Buying a house is considered to be one of the biggest decisions you can make in life. Unfortunately, the home buying process can often get incredibly complicated and lengthy as well. Fortunately, a buyer’s agent can help you navigate through the potential pitfalls that amateur and experienced homeowners alike can fall victim to.
In this article, we’ll take a look at how a buyer’s agent can benefit you and how they are different from a listing agent. By understanding the critical role they play in the home buying process, you’ll appreciate the level of insight and expertise they can offer you.
What Is A Buyer’s Agent?
A buyer’s agent works on behalf of the home buyer to ensure that they buy the right home at the right price. These real estate professionals will take a step-by-step approach to educate and guide the buyer through the process of purchasing a home.
A seller’s agent, on the other hand, represents the interests of the seller of the house or listing agent. Knowing which type of real estate agent you are dealing is key to getting favorable terms.
Buyer’s Agent Vs. Listing Agent
A real estate transaction typically involves two types of agents. The first one, a buyer’s agent, represents the interests of the buyer. The second one, is the seller’s agent, also known as a listing agent, who represents the seller of the property.
A buyer’s agent is a legally licensed professional who works with the buyer to find the best listings suited to their financial profile and needs. On the flip side, the listing agent is in charge of listing the seller’s property and selling it at the best price and terms possible.
Still, many people, especially first-time buyers, believe they can take a do-it-yourself approach to finding a home to buy. They will try to work directly with the listing agent to close the sale of the property in an attempt to “save on costs”.
However, a professional buyer’s agent has years of training and expertise in the real estate industry. Not only that but they also have a fiduciary duty to protect a buyer’s interest. Their qualified recommendations and negotiating tactics can potentially save buyers heaps of money off the purchasing price.
Read More:
- Buying A Home If You’re Legally Separated Or Divorced
What Can A Real Estate Buyer’s Agent Do?
As a real estate professional, a buyer’s agent acts as a resource who can help buyers navigate through each step of the home buying process. Here are some of the common tasks that a buyer’s agent will handle:
- Finding property listings: The home buying process starts off with the buyer’s agent getting to know the preferences and needs of their client. This helps agents look for properties that not only match their interests, but are also appropriate based on their financial profile. They will also be on the lookout for any new listings that match their needs so they can inform their clients as soon as possible.
- Schedule showings: A buyer will review the listings their agents send them so they can pick and choose which properties they would like to visit. The agent will arrange the visit with the listing agent or seller if FSBO (for sale by owner) for the in-person tour. In addition, the agent will keep the buyer posted on any Open Houses that may be of interest to them.
- Question and answer specialist: The buyer’s agent will usually accompany the buyer to showings and open houses. While touring the properties they can answer any questions that the buyer may have regarding the property in question. In addition, the agent can also ask important questions to the listing agent or FSBO seller that the buyer wouldn’t have thought to ask. The agent’s unique perspective and experience can help reveal important information about the property, taxes, and much more.
- Pricing consultant: Buyer’s agents have a fiduciary duty to ensure their clients have all the relevant details about the properties they evaluate. This means making sure that any defects, hazards, or any other issues that could affect the sale are fully disclosed. The agent also conducts a comparative market analysis to estimate the value of the property versus other similar homes that were recently sold in the area. By ensuring their clients are fully informed about the property, they can mitigate the risk of lawsuits and reputational damage.
- Handles negotiations with listing agents or FSBO sellers: Once the agent makes the offer on behalf of their client, they will proceed to negotiate the terms and price. As each party goes back and forth with their offers and counteroffers, the agent plays a key role in protecting their client’s interest. This includes providing guidance on how buyers can improve their offers by eliminating contingencies, adjusting the closing date and more. Once the seller agrees to the terms and conditions proposed, they will work on drafting the contracts.
- Provide referrals of other real estate professionals: The buyer’s agent will fulfill his fiduciary duty to represent his client throughout the home buying process. As part of their work, they will often reach out to other professionals in the real estate field such as real estate attorneys, inspectors, etc. This type of professional collaboration can help expedite the closing process and provide a more comprehensive client experience.
Who Pays A Buyer’s Agent?
Inexperienced homebuyers don’t always realize that it’s the seller who actually pays the commissions for both the buyer agent and the listing agent. In fact, if the deal fails to go through for any reason, the agent is normally not entitled to any compensation.
The buyer agent negotiates a favorable deal on their client’s behalf and handles the tedious paperwork process involved. By saving their clients heaps of time and money, hiring a buyer’s agent is really a no-brainer.
Although contracts may vary, a seller typically pays a 6% commission off the purchasing price of a home. This commission is normally split evenly amongst the listing and buyer agents. Although these commission costs are factored into the deal, it’s the seller who pays these fees off the proceeds of the sale.
Let’s take a quick look at how the math works out. Let’s say a property was sold for $400,000 in total. The seller then pays the agents a 6% commission, or $24,000, which is taken from the proceeds of the sale.
This amount is then split evenly between the 2 agents for $12,000 each. The seller, on the other hand, nets a profit of $376,000.
Can You End A Contract With A Buyer’s Agent?
Unlike other salaried jobs, buyer agents only see a payday if their clients find and close on a new home. This is why agents are increasingly asking their clients to sign a broker agreement that establishes their working relationship.
The terms of the relationship are clearly stipulated within the contract including a non-compete agreement during the home buying process.
Most of the terms in a contract can usually be negotiated to a certain extent. However, some firms may place firmer limits on how their agents can alter certain provisions. Buyers also have the option to negotiate how long the contracts remain valid.
It is important to note that most agents require that clients work exclusively with them for about 90 days.
If the buyers are unable to close on a property within the 90-day period, the contract then expires worthless. At this point buyers are legally free to hire another agent if they so choose.
That being said, each contract should be analyzed carefully as to avoid any unexpected or unwelcome surprises. Some contracts even call for an automatic renewal after the 90 day period.
Fiduciary duties aside, sometimes clients and agents have a tough time working together. Whether it’s a clash of personalities or different work ethics, the situation may merit the early cancellation of a contract.
Of course, that also depends on the details included in fine print. However, if the agent fails to live up to his responsibilities, the buyer is well within his right to terminate the agreement immediately.
Buying a property is usually a pretty big deal. The last thing you need is to be stuck with an agent you don’t see eye-to-eye with. In fact, some buyers will even try to avoid signing a buyer’s broker agreement at all!
If you’re not 100% confident about your agent, you may want to request a trial period to test the relationship. With some careful negotiation, including a provision with a 30- or 60-day opt-out period may be a great option.
How To Find A Buyer’s Agent
The home buying process is about as lengthy and complex as transactions can get. Having a reputable buyer’s agent on your side is crucial to ensuring that a buyer makes the right choices. However, knowing how to find a buyer’s agent that will best represent you can be a tricky process.
One of the most effective ways to find an agent that’s right for you is by actually interviewing several of them. Having several question and answer-style interviews can give you a good indication of what personality and professional traits would best serve you.
Remember, anyone can sell a home, but it takes an honest agent with a strong work ethic to find a deal that’s right for you.
Here are some great questions you can ask when conducting your interviews:
- How long have you been working as a professional real estate agent?
- What is your typical day like?
- Do you have a lot of experience working with buyers?
- What is your current workload in terms of buyers and sellers?
- Have you had a lot of success finding homes in my desired location/price range?
- How could working with you benefit someone in my situation? What would you say would be the biggest factor that separates you from the other agents?
The moment you sit down with your agent to discuss the perfect home for you, pay attention to how they respond to what you say. Whether it’s a thoughtful response or a dismissive eye-roll, how your agent reacts to what you say is important. You want to make sure they are well-versed in their industry and that they always maintain a high level of professionalism. To get the home you want will count on your agents’ reputation when they are representing you.
Still not clear on how to look for agents? Get started today by Creating an account on Gott Real Estate to start your search and we will set you up with the best agent in your area. This company has a network of highly-qualified and reputable agents in all 50 states.
They will take the guessing game out of your search process by matching you with an agent that will understand and protect your interests. Stop letting doubt hold you back from finding your dream house.
Get started today and while you’re at it, check out current mortgage rates.
