First time homebuyers - use non-local dad as "agent", or use a local agent?

[CBCwDiffpls]

Hi everyone,

We are ready to buy our first home. We are in no rush, but hoping to move in at most a year or so. About us - dual physician couple, total income about $630k, two kids (2 years, 2 months), no significant debt. Maxing out all of our retirement accounts, Roths, to the tune of about $120k a year. Currently paying about $4000/mo for rent, with total monthly expenses (including rent) about $11,000.

We live in a VHCOL area, and from cursory home searches, we are looking in the $2m range, but I bet we'll come closer to 2.5m. We have sufficient down payment to pay 20% with enough left over for closing costs, basic remodeling if needed etc. Both of us like our jobs, and if anything, we are actually planning to work a little bit more once the kids grow up a little bit (I am currently 100% time and hoping to increase some side hustles, and spouse is currently on maternity, but returning soon at 60%, hopes to go back to 80-90% once the little one gets to 6mo).

Question: my dad is a real estate agent in the same state, but very different geographic area so he is not familiar with the ins and outs of the specific places we are looking. He's saying we could just use him as the buyer's agent, and he would just gift us the buyer's commission minus any fees etc. This is significant amount, about $40,000 as I understand the commission is about 2%. He's comfortable handling anything associated like title insurance and all the usual stuff that would be needed to close successfully, appraisals etc. My question is - given the significant amount of money in question here - is getting a regular agent, familiar with the local area, worth it? It just seems like most of the research could be done online now adays (schools, distance from shops, restaurants, daycares etc), that paying someone $40k+ for specialized knowledge about this stuff, would not be worth it. We are already renting in this same area, so we generally have a sense of what we want here. We first searched a little bit before COVID before that threw a wrench in things, but having worked with an agent at the time, we do not feel they added much value - everything they told us (quality of the schools, road noise, walkability etc) we already knew either from personal experience in the area, or talking to friends and family in the area who have lived here for some time.

Would appreciate any advice regarding this. Thanks.

[Hoopoe]

Local agents will say that they help close more deals as they know the selling agent who may be able to lobby for them. This may be true but it's a stretch. So long as your dad is responsive and knows what he is doing I think it is just as likely to help you. 40k (post tax!) is huge and how I would proceed. My wife is going part time and we are considering having her get her real estate license just for this reason (maybe primary home plus a few RE investments in the next few years). It's not hard to pass the test, costs a few hundred dollars, and can give you a 40k ROI post tax and a fast track toward REPS status.

[CordMcNally]

Unless there's some major local issues then I wouldn't think it'd be a big deal. An independent inspector could likely answer any of those questions for you.

[nephron]

No. Above any financial considerations, I would be more concerned with your questioning your fathers judgement in your real estate decisions. A real estate fee will not break your financial plan/trajectory as it is a one time cost. I think that you could make more of an argument of needing the agent from a sellers perspective then a buyers perspective as well.

[ObgynMD]

Depends on the market. Anecdotally, we bought our house off market. We had the opportunity to buy it because our realtor knew of this ‘pocket listing’ from another realtor within his company. It never came to market so if not for our realtor, we never would have gotten this house.

If it’s a competitive market (where there are usually many competing offers) having a local agent makes a difference.

[CBCwDiffpls]

Thanks everyone for the advice.

Depends on the market. Anecdotally, we bought our house off market. We had the opportunity to buy it because our realtor knew of this ‘pocket listing’ from another realtor within his company. It never came to market so if not for our realtor, we never would have gotten this house.

If it’s a competitive market (where there are usually many competing offers) having a local agent makes a difference.

Interesting point. We heard something similar from someone who recently bought in a desirable area we are interested in. Basically, they found a house on Redfin, but ultimately did not win. They ended up asking the seller's agent if they had any recommendations, and the agent linked them to another agent in the same company (I think literally the same office) and together, they were able to make a deal on a different house that never actually went on the market.

[ObgynMD]

Thanks everyone for the advice.



Interesting point. We heard something similar from someone who recently bought in a desirable area we are interested in. Basically, they found a house on Redfin, but ultimately did not win. They ended up asking the seller's agent if they had any recommendations, and the agent linked them to another agent in the same company (I think literally the same office) and together, they were able to make a deal on a different house that never actually went on the market.

This was basically our exact situation, except it was our buyers agent who found the off-market listing for us.

If OP’s market isn’t so hot, using family and saving the $40k sounds great. But here, not knowing the local agents decreases the chances of getting the house.

On the flip side, our agent did say there are certain local agents that are notorious and he does not like to work with. So picking the wrong agent could hurt you.

[CordMcNally]

They ended up asking the seller's agent if they had any recommendations, and the agent linked them to another agent in the same company (I think literally the same office) and together, they were able to make a deal on a different house that never actually went on the market.

I would never let a house not go on the market in this environment. Sure, you may feel like it's easier but it really would be minimal work for the potential of quite a bit more $$$.

[Tim]

There is a difference between a "buying agent" and the "selling agent" and "listing agent". The first and last are contractual agreements with fiduciary responsibilities.
The "selling agent" has a default responsibility to the homeowner that listed the property.

In the absence of an agreement, whoever shows the house gets the selling commission if you do not declare that you are working with an agent.
You find the house, use your father's name.
An agent brings the house to you, don't screw them, give them the commission.
No reason to give a "sellers agent" commission to a listing agent or to an agent that had zero to do with finding the house.

You can do multiple paths.

[Bev]

FWIW, I would NEVER use a family member (or even a close family friend) as an agent.

The potential for miscommunication and hurt feelings are common. It is very difficult to fire them if you are unhappy with the job they are doing. You can afford to use a local agent who is familiar with the area/market you are interested in purchasing.

It sounds like your father is a "good guy" and is just trying to help you out. Family is great, but keep them out of your potential home purchase.