The Pros and Cons of Using a Friend or Relative to Buy a Home
Posted by Steve Harmer on Tuesday, May 30th, 2017 at 9:15am.
When buying or selling a home, using the skilled services of an experienced real estate agent is often preferred.
A good Realtor® is sort of like your own personal Yoda—someone you can trust with your most pressing questions and biggest decisions, guiding you safely toward your destiny (of a brand new home!).
A Realtor may have profound knowledge of the local market, excellent negotiation skills, and other benefits that can serve you well throughout the transaction. Many people are friends with agents, and others may have a close relative in the area who has a real estate license. As you begin selecting a real estate agent to hire for assistance with your upcoming transaction, you may be wondering if you should hire a friend or family member to help you. This is a slippery slope that should be closely analyzed before you make a final decision about who to hire for assistance with your buying or selling plans. Because each situation is unique, you will need to carefully analyze the relationship before deciding how to proceed.
Placing Your Relationship at Risk
You may be well aware of the adage warning against mixing business with pleasure, and this may hold true in this case as well. Consider that your friend or family member may be personally insulted if you do not choose to use his or her services for your transaction. In some cases, you may be well aware that the individual is in dire need of the money that your transaction could provide to him or her. Because of this, you may be more inclined to give this individual your business.
In addition, real estate transactions can be strenuous and tense, and the intense emotions often create rifts between a real estate agent and a client. The last thing you may want is for this personal relationship to be severed or tainted because of an issue that arises during the transaction. In some cases, an issue between two family members creates a larger rift within the family unit.
The Financial Benefits to Both Parties
Your real estate agent friend or family member will receive a percentage of the financial value of the transaction at closing, but there is some variation to this. Your agent will have business expenses that must be paid out of these funds, such as marketing, insurance and broker fees. In addition, the agent cannot work for free. His or her time and effort are worth money, and you should expect him or her to be compensated.
However, in some cases, a friend or family member who is also a real estate agent may gift at least some of the proceeds back to you or may agree to work at a discounted rate to save you money. In essence, they are agreeing to give you their time and services at a discounted rate. In this case, the transaction can be financially beneficial to both of you.
The Ability to Find the Right Neighborhood and Home
Kamloops is a large city, and some real estate agents choose to focus their time and energy on a select few neighborhoods or to appeal to a certain type of buyer. For example, some may focus primarily on acreages, and others may be more familiar to communities outside of Kamloops such as Chase or Sun Peaks. With this in mind, your real estate agent friend may be outside of his or her comfort zone with your transaction. This does not mean that he or she cannot assist with the process, but you may enjoy better results in some cases when you choose to work with an agent who is more experienced with your type of transaction.
The Stress Associated With a Real Estate Transaction
Real estate transactions can be tense and stressful situations. As a buyer or seller, you may have a significant amount of financial skin in the game. You may also be emotionally attached to the property. Your real estate agent friend or family member may also be emotionally vested in the transaction. After all, he or she may need or significantly want the commission from your transaction, or he or she may feel pressure to serve you because of your relationship. This means that both parties may be stressed. Most real estate transactions do not proceed without any hitch's, and there are often numerous roadblocks that must be dealt with head-on if you want to close on the deal. The stress associated with a real estate transaction may be more easily handled between two individuals who are very close and who trust each other. On the other hand, the stress may fracture a relationship and cause irreparable damage.
The Ability to Get Personalized, Responsive Customer Service
You may think that you would get very personalized customer service from a friend or family member who is a real estate agent. In many cases, this is true. After all, the agent may know you and your family personally. They may be aware of your tastes, preferences, and more. On the other hand, the real estate agent may see that he or she is working for a discounted rate in some cases, and he or she may therefore offer a discounted level of service. In some cases, the agent may think that serving other clients who are not friends or family members is more important than serving you, and your transaction may be placed on a back burner.
As you can see, there are many things that can go wrong when you choose to hire a real estate agent who is a close friend or family member. On the other hand, there are benefits associated with this as well. It is important for you to carefully think through your relationship with this person. Examine all the pros and cons as they are related to your relationship specifically. Consider having a candid conversation with this individual to discuss your objectives as well as your concerns. In some cases, the other party may not want to work with you, and the issue may be solved. In other cases, the two of you may establish rules and guidelines that you both are comfortable with, and you may walk through the real estate transaction successfully.
