In a previous post Buyer Representation or Buyer Beware: Your Choice, we learned about the importance of buyer representation (a.k.a. Buyer Agency, Buyer Brokerage) and the differences between the levels of service you can expect depending on whether you are a “customer” or “client” of the agent. Clearly, every buyer would want to have a client relationship with their agent since by definition they could expect a higher level of service from that agency relationship, right?
So why aren’t buyers using buyer’s agents for every purchase? Many buyers have misconceptions about buyer agency and the advantages it can bring to the home buying process. These misconceptions exist because buyer agents don’t always convey the essential points about buyer agency to their clients, customers, and the public in general.
Let’s look at five misconceptions about buyer representation that Buyers may have when they search for real estate:
Buyer Misconception #1: I can pay less by eliminating one agent (commission) from the transaction.
I have no evidence that listing agents are reducing their commissions when buyers come directly to them, but I have seen buyers pay more for comparable homes when they are not represented by a buyer’s agent. What does it matter if only one agent gets paid commission if you end up paying more at the closing table?
Granted, sometimes a buyer finds a property that they want so badly that they are willing to pay more to get it. But at least with a competent buyer’s agent on board the buyer would be making a well-informed decision when they purchase.
Buyer Misconception #2: I can negotiate better without a buyer’s agent.
How can you negotiate effectively as a buyer when you don’t have an agent advocating for you like the seller does? That’s two against one! The listing agreement an agent has with a seller clearly states that the agent is representing the seller, not the buyer. If you don’t have a buyer’s agent, then you are contractually at a disadvantage.
A buyer’s agent adds an objective component to the negotiation that is desperately needed when buying a home. Passions run high for a buyer when negotiating a purchase and those passions needs to be tempered by a third party representing the buyer’s interest.
Buyer Misconception #3: The listing agent is so nice; I know he/she is looking out for me.
The listing agent, no matter how nice they are to you, is legally bound to do what’s best for the seller, not you. What’s best for the seller is for the listing agent to reveal as little as possible about the property (within the extent of the law) and to get as much as possible for the seller at the closing table. If the listing agent leads you to believe that they are also looking out for your interest as a buyer, then he/she is acting as a dual agent, a fact that must be fully disclosed in writing to you and to the seller, as required by Georgia Real Estate law.
Buyer Misconception #4: If I hire a buyer’s agent, I have to pay the agent’s commission.
Every buyer’s brokerage agreement clearly states that the commissions will first be paid based on the listing agent’s offer of compensation, which is available on almost every property listed by real estate agents. Listing agents who are members of multiple listing services (MLS) are typically required to state the commission rate available to cooperating agents who bring buyers for their listed properties.
On occasion buyers may be asked to pay a commission for the purchase of “For Sale By Owner” homes (FSBOs) or for short sales when the seller owes the lender more than the purchase price. But all this is negotiated in advance between the buyer and the buyer’s agent when first entering into the buyer’s brokerage agreement, so there are no surprises that come up along the way as to who is responsible for agent compensation.
Buyer Misconception #5: I’ve been doing all my research on-line and I feel that “hiring” another agent would just be a waste of my time.
The world wide web has given consumers mountains of information at their fingertips and has made it possible for buyers to pre-view practically every property on the market without ever leaving the comfort of their own homes. It’s no wonder that buyers feel more “empowered” today to make their own buying decisions without the assistance of a buyer’s agent.
But a buyer’s agent does more than just show you homes; a buyer’s agent is an advocate for you in helping you make one of the most important decisions in you life.
What should you expect from a buyer’s agent? A good buyer’s agent will:
- Interview you at length, listening to you intently and asking probing questions, and develop a list of your interests, concerns, and needs as a future homeowner. In the real estate business, it’s called “Know your Client”.
- Make sure that you are financially qualified to see the homes you are interested in, and help you find a lender that you can work with before ever touring the first home.
- Thoroughly research listed homes that meet your requirements and recommend the best examples of homes available.
- Schedule and coordinate home showings and accompany you on each and every occasion.
- When you find a home you are interested in, produce a CMA (comparative market analysis) or suggest an appraisal of the property to ensure your are buying at the market price.
- Provide you with relevant public information on the home or area that may not have been provided by the listing agent, and to the extent possible, re-confirm the information provided by the seller.
- Carefully write offers on homes that give you the most protection as a buyer if things go “sideways” between parties during the inspection phase and before closing.
- Provide the names of home inspectors, contractors, and other professionals who have expertise in other services relevant to the home buying process.
- Constantly advocate for you from the time you enter into the agreement and start seeing homes and throughout the closing of the real estate transaction.
If the examples above represent the level of service that you want and expect from your real estate agent when buying a home, then always insist on buyer representation. To learn more about buyer representation, visit the Real Estate Buyer’s Agent Council web site or contact Dale Holmes at 706.499.0367.
Dale Holmes, Broker for Headwaters Realty has earned the Accredited Buyer’s Representative (ABR®) REALTOR® designation. The ABR® Designation is awarded through the Real Estate Buyer’s Agent Council, or REBAC, which was founded in 1988 to promote superior buyer-representation skills and services. REBAC is an affiliate of the National Association of REALTORS® (NAR).