Why Have a Buyer’s Agent When Buying a House
Are you wondering what a buyer’s agent is and why you should have one? You are probably thinking do I need a buyer’s agent?
Many consumers wonder why they should have a buyer’s agent when purchasing a home. They ponder whether there is going to be any value.
It only makes sense to hire a buyer’s agent if you plan on buying a home.
There are multiple reasons to do so, many of which we will cover here. Buying a home is one of the most significant purchases you will likely make in your lifetime.
Having a real estate professional look out for your best interests is essential.
A buyer’s agent will help ensure that you get the best possible results—and will make it more likely that you can achieve the desired outcome.
Unfortunately, some uneducated buyers think that going directly to the listing agent gives them a leg up on a purchase. Wrong!
The listing agent works for the seller. They have an allegiance to the seller throughout the transaction. Their goal is to get the seller the most money possible. A seller’s agent can give you ZERO advice.
We will cover 13 reasons why having a buyer’s agent in real estate is necessary.
Before doing that, however, let’s cover the definition of a buyer’s agent.
What is Buyer’s Agency?
Buyer’s agency is when a real estate agent exclusively represents a buyer’s best interests. Their allegiance is to the buyer in all parts of a real estate transaction.
Buyer’s agency was established in most of the United States in the 1990s. Before the advocacy of buyer’s agency, all real estate agents represented the seller.
Having buyer’s agency was a significant turning point in real estate sales. Potential home buyers now could have a buying agent in their corner.
What is a Buyer’s Agent?
A buyer’s agent represents a buyer’s interests when buying a home. A buyer is considered a “client” of the real estate agent, not a customer. They become a fiduciaries to the buyer in all aspects of the transaction.
In a buyer’s agency relationship, the agent provides the client with undivided loyalty, reasonable care, obedience to lawful instruction, disclosure, confidentiality, and accountability.
A real estate agent must put the buyer’s interest first and attempt to negotiate the best possible terms for their client.
What is an Exclusive Buyer Agency?
Some real estate companies choose only to represent buyers. The company does not have any seller clients. Under an exclusive buyer agency, the company’s goal is only to serve the best interests of home buyers.
An exclusive buyer’s agent (EBA) only represents home buyers and does not “list” homes for sale.
What is a Buyer’s Agency Agreement?
A buyer’s agency agreement is a contract between a buyer and a buyer’s agent for the exclusive use of their services. It spells out a working relationship between the parties. The buyer’s agent’s duties to the buyer will be outlined in the buyer’s agency agreement.
The critical aspects of a buyer’s agency agreement include the following: agent exclusivity, length of the contract, compensation procedure, and the type of home the buyer wants.
The contract will indicate that the buyer can only work with the specified agent. How long the agreement is enforceable is stated. The compensation procedure will be outlined if the seller pays a lower commission than the buyer agent desires.
A complete description of what the buyer is looking for will be outlined. The agreement will typically obligate the buyer to purchase a home through the buyer’s agent in most buyer’s agent agreements.
If, for some reason, a buyer purchases a home without their exclusive buyer’s agent, that agent would be entitled to a commission.
Given that a buyer is on the hook for a buyer’s agent fees regardless of whether they are using them, it makes sense to be one hundred percent confident in the agent before signing an exclusive buyer’s agent agreement.
Much like you would when signing an exclusive right-to-sell agreement when selling.
What is a Buyer’s Agent Fee?
Do buyers pay commissions to real estate agents? Usually not.
The buyer’s agent fee is the commission they will earn when finding a home for a buyer and then subsequently closing on the sale. The seller typically pays for a buying agent’s fee.
Usually, Realtor’s commissions are split 50/50 between the listing and selling agencies. The seller pays the buyer’s agent from the sale proceeds, so the buyer has no financial responsibility for payment.
If the buyer becomes interested in a FSBO, and the seller is not offering a commission, the buyer would be required to pay the buyer agent commission as spelled out in the buyer’s agency agreement.
Additionally, if the compensation offered by the seller is lower than the buying agent’s minimum acceptable commission, the buyer would need to make up the difference.
Do Listing Agents Make More Than Buyer’s Agents?
On a transactional basis, the commission paid to buyers’ and sellers’ agents is usually the same. So, on a transaction basis, the compensation is the same.
However, most real estate agents who work primarily with sellers have a higher income than buyer agents.
Finding a buyer the perfect home usually takes longer than selling a property.
Here is an excellent breakdown of how much a real estate agent makes.
What Does a Buyer’s Agent Do?
Let’s go over all the best reasons for having a buyer’s agent in your corner.
1. It Usually Won’t Cost You a Dime.
That’s right. In most cases, hiring a buyer’s agent won’t cost you anything. No, buyer’s agents don’t work for free. But they also don’t get paid by the buyer.
As mentioned previously, they get paid by the seller. Typically, buyer and seller agents will split the commission on a home sale.
The only situation where you might be expected to pay the buyer’s agent is if the property is FSBO—For Sale by Owner—and the owner refuses to pay the fee for the agent.
You can generally avoid such situations, though, just by verifying that any FSBO home you look at is being sold by an owner who has agreed to pay the buyer’s agent.
Your agent should explain how commissions work in instances like this one. Remember, there might be a great for sale by the owner out there that fits your needs perfectly. Part of your buyer agent’s job is to find one of these properties for you, should they become available.
If a FSBO doesn’t pay a commission, you can always deduct that amount from what you offer the seller or pay your agent. This is one of the many reasons why FSBOs rarely save money.
You won’t be paying any money out of your pocket should be a significant reason for having a buyer’s agent.
2. Your Buyer’s Agent Will Have a Finger on The Pulse of The Market.
The real estate market is in constant flux. Unless you are a professional real estate agent, it isn’t easy to be fully aware of everything in your local market.
That is why you hire a buyer’s agent—they will have the market knowledge you need to get the best results from your purchase.
The agent can advise you on what kind of offer is likely to get you the home you want. Your agent can give you an informed opinion on where they see the local real estate market headed. Will the prices of homes rise or fall? Are the inventory levels for homes going up or down?
Are you likely involved in a bidding war because so few homes are on the market? How can you put yourself in the best position to win if that’s the case?
Is having an escalation clause a good idea?
3. Your Buyer Agent Will Take Care of Coordinating Showings.
You only have so much time to spend looking at homes. Coordinating showings with sellers and their agents can be a juggling act, one that may become frustrating when inventory is tight, and homes are selling fast.
An exceptional buyer’s agent will be flexible with getting showings coordinated. They will work around your busy schedule as best they can.
Your agent will figure out how to get you to the showings you want most when you want them. Sometimes this won’t be easy, like when the seller insists the listing agent attend.
4. A Buyer’s Agent Will Research The Area and Neighborhood.
Many buyers put a lot of focus on the home they are excited about buying but forget about their surroundings. How is the neighborhood?
How is the city or town to live in? Are there any known problems nearby that may give a buyer second thoughts?
The best buyer’s agent will have a pulse on the local market. They will know the best attributes along with the worst.
As a buyer, you may not be comfortable purchasing a home near a toxic waste dump. A buyer’s agent will research issues like this and give you the lowdown.
A significant role of a buyer’s real estate agent is to perform due diligence on the house you’re interested in. They are there to protect you.
A genuine buyer’s agent’s role isn’t to be a glorified taxi cab driver. If this is the kind of agent you are working with, FIRE them!
5. Your Buyer’s Agent Should Be Researching The House Itself.
In most states, homeowners will fill out what’s known as a seller’s disclosure statement. In this document, the seller will tell buyers what they know and don’t know about the property.
An outstanding buyer’s agent will review this form with you. They will advise on anything that may need further clarification or possibly investigation.
Researching the history of the house will be paramount.
For example, some sellers are notorious for not getting required building permits for remodeling work they have done in their homes. This big no-no could cause problems for a buyer once it’s time for them to sell.
A buyer’s agent will research the local town building department when there are suspicions that permits have not been pulled.
In a worst-case scenario, your buying agent could discover the property is stigmatized in some way.
6. Your Buyer’s Agent Will Advise You on What to Offer.
One of the essential roles of a buyer’s agent is to advise you on what to offer on the home you’re interested in. There should be a detailed comparative market analysis done on what to offer.
The conclusion should be based on comparable sales data of similar properties or “comps,” as real estate agents call them. The focus will be on what is sold.
The best real estate agents understand pricing well. They know how various amenities in a home will impact the ultimate value. This will be one of the most critical tasks a buyer’s agent will provide when it comes down to it. The deal will be based on real science, not some phony Zillow estimate.
You will live with what you pay for the home for years.
7. Your Buyer’s Agent Can Advise You on Financing and Help Find a Lender.
The agent you work with should have extensive knowledge of different financing options. They can connect you with lenders that will meet the financing criteria you are looking for.
Choosing a lender is an essential aspect of the home-buying process.
The agent will likely have one or more mortgage brokers they like to work with. So you can discuss your financing options with the agent and ask for recommendations on mortgage brokers.
One thing to keep in mind about financing—it is typically best to work with a local mortgage company when possible.
Local companies know your market better than those without a local presence. They tend to be easier to work with and more likely to be helpful.
Here are some helpful questions to ask the lenders you are interviewing. The last thing you want is a mortgage broker or lender that will take advantage of you.
8. Your Buyer’s Agent Serves as Your Professional Negotiator.
You may be great at negotiating, or you may dread the prospect. If you are a good negotiator, you know the importance of knowledge regarding getting the best results.
Your buyer’s agent knows homes and the market and can use that knowledge to negotiate effectively on your behalf.
If you don’t like negotiating, having an agent solves the problem. You discuss your offer with your agent, discuss terms, etc. They become your voice. You have an ultimate say but can rely on the agent to talk and negotiate for you.
One of the most vital aspects of negotiating will likely come into play after the home inspection.
If there are any significant home inspection problems, you’ll want your real estate agent to help negotiate a credit, price reduction, or repair. Dealing after an inspection goes with the territory for a buyer’s agent.
9. A Buyer’s Agent Will Help You Navigate Emotional Territory.
Real Estate agents are often associated with being therapists on the side. With so much riding on the line, getting emotional over a home purchase is customary. You may want the home. It’s possible you may be stretching your finances to buy it. You may find the attitude of the seller irritating or even infuriating.
Business deals are best done with a cool head, so you must avoid letting your emotions get the better.
Having an agent as a go-between is excellent for an emotional filter. Vent to the agent, and then move forward with razor focus.
10. Your Agent Has Extensive Experience Looking at Houses.
There is nothing that replaces real-world experience. While it is vital for you to do your research in the home-buying process, you can only absorb so much information and advice.
Fortunately, with a buyer’s agent, you have someone who has viewed probably hundreds of homes. They can give you valuable insight into what a home lacks and what it has that is desirable.
They should be able to tell you what the resale value will be like. Will the home appreciate well or be a laggard?
The best buyer's agents aren't concerned about making a sale but instead what's best for the client.Click To Tweet11. A Buying Agent Will Understand How to Navigate Real Estate Contracts.
You may be pretty familiar with buying homes, or you may be brand new to the process. But even if you have done this seven different times, you are still going to benefit from having a professional guide you through the contract process.
Real estate contracts can be confusing and difficult to understand, so having a representative looking out for your best interests—who will not be baffled or overwhelmed with the contract process—is ideal.
Your agent will know about the various possible contingencies that can show up in a real estate contract—both those the seller might try to include and those you might want to have based on your circumstances.
The agent can also write a formal contract on your behalf, making you look like a desirable buyer to sellers and their agents.
12. Buyer’s Agents Will Have Connections to Get Through The Buying Process.
A variety of professionals may be needed to complete your transaction. Instead of spending time tracking these people down—like home inspectors, real estate attorneys, and mortgage originators—you can leave the task to your agent.
They should have a list of trusted professionals who are excellent to work with and can connect you with them immediately.
The buyer’s agent can be a fantastic resource for many things before, during, and after your purchase.
Maybe you need a landscaper, painter, plumber, or professional mover?
If you are being transferred from out of state, you may need a company to ship your car or a temporary storage unit. These are all things a buyer’s agent that is tuned in locally can provide.
The best buyer’s agents will have connections and provide you with a list of trusted contractors.
13. Your Agent Will Ensure That The Transaction Remains on Schedule.
While some delays in a home purchase can be unavoidable, many potential delays can be spotted and avoided before they occur. But detecting the problems early on requires awareness of how things are supposed to go, which only comes with experience.
Your agent will pay close attention to the transaction and look for possible issues.
They are just as interested in making sure things go smoothly as you are and should be well-equipped to keep things on track.
When delays do occur, which can happen, having an agent will help you minimize the delays.
Your buyer’s agent will be able to identify where things went wrong and determine potential solutions based on prior experience.
Buyers Agent Near Me
Do you know how to find a buyer’s agent?
The best way of finding a buyer’s agent is through references from family and friends. You should seek out someone who has successfully transacted with an agent. Ask them pointed questions about they like the agent. The least important part of being a buyer’s agent is showing you homes. Anyone can do that.
You could always do an online search if you are not from the area and don’t know anyone. Head to Google and use buyer’s agent near me as a search term. You’re likely to see several beneficial results.
Keep in mind you will want to do a thorough buyer’s agent interview before agreeing to work with them.
Don’t Accept Dual Agency
It is possible you could be working with a buyer agent who has a listing you are interested in. This situation creates dual agency in which the agent cannot represent your best interests.
Some agents often practice dual agency – a horrible situation for you and the seller.
Dual agency is illegal in some states because it is terrible for consumers.
The real estate agent becomes a neutral party and cannot give the buyer or the seller any advice. Completely moronic! When buying a home, there is incredible value in having someone working for YOUR best interests.
If this pops up, ask for a referral for another agent representing your interests.
Are There Any Disadvantages to Using a Buyer Agent?
The only downside of having a buyer’s agent is picking the wrong one. If you signed an exclusive buyer’s agency agreement, you would be locked into using that agent until the contract expires.
Can a Seller Refuse to Pay a Buyer’s Agent?
Yes, as long as it is done upfront. Once compensation is offered to a buyer’s agent, it cannot be retracted during a transaction.
You Should Hire a Buyer’s Agent
Ultimately, you have every reason to hire a buyer’s agent and no reason not to. Take the time to interview a few agents and take your pick. You will be happy you did.
Here is a summary of what a buyers’ agent does for their clients. Look for a real estate agent who will do everything for you.
Hopefully, you now better understand why you need a buyer’s agent.
Additional Real Estate Resources For Buyers and Sellers Worth a Look
- Don’t go to the builder’s real estate agent when buying a new home – see why you should never go to the builder’s representative when purchasing new construction. Hire a buyer’s agent!
- Does it make sense to sell my home now? – Petra Norris looks at whether it makes sense to sell your home this year. What are the most important considerations?
Look at each of the above resources from other real estate professionals for more sound real estate advice.
About the Author: The above Real Estate information on what is a buyer’s agent was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 37+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.