real estate agent shaking hands; what is a buyer's agent? (DragonImages)
Ready to house hunt? It's a jungle out there: Prepare for a flurry of paperwork, stampedes of buyers competing for the same digs, and other challenges before you get your hands on those house keys. We won't lie: The process can be complex and stressful -- which is why having a pro by your side can make all the difference.
You might have heard of buyer's agents, seller's agents, listing agents, and so on. You're a buyer, so what is a buyer's agent? True to their name, buyer's agents assist home buyers every step of the way; they can also save you tons of time and money on the road to homeownership.
Read on to learn how a buyer's agent can help, and how to find the right one for you.
Benefits of using buyer's agents
"A buyer's agent will guide you through the home-buying transaction and be at your disposal for any questions or concerns," says Shane Wilcox, a Realtor with Partners Trust. Here are some of the things a buyer's agent can do:
- Find the right property. After determining what clients are looking for and what they can afford, the agent will schedule appointments to tour homes that fit the bill. The agent can also explain the ins and outs of various properties and neighborhoods to help buyers decide which home is right for them by explaining the pros and cons of various options.
- Negotiate the offer. The buyer's agent will advise clients on an appropriate price to offer and present it to the seller's agent. "Then they will negotiate on your behalf and write up the contracts for you," says Matt Laricy, a Realtor with Americorp Real Estate in Chicago. This is where the agent's experience in negotiating deals can save you money and help you avoid pitfalls like a fixer-upper that's more trouble than it's worth.
- Recommend other professionals. A buyer's agent should also be able to refer you to reliable mortgage brokers, real estate attorneys, home inspectors, movers, and more. This can also help expedite each step of the process and move you to a successful sale all the faster.
- Help overcome setbacks. If the home inspector's report or appraisal brings new issues to light, a buyer's agent can advise you on how to proceed, and then act as a buffer between you and the sellers or their agent. If negotiations become heated or hostile, it's extremely helpful to have an experienced professional keeping calm and offering productive solutions.
Buyer's vs. listing agent: What's the difference?
Buyer's agents are legally bound to help buyers, whereas listing agents -- the agent representing the home listing -- have a fiduciary duty to the home seller. "That's why it's in your best interest as a buyer to get an agent who is there to represent you," explains Alex Cortez, a Realtor with Wailea Village Properties LLC in Kihei, HI. "Think about it this way: If you were getting sued, would you hire the same attorney as the person suing you? Of course not. You need someone who will diligently fight for your interests and rights."
Let's say, for instance, you walked up to the listing agent at an open house and gushed about how you love the home and want to buy it, but you will need to move soon because you're expecting your second child and need to decorate the nursery pronto, or the lease on your rental is up in a couple of months. A seller's agent could then use this information against you by informing the seller that your clock is ticking, so they shouldn't budge too much on their asking price -- or at all.
Yet make this same confession to the buyer's agent you're working with, and it's all fine -- this professional would know to keep this info private from sellers (and their agents) so it can't be used against you.
How to find a buyer's agent
A good buyer's agent can ease your way to homeownership -- and a bad one can result in a bumpy ride. As such, don't just take the first buyer's agent you meet (which is what two-thirds of home buyers do), or blindly accept the recommendation from a friend (over half do this). Instead, it's best to interview at least three agents and ask them a few questions, including the following:
- What neighborhoods do you specialize in? Real estate requires local expertise, so you should find an agent who's extremely familiar with the areas you're interested in.
- What's your schedule and availability? Part-time agents who are committed can do a fine job, but if the house of your dreams pops up or you encounter last-minute closing snafus, you want an agent who will be readily reachable.
- How long have you been a real estate agent? You ideally want someone with a couple of years of experience, and a proven track record of selling homes.
To find real estate agents in your area, head to realtor.com/realestateagents, where you can also read online reviews provided by past clients and learn more.
The agent/buyer contract
Once you agree to work with an agent, you will have to sign a contract called an Exclusive Buyer Agency Agreement outlining the agent's services and compensation (more on that next). This contract also means that this agent will be your sole representative and that you won't work with other buyer's agents.
How much do buyer's agents cost?
Home buyers need to worry about the expense of hiring a buyer's agent. Why? Because the seller pays the commission for both the seller's agent and the buyer's agent. Typically the commission equals about 6% of the home's sales price, which is split evenly between both agents (on a $200,000 home, that would be $6,000 apiece).