There are many folks who plan to buy a home and do not know about the benefits of using a buyers agent to help them buy. This blog will outline the benefits of using a buyers agent versus buying the home directly from the listing agent or the home seller.
Its important to understand the premise that a buyers agent works under. A buyers agent's fiduciary duty is to the buyer. Their responsibility is to get the best price, the best terms and the best conditions for their clients, the buyer.
How are Buyers Agents paid?
Most buyers and sellers don't totally understand how real estate agents get paid. A lot of the reticence of buyers using a buyers agent comes from the mistaken assumption that the buyer has to pay the buyers agent for their services. This is incorrect in 99.99% of situations.
At this point, in this discussion, it makes sense to describe how real estate agents are paid for their services.
When a seller signs a listing contract authorizing the sellers agent (or listing agent - the terms are interchangeable) to sell their home, they agree to pay a certain percentage commission upon the successful sale of the home. If a buyers agent has been involved in assisting the buyer to buy the home then the sellers agent owes the buyers agent a portion, generally half, of the commission paid. When the listing agent posts the home into the MLS system they document how much commission they will be paying a buyers agent if a buyers agent helps a buyer buy the home. The only time the buyer is liable for any payment to the buyers agent is when the buyer has signed a buyers agency contract with the buyers agent AND, the buyer buys a home directly from a For Sale By Owner and does not involve the buyers agent in the transaction.
Can a Buyers Agent help?
Using a Buyers agent can be very beneficial to the buyer. The buyers agent should be familiar with the town in which the buyer is interested. When an agent knows the town, they are familiar with values in the town, they know the homes that have been on the market and sold over recent years, they know when a home has been on the market recently and not sold, they know the 'good', 'desirable' locations and the 'not so desirable' locations. They have access to all sorts of information that can help you make a considered purchase that should appreciate in value during the buyers ownership and given normal market conditions.
Good buyers agents educate you about the real estate market. They can advise you as to what is happening to the 'health' of the town you are looking at, they can explain what is happening 'on the ground' at the local level, and they can guide you in choosing a home that not only will you love living in, but the next buyer after you will love living in. It is really important when buying a home to consider the next buyer - if you consider what the next buyer also wants then you are considering the homes resale value.
We all know that there are some areas of each town that are not as popular as other areas of town. Its important to ensure that you are aware of this aspect of the location prior to buying a home in that location. You may make a conscious decision to buy in that area, but you should still be aware of it and the potential downside during resale. A buyers agent can help guide you in this...as buyers agents, we work with many buyers and we know when previous buyers have had preferences over certain locations versus others - this sort of location experience from a buyers agent is invaluable to the buyer.
There are some homes that, for whatever reason, come on the market and don't sell. Then they exit the market and try again the next peak selling season, and again, don't sell and so it goes. A buyers agent who works in the town and is familiar in the town knows about these homes and can give you those snippets of information so that you are aware of them when making an offer on a home. Also invaluable in the determination of an offer price is the market history of a home. The buyers agent can access this information from MLS (Multiple Listing Service) and provide it to you explaining the significance of several milestones in the homes market history. The strategy of making an offer on a home that has only just come on the market 1 day ago is significantly different than the strategy of making an offer on a home that has been on the market for 3 months or more. You can also tell a lot about a sellers motivation when you look at the number of times the home has reduced its price and the amounts the home has dropped. Recently there was a home on the market in Arlington that dropped its price 10c (yes, $0.10 cents) regularly - there we have a seller who is not really 'motivated' and the home had been on the market for 1300 days - yes, 3.5 years.A buyers agent can explain and guide you through the offer process ensuring that your offer is seen in its best light and is skilled in negotiating the lowest price for your home. If you make an offer through the listing agent of the home you need to understand that the listing agents fiduciary duty is to get the highest price, the best terms and the best conditions for their client, the SELLER. Not the buyer, the seller. More often than not, the sellers agent is also not going to fill you in on the market history of the home, nor the various points which you should use to make an informed decision as to offer price. This also applies to homes that are being sold directly by their owners - these folks are not familiar with the market, often perceive their home is better than others on the market because of bias, and are often listed at higher than market value.
During the home purchase process there are many steps along the way that the buyers agent guides and assists the buyer. From attending the inspection, guiding the buyer with the inspection response, guiding the buyer with the Purchase and Sales agreement and facilitating the signing of it, accessing the home a few times prior to closing, explaining the mortgage process and ensuring that contingency dates are met, taking the buyer through walkthrough of the home, and attending closing with the buyer (moral support at this point :-) ). The buyers agent should be helping make the whole purchase transaction a stress-free process, or at least, minimize the stress associated with buying a home.
When using a buyers agent you know that you have an experienced, professional resource who is looking out for your best interests and guiding you through the whole home buying process....all at no cost to you. A real bonus if ever there was one!