Buying a home is probably the most important purchase you'll ever make. Do you want to go it alone? Until a few years ago, home buyers had no choice. They decided upon a home to buy and negotiated the contract without representation.
Traditionally, all residential real estate agents represented the home seller. That was true of the "listing agent" who put the home up for sale, as well as the agent who found the buyer. That agent - who helped the buyer find the right home actually worked for the seller. Under that traditional system, all agents were legally bound to repre¬sent the seller and the buyer had no representation.
Buyers no longer need to represent themselves during the home search and purchase while all agents represent the seller. Smart home buyers today can receive undivided confidential representation by choosing a "buyer's agent."
In fact, 71 % of home buyers surveyed in a recent Gallup poll for the National Association of Realtors said they would use a buyer's agent next time they purchased. At last, you don't have to buy a home alone. Now you, like the seller, can have someone on your side looking after your best interests.
A buyer's agent usually owes certain duties to their home buyer, such as care, confidentiality, full disclosure and accurate accounting. These responsibilities are defined by state laws, the REALTORS® Code of Ethics, general principles of agency, and court decisions.
That's the legal definition. But what does a buyer's agent actually do for the home buyer? Like other agents, a buyer's agent will show the buyer available homes, point out the property's features, provide financing information and submit the offer to purchase.
But that's not all. As your representative, a buyer's agent will share valuable and essential information with you if the agent knows it, such as:
Most important for many buyers, you can ask a buyer's agent for advice and assistance in setting your offering price and structuring the other terms of your offer. What's more, you'll have peace of mind knowing an advocate is working on your behalf to help you buy at the best possible terms. A buyer's agent's goal is to help you buy the home you want and buy it at the right price.
If you want to make sure you buy smart, you need a buyer's agent. If you're a first-time buyer, if you're relocat¬ing or unfamiliar with the local real estate market, if you're buying for investment and want negotiating help, or if you need to purchase anonymously, you'll be best served by a buyer's agent who puts your interests first.
Also, if the real estate professional helping you find a home is a relative, close friend, or business associate or you previously were the agent's home-selling client, chances are you'd expect the agent to represent your interests and should establish a buyer agency relationship. Or, if you just want to get the best value in a property and an agent, you owe it to yourself to be the most knowledgeable buyer you can be.
Without a buyer's agent, you're really on your own. Keep in mind, the seller's agent is actually working for the seller and is the seller's legal representative. Yes, a seller's agent can offer buyers some services, including a diligent search to find the right home, an explanation of available financing, calculation of monthly payments, estimation of settlement costs, presentation of your offer to buy.
What a seller's agent cannot do is disclose information not in the best interest of the seller such as an opinion of the home's real value or what price and terms the seller would accept. By law, the seller's agent must negotiate on behalf of the seller and may not withhold from the seller information that could strengthen their bargaining position. That means you, as a buyer, should be careful not to disclose to the seller's agent any financial or personal information that could be used against you.
Perhaps the right question is, "What will it cost me if I don't use a buyer's agent?" Purchasing a home without representation is possibly the biggest financial mistake you can make.
A buyer's agent can guide you each step of the way to prevent costly errors. Failure to find out about defects in the property or the actual value of the property can, of course, be an expensive mistake. And failure to negotiate a contract that works for you can cost you plenty. With a buyer's agent, you can ask for and receive advice and assistance in selecting the best property and determining an offering price.
That depends. Surveys show in most instances buyer's agents are paid like seller's agents; that is, buyer's agents generally receive a share of the sales commission built into the list price. Many listing agreements between home seller and seller's agent indicate whether the sales commission will be split between the seller's agent and a buyer's agent. That's because most sellers are prepared to pay a commission simply to get their home sold. They aren't concerned whether it's a seller's agent or a buyer's agent that shares the commission.
There are, however, other ways buyer's agents may be paid. Be sure you understand from the start - before you commit to a relationship with a buyer's agent- how the buyer's agent will be paid.
Remember, the question you really need to ask yourself is: "Can I afford to buy a home without a buyer's agent?" For most home buyers today, the answer is "NO!"
Sometimes the home a buyer wants to purchase is listed by the same agent who is representing the buyer or by another agent from the buyer's agent's real estate company. In that case, the buyer's agent's ability to fully represent either the buyer or the seller may be limited. The resulting relationship goes by different names in different parts of the country - for instance, "designated representative," "transaction broker," "facilitator," or "disclosed dual agent." State statutes and common law determine how an "in-company situation" is handled.
If an "in-company situation" occurs, it must be properly disclosed to both buyer and seller who then give written informed consent to modify the agency relationship. Each state may vary in what is specifically required of the agents. In some states, an "in-company" situation can exist where different sales associates of the same brokerage firm each fully represents exclusively the interests of their own client- the buyer or the seller- in an in-house buyer ¬agent transaction. Be sure to ask how your buyer's agent handles in-house listings. An "exclusive buyer's agent" has no listings and thus avoids the limitations of an "in-company" situation.
If you want an agent to fully represent your best interests; if you want help evaluating a property; if you want someone to negotiate to get you the best price and the best terms; if you want to purchase a home in what's becoming the most popular way to buy, you'll want to enlist the aid of a buyer's agent.