Some buyers balk at working with a buyer’s agent because they are concerned it will cost them money. This is understandable since it is customary to sign an agreement with the buyer’s agent defining their compensation as a percentage of the sale price.
Rather than see this as a cost, see it as a protection for both parties – the buyer’s agent has agreed to work for you and to represent your interests to the best of their ability. You in turn agree to be sure he or she is fairly compensated for their work. In almost all cases, their commission will be paid by the seller.
There is a common misconception that one can “avoid the middleman” by going directly to the listing agent. Some buyers will do this to avoid adding another agent to the transaction because they want to deal directly with the listing agent. In that case make sure you know how you are being represented. Unless you agree up front that the agent will be working on behalf of you and the seller as a dual agent the agent will only be working for the seller.
Another reason a buyer goes straight to the listing agent is to theoretically reduce the amount of commission and the ultimate sales price. However, the listing agreement defines the commissions to be paid to both the listing agent and the agent bringing the buyer to the table. Even if the buyer doesn’t have an agent, the commission will be paid — to the listing agent. What a buyer fails to realize is there still needs to be someone there to do the duties of a buyer’s agent — duties such as showing the house, writing the contract, handling pre-closing issues and paperwork, attending the home inspection, final walkthrough etc. This is agreed upon at the time of listing, so the absence of a buyer’s agent does not reduce the commissions paid. Any price reduction has to come off of the actual price as negotiated between buyer and seller.
Also, the buyer should be aware that while the listing agent may provide assistance in preparing the paperwork for the offer, unless a dual agency agreement is signed, the listing agent’s accountability is only to the seller. In a transaction of this magnitude, you want someone working for you, with your best interests as their priority.
Having a buyer’s agent is even more important in a For Sale By Owner situation. An attorney can draw up the paperwork, but is not knowledgeable about the value of the property and valuation questions or advice , resale issues, issues that can arise from a home inspection, final walkthrough issues, and how to structure an agreement favorable to buyers. A buyer’s agent has the outside perspective needed to help you determine an offer strategy and to protect your interests, potentially saving you time and money. Plus, the sellers often will still pay the buyer’s agent commission – it’s all part of the negotiation process.
Here’s the bottom line: a buyer’s agent represents you in a real estate transaction. Their experience and skill at negotiating and in understanding the state laws and local customs can save you time and money. As your representative, your buyer’s agent can navigate the entire process from home searching to preparing the offer to the inspection to renegotiations to the final walk-through. If you are seriously looking for a home, working exclusively with a buyer’s agent increases the likelihood that you will find the home you are looking for without paying too much. Their knowledge of the entire process is invaluable in ensuring the sale goes as smoothly as possible.
Copyright © Shawn Buryska