Reasons You Should Use a Buyer’s Agent to Buying a Home
Mary Catchur
I am writing this article on behalf of my many wonderful business associates who works as a Buyer’s Agent. On several occasions over the last few weeks, I have received calls from buyers wanting to get pre-qualified as they begin their home search. I typically ask them if they are working with a real estate agent and am often surprised when I hear them say that they “prefer to call the agent on the sign” of the home they are interested in. Even after explaining to them that the “agent on the sign” is the listing agent and would not be able to fully represent them in their negotiations on the home, many still refuse to take my suggestion to reach out to a Buyer’s Agent.

I can only assume that this stems from a belief that they will be paying more for the home, if they bring in their own agent. So, I would like to reiterate some reasons why it is beneficial for a buyer to use his/her own agent.

#1 There is No Cost to the Buyer

Contrary to what many people believe, using a buyer’s agent does not cost the buyer anything. When a listing agent contracts with a seller to sell their home, the sales commission is negotiated between them. Typically, that commission is 6%, but often varies by region of the country and what the parties negotiate. The listing broker will also typically agree to split the commission evenly with the selling agent (who represents the buyer), although that may vary as well. For example if the commission to the listing broker is 5.5% they may designate 3% for the listing broker and 2.5% for the selling broker. When there is no agent representing the buyer, the listing agent will typically retain the full commission.

Some will argue that if a buyer comes without an agent, he can get a reduction in the price of the home for the commission that the buyer’s agent would have received. As this commission is negotiated between the seller and the listing agent, that is typically not the case. And some listing agents will say that representing both parties is twice the work and a reduction of their fee is not warranted.

Many don’t realize that even if you are purchasing new construction, you should be represented by a buyer’s agent. Most builders will cooperate with agents and will compensate them for their services in representing you.

Buyers should remember to always notify the listing agent or builder that they are already working with a Buyer’s agent if they go to see a property and are not accompanied by their agent. This will prevent future disagreements about which agent is due the commission and will ensure that the agent that you intended to have represent you will be properly compensated for their efforts.

#2 Your Interests are not Fully Represented when Working Directly with the Listing Agent

The listing agent’s duty is to the Seller of the property. They cannot fully represent both the seller and the buyer. See below for a summary of the most common types of representation that an agent can provide:

    Seller agency (single agent for seller): This agent looks out for the best interest of the seller in the transaction. He must still be honest with the buyer and disclose any material facts about the property.
    Buyer agency (single agent for buyer): This agent looks out for the best interest of the buyer in the transaction. He also has a duty to be honest with the seller.
    Dual agency: This agent represents both the buyer and the seller in a transaction. He has a duty of confidentiality to both parties. He may facilitate the entire transaction and may not provide full advice to either party due to confidentiality. Because of the potential for conflict of interest, the parties must give their consent, often in writing. This relationship is not legal in some states.
    Designated agency: This occurs when the same brokerage firm represents both the buyer and seller, but a different agent from within the company represents each one. In this case, the brokerage owes confidentiality to all parties and may do nothing to the detriment of either the buyer or the seller. The designated agents give their clients full representation.
    Non-agency relationship (called, among other things, a transaction broker or facilitator): Some states permit a real estate licensee to have a type of non-agency relationship. Generally, the duties owed to the consumer in a non-agency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

These laws vary by state so it is always wise to consult a real estate broker in your area.

So, what is the benefit of using a buyer’s agent, and how will they represent your interests?

Many buyer’s agents will use a Buyer Agency Agreement which spells out their duties to the buyer. Typically these duties include:

    Negotiate the best possible price for the buyer.
    Write up the offer and review seller disclosures.
    Protect the buyer’s financial information.
    Disclose to the buyer if they are working with another buyer interested in the same property.
    Show all properties the buyer is interested in that fits their criteria and budget.
    Connect the buyer with third parties such as inspectors, lenders, home warranty companies, etc.

Many feel that they can forgo the services of a buyer’s agent due to the vast amount of information online these days about properties that are listed for sale. However, depending upon the source, this information is often outdated and unreliable. A buyer’s agent will gain an understanding of your needs and set up your home buying criteria in their system so that you will promptly receive information on properties that might suit your needs as they become available, saving you hours of time searching for online listings and driving around looking for properties. They are also a great resource for information on the surrounding community including schools, recreation, churches, etc. And most importantly, they are aware of local market trends, helping you to negotiate a fair offer for the home you are buying.

According to Keller Williams Realtor, Melissa De Maria:

    The main benefit, in my opinion, of each party having their own agent is the problem solving that occurs in a transaction. When each party has their own representation, the emotions of negotiating are removed and the agent can really advise and problem solve with their client and talk to the co-operating agent to create a win-win for both parties. If the agent is working as a transaction broker or dual agency, the agent is restricted and cannot provide advice, ideas, solutions, etc. I prefer always to be a single agent as it allows me to build a relationship with my client that extends past the transaction.

Many lenders will also agree with this. Issues will often arise during the home mortgage process that need to be discussed with and facilitated by the buyer’s agent. Some examples may include required repairs or property valuations below purchase price that are brought to light by the appraisal, or even issues related to the buyer’s personal situation that may affect the loan process or timing of closing. A buyer’s agent may be able to help problem solve in these situations as well, without unnecessarily involving the listing agent or seller.

#3 Select a Buyer’s Agent that Understands your Specific Needs

What happens after a listing agent shows you a house you are interested in, but it turns out the home isn’t right for you? The listing agent may be able to show you other homes, but they may not be the best agent to meet your needs.

Many agents now specialize in either working with sellers or working with buyers. There is even a special designation for those who specialize in working with buyers and have become certified as an Accredited Buyer Representative (ABR). The listing agent on the home you were first interested in may also work with buyers, since many agents work with both buyers and sellers, but they may be primarily a listing agent and not able to help you continue your search. Buying a home is an important event in your life, especially if you are relocating from one city to another and don’t know a lot about the area you are moving to. I believe it is a good idea to get a few recommendations on real estate agents and speak to them to determine which one best suits your needs. Some of the questions you may consider asking are:

    How long have you been in the business, and do you work full-time or part-time as a real estate agent?
        The real estate business has become more and more complex in recent years. Having somebody with experience who knows the market and devotes himself to it full-time will most likely be a stronger resource than somebody who just dabbles in it part-time. Once again though, somebody who is new to the industry, but has a strong support team and up on the latest market trends, may be willing to work hard for you and go the extra mile. The important thing is to ask questions and understand what they have to offer you.
    Do you specialize in particular types of properties?
        If you are looking for a rural property with a lot of land, and an agent typically sells beachfront condos, he may not be the right fit.
    What can you expect in terms of communication?
        In this day and age of constant communications through text messages, email, etc., people’s expectations on how and when they will be communicated with can be important. If you are someone who likes rapid communication via the latest technology, and you don’t want to be bothered after 5 pm, an agent who doesn’t text message or email is not likely to be a good fit.
    What area(s) of town do you cover?
        If you are relocating to an unfamiliar city, an agent who only covers a small sector of the city may not be able to help you find the best location.
    Do you have some references I can check?
        You should ask for, and check, references. You may even want to check out the state regulatory agency that oversees your state to see if any complaints have been filed.

There are a lot of great, competent real estate agents (both listing and buyer’s agents), who are devoted to their jobs. Sometimes, it comes down to a personality fit, but if you take the time to do the research, you are more likely to find an agent who will smooth the path to finding your dream home.

#4 A Buyer’s Agent Can Help Resolve Issues Regarding Your Mortgage

Buying a home, including getting a mortgage to finance your home, is a team effort.  The two people you will work most closely with are your real estate agent and mortgage loan originator. I want to emphasis, therefore, the benefits a buyer’s agent can bring to the table when it comes to getting a mortgage to purchase your new home.

When applying for a mortgage, many of the issues that may need to be resolved concern the physical property and the seller.

    For example, repairs may need to be made to the physical structure. Having the seller make these repairs could save you money as the homebuyer, while also satisfying requirements of the lender to get the best possible mortgage.

In a real estate transaction, a buyer’s agent is uniquely qualified to resolve issues directly relating to the physical property and the seller, while ensuring that these issues are resolved in your best interest. The result can be financial savings on the purchase of the home, as well as savings with your mortgage.

As a mortgage loan originator working to get clients the best possible mortgage for their home, I believe it’s always beneficial to use a buyer’s agent when purchasing real estate.