodies. Get at least three quotes from different banks and compare both rates and fees.

You must read the product term sheet to understand mortgage product features. Many banks are offering Flexi Loan where you have the flexibility to pay part or all of your principal early. Research on Islamic Home loan as well as they have discounts for stamp duty, rate ceiling and some other good features.

House search tips

Hire the right professional agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right real estate agent should be highly skilled, motivated and knowledgeable about the area.

Pick the right type of house and neighborhood

But even if the home is right, the neighborhood could be all wrong. So be sure to:

Common first-time home buyer makes

With so many things on your mind, it’s not surprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar mistakes.

Not saving enough for after move-in expenses

Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a fund to pay for what will go inside the house and moving in cost. What goes inside the house includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

Buying a home for today instead of tomorrow

It’s easy to look at properties that meet your current needs. But if you plan to start a family, you may need to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.

Negotiate

A lot can be up for negotiation in the home buying process, which can result in significant savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer’s market, you may find the seller will bargain with you to get the house off the market.

Compare surrounding property prices as well, we have the tool to help you scan the best deals around.