Why You Should Use a Buyer’s Agent – The Pros Outweigh the Cons.
There are a number of reasons why a home buyer should have their own realtor. The pros heavily outweigh the cons for using a “Buyer’s Agent” when purchasing a home. From a home inspectors point of view, in most cases I highly recommend that home buyers find and use a buyers agent to represent their best interest.
What is a Buyer’s Agent?
A buyer’s agent is defined as a relationship in which the realtor or broker is the agent for a buyer, with fiduciary responsibilities to the buyer. By law, a Designated Buyer’s Agent MUST “promote the interests of the buyer with the utmost good faith, loyalty and fidelity” and MUST “protect the buyer’s confidences…” Put in simple terms, it means that a buyer’s agent is tied to the buyer, and all of their loyalties are to the buyer. Once comfortable with a buyers agent often times buyer and agent enter into an agreement
How Do I Find a Buyer’s Realtor or Buyer’s Agent?
The best way to find a good buyers agent is a referral from family or friends. If you are from out of town, to find a buyer’s agent in your area, Once you find the agent you like, you may be asked to sign a Designated Buyer’s Agent agreement or Buyer’s Broker Agreement committing you to a set amount of time with your agent, usually 3 to 6 months but you can ask for less or even a 1 week trial to test the water if you like. As with all paperwork, read the fine print. Make sure that if you become dissatisfied, you can break the agreement without notice and/or opt-out penalty. For additional information on protecting the home buyer’s interest see these articles: Hiring a Buyers Agent and Is your realtor on your side?
Who Pays a Buyer’s Agent?
A common answer is: The buyer agent’s fee is most often paid from the transaction, and usually comes directly from the seller’s side. The fact is that all commissions are normally wrapped into the house price. In other words, sellers factor in the cost of commissions when they price their homes. Typically, the listing agent and the buyer’s agent split the commission from the transaction. A more expensive house means only a little more commission. This is rare in Central NY but when buying expensive homes some buyers negotiate an up front fee to be paid to the buyer’s agent and any commissions due them from the sale are deducted from the price of the home, this removes the incentive of selling more expensive homes or ones with higher commissions or bonuses that are paid out.
The Up Side of Using a Buyer’s Agent
- A buyer’s agent knows the area its markets. They can save you time helping narrow down your search.
- Buyer’s agents can discuss freely with you their opinion on a property, for example if they think a property is overpriced or in a questionable location.
- Buyers agents can relay important information about the house such as how long it been for sale and if the price has dropped – how much and why.
- They may also be able to give you helpful information about the sellers such as they have already bought another house and in a big hurry to sell.
- They can help facilitate with the home inspection and any ancillary testing that may be required.
- A buyer’s agent protects the buyer’s interest during the crucial negotiating and closing process. They help you put together a purchase offer that is in your favor not the sellers.
- They can help if needed in negotiating contingencies for a lower price or repairs. This is especially helpful for first time home buyers.
- Your own agent can assist you through the closing process and paperwork. There are many details in buying a house, its great to have an experienced pro helping you along the way.
- A good agent will make sure all the bases are covered, they work along with the lawyer and loan officer and others to ensure a smooth closing. When going it on your own, you might not realize there’s a problem until you’re sitting at the table.
Finding a Buyer’s Real Estate Agent
People find realtors in a lot of ways, some just call the number on a for sale sign or meet the realtor at an open house. These are the two most common ways people end up using a seller’s realtor instead of a buyer’s realtor. This usually happens because the buyer’s don’t have the forethought to find a buyer’s agent. You should decide to find and look for a good buyer’s relator agent. Ask family and friends for referral or do an online search for your area. Many realtors advertise their service as a buyers agent. You can also check with the National Association of Exclusive Buyer Agents for a list of buyer’s agents.
Don’t Get Stuck with a Listing or Seller’s Agent by Accident
When you’re at an open house or call the listing agent to show you a home essentially you choose to represent yourself. Remember the listing agent has a contract with the seller, to sell the home for as much as possible. You are forgoing all of the help, advice, counsel, and expertise that a knowledgeable buyer’s agent could afford you. A listing agent or sellers realtor will appear accommodating and very friendly, more than happy to sell you the home, why not, in most cases you are allowing them to make a double commission at your expense.
Beware of a Seller Agent’s Bias
Be extra cautious if you are in the situation of using the listing or seller’s agent. No matter how nice and caring they seem be aware that they are prohibited, by their fiduciary responsibilities to the seller, from telling you anything negative about the property. They can’t violate their first responsibility to their true clients (the sellers) and their best interest. Even if they are aware the property is not right for your needs they are not supposed to tell you. Many people find themselves in this situation not really by choice but as an oversight. In this case it is extra important that you have a thorough home inspection conducted by an unbiased inspector who’s looking out for your best interest. Be sure not to use one referred by the selling agent!
Home Inspector Confidentiality
When I do a home inspection for a buyer I represent their best interest alone, I am beholden to no realtor, bank etc. If my client is using a designated buyer’s agent I can speak freely with them since they also represent the best interest of my client. This can be really helpful especially when negotiating for a lower price or repairs or credits based on findings during the home inspection. When the buyer and home inspector can speak freely with a designated buyer’s agent it make things much simpler.
Conflict of Interest When Using a Seller’s Agent or Dual Agent
The above shared confidentiality is contrary to conflict of interest that exists when I speak with the seller’s agent who represents the seller and the seller’s best interest I keep client information, report findings and comments confidential. The same holds true for a dual agent who represents the seller first and foremost and to a lesser degree somewhat represents the buyer. I find myself often reminding home buyers of these facts. It can be somewhat difficult trying to negotiate a lowest price directly with a realtor who job is to get the highest price for the seller. What they say to the seller and seller’s agent may be used against their own best interest. Many of the transactions I’m part of involve dual agents, and they do their best to represent both parties fairly, but their primary loyalty is to the seller’s best interest which means selling the house for as much as possible.
The Down Side of Using a Buyer’s Agents
- In a new trend, agents representing buyers are increasingly being showered with extra incentives that may cause them to push certain houses. Traditionally, sellers pay 6 percent commissions – 3 percent to their agent, 3 percent to the buyer’s agent. The new trend in a down market is a higher percentage going to the buyer’s agent in addition to a bonuses paid if sold at listing price.
- You may be able to get a lower price if you go it alone. This can be difficult to negotiate on your own but once you decide to buy, ask for 3 percent off your final price. Listing agents often try to collect the full 6 percent but you can ask for half (that would normally be paid to the buyer’s agent) to be deducted from the price.
Whether you decide to go it alone or go with a pro, don’t forget to value your instincts when hunting for your first house. After all, your buyer’s agent isn’t going to live there, you are.