June 5, 2023

Why is it So Complicated to Buy a House?

Purchasing a house is one of your life’s biggest commitments that is bound to be stressful. To add to your stress, the process of buying a house may seem unnecessarily complicated.

Over time, the brokers working in the housing market have convinced homebuyers and sellers that their expertise is required to ensure that all the parties get a fair share. In addition to this, the government has added multiple regulations that are meant to actually protect consumers but end up looking complicated and difficult to interpret. This has resulted in an incredibly complicated and costly homebuying process.

Understanding the Complexity of Buying A House

The Congress passed the RESPA law in 1974 that put an end to routine price gouging and kickbacks that took place between agents and service providers that were essential to buy a house. But this made the process of homebuying complicated for the consumers.

Today, there is an escrow service that is required to hold the deposit amount until the contract is settled. In addition to this, there is a title insurer whose job is to evaluate if the property under consideration has any liens or boundary issues. Next, the mortgage provider is required to lend money that most consumers require to buy a home. Apart from this, there is an insurance provider who covers the insurance required to obtain the mortgage and secure the property in case a catastrophe was to occur. Lastly, there is a home warranty provider who offers a limited warranty if any big items such as the roof or water heater were to fail. Owing to the RESPA regulations, each of these entities has a separate fee that cannot be bundled together. To top this off, there are real estate agents who are still overcharging you separately for their services.

The Cost of Commission

Sellers traditionally used to pay about 6% of the value of the transaction to their own broker and that of the buyer for their services. However, nowadays buyers find properties through Zillow, Google or Homes.com and send them to their agents. In many cases, the only job that a buyer’s agent does is to open the house for viewing. In spite of such limited work, the buyer’s agent still collects half the commission that is paid to the sellers. When you look at this amount in terms of numbers, it is a huge sum. As a buyer, you may be thinking that the seller is paying this amount however this amount is usually built into the listing price of the house.

How Can A Good Mortgage Professional Help You?

Based on the complications surrounding buying a house and the cost of commission, it is best to hire a mortgage professional who can make the process less costly and less complicated for you. A good mortgage expert will remove the need to overinflate list price and help you secure insurance and mortgage at competitive rates. Moreover, a seasoned expert who handles a lot of business can take care of title, escrow, and warranty so that you are easily able to fulfill your home buying dreams. Rex Homes, for example, has some information on why this process is complicated and what they can do to help you on their blog here: https://blog.rexhomes.com/why-is-buying-a-house-so-complicated/