What is a Buyer's Agent, anyway?

Simply stated: A Buyer?s Agent is a licensed real estate professional working exclusively on behalf of the buyer to assist them in purchasing a home.

Why should I consider signing an exclusive agreement with a Buyer?s Agent? PERSONAL REPRESENTATION, PRIVACY / CONFIDENTIALITY, NEGOTIATING STRENGTH, CONFIDENCE!

Many people don?t understand the value of a Buyer?s Agent, and believe it is easier and simpler to stay a ?free agent? and contact the Seller?s Agent when they are interested in writing a contract. While it makes sense on the surface, this is not in the best interests of the buyer. Why? The Seller?s Agent is, well, the Seller?s Agent! Their role is to represent the seller and their needs (getting the most they can for the property) and not yours (paying the least you can and getting the most concessions like home warranty, appliances, repairs, closing costs, etc.)

It is not illegal for an agent to represent the buyer and the seller (it?s called dual agency) but it is tough to represent both fairly. A much better solution is Buyer Agency, where the buyer has representation throughout the purchase, separate and apart from the seller.

Because the Seller?s Agent has offered to share their commission with a Buyer?s Agent who brings a viable buyer, there is NO direct expense to the buyer! You will NOT save money in most cases by not having your own representation! In fact, you are more likely to lose money without your own representation.

So why doesn't everyone use a Buyer Agent? Lack of knowledge, fear of getting tied to one person who won?t produce results, the 'I can do it all myself' mentality, among many others.

Overcoming those obstacles:

1. Lack of knowledge. By reading this, and many other materials, you can gather information about what to look for in an excellent Buyer?s Agent, and how the process should move forward.
2. Being tied to an agent who won't produce results.
   ? Get references and referrals. Do call to verify references.
   ? NEVER hire a Buyer?s Agent out of obligation. Avoid working with relatives and friends, particularly those new to the business (unless they have a strong mentor relationship with a senior agent who will be working together with them to help you.) While most new agents start out with family and friends, there is a lot to know about the business, and they will be practicing on you! It is to your advantage to find the most experienced negotiator, evaluator, networked Buyer?s Agent you can find. Your purchase represents a lot of money over the course of your home loan, and the money that your relative or friend will earn is small, compared to the investment you are making. Unlike beauty college, this transaction is much more difficult (and expensive) to grow out of!
   ? Never sign an Exclusive Buyer?s Agency Agreement that doesn?t allow for termination. The contract should say it has unilateral termination (both the buyer and the agent can terminate the contract.) In other words, make sure you can cancel the contract if you?re unhappy. Usually there is a time period, agreed to in writing, that any property shown to you by the agent would still result in a commission to them. If an agent doesn?t offer you a unilateral termination option, or says, it?s not in writing but we can always cancel it if you?re not happy ? run, don?t walk, to the nearest exit!
3. The ?I can do it myself? mentality.
   ? This is the tough one. Like seeking directions, some of us would rather be lost than ask for help. If this is you, consider these points:

   To borrow $1000 for 30 years, at 6% interest, will cost about $1150 over the term of the loan. In other words, you will repay $2150. Every extra thousand dollars in savings your Buyer?s Agent can negotiate on your behalf will save you more than double that amount during the life of a typical loan. If your interest rate is higher, the cost increases.

In talking with lenders, we?ve discovered that the main reasons people lose their homes to foreclosure include loss of work, major medical issues and expenses, and deferred home repairs. In the later example, it is vital that you have someone who can make sure you have wise counsel regarding the current condition of the home, any deferred maintenance expense planning (items you?ll need to pay for over time, like a new roof or central air system), major defects that could affect your ability to resell the home later, and home warranty plans to protect your cash flow.

Your Contract with A Buyer?s Agent

An Exclusive Buyer Agency Agreement normally ties you to one agent or team. While some agents will work for you without an agreement, most professionals value their time and will not invest in clients who do enter into an exclusive agreement. (Would you spend hours driving someone around, doing research, helping clients hire inspectors, lenders, and other professional services, and not have an agreement to be compensated? If someone is willing to do all this work without a financial arrangement in place (if they do help you find and purchase a home,) you might want to wonder why.

Additionally, a good agent will spend time with you personally, discussing your needs and creating a personalized search for your new home. Prior to looking for specific properties, they will usually ask you to fill out a loan application or provide proof of credit worthiness, such as a lender approval letter. This is to ensure that you are actually looking at properties you are qualified to buy.

Why choose a Realtor? who offers Buyer Agent services? All Realtors? voluntarily adhere to a strict code of ethics, and have additional hours of training to make sure their clients get the most professional, ethical care possible.

Items to look for in the Exclusive Buyer Agency Agreement

• The contract should cover a specific time period agreeable to both parties.
• The agreement should be in writing. It should outline the expectations of both the buyer and the real estate agent.
• The agreement can be far-reaching or cover listings only in a specific geographical area.
• The contract should address agent compensation. Buyer's agents are usually paid a portion of the seller's commission at closing, but not always. Ask how agents are paid in your area. What if you buy a for sale by owner property? Will you pay the agent's commission? If not, get it in writing now.

A buyer agency agreement is a binding contract, and that means you may owe a commission even if you switch agents or companies. Be sure you understand every aspect of it before you sign.

When You Contact an Agent

• Ask if they can work as a buyer's agent.
• Ask what services you can expect if you chose them as a buyer?s agent.
• Ask for a copy of the Exclusive Buyer Agency Agreement, and whether it allows for termination. Review it privately and make sure you are comfortable with the terms before meeting to sign it.
• Ask if the company allows dual agency, and if so, how it will work. 
• Do not sign an agreement if you feel pressured or want to interview other agents. Again, you will be the one paying the loan for many years to come, while the agent has gone on to other things. This is an important decision, and it?s yours to make!

Final thoughts?

Don't sign a buyer agency agreement until you know the agent is the right one for your needs.

Don?t expect a professional Realtor? to do work on your behalf without an Exclusive Buyer Agency Agreement, but do expect patient conversation(s) to determine if there?s a good fit.

Never disclose confidential information to a seller's agent ? they are not obligated to keep that information from the seller or anyone else.

Most Buyer?s Agents also have seller clients. Ask in advance how they will handle your account, should you want to write an offer on one of their listings.

How to contact us

If you?d like to interview us for consideration as your exclusive Buyer Agents, we?d love to have the opportunity to talk with you about it.

You can reach us via email or call us at (615) 650-1571.