If you're thinking of buying a home, one of your first decisions is whether to work with a buyer's agent. As the name suggests, a buyer's...
If you’re thinking of buying a home, one of your first decisions is whether to work with a buyer’s agent.
As the name suggests, a buyer’s agent is a real-estate agent who represents the buyer in a home sale, as opposed to the listing agent who represents the seller.
It’s important to understand that just because an agent shows you a house doesn’t mean he or she works on your behalf.
To establish an official relationship, you must sign a formal buyer’s agency agreement, which spells out your obligations to each other.
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Basically, the agent is promising to represent only your interests, and you’re promising not to make offers that cut the agent out of deals — and ultimately, a paycheck.
“You’re signing a legal document,” said Ilyce Glink, author of “100 Questions Every First-Time Home Buyer Should Ask” and other real-estate guides. “Make sure you know what you’re agreeing to.”
Another point of confusion is how buyer’s agents are paid. Buyers “think they have to pay for representation, but they actually get it for free,” said Andi Fleming, a real-estate agent with Long & Foster in Washington, D.C.
Well, not really for free, since the cost of sales commissions is reflected in sales prices. If the property you want is for sale by owner, deciding who pays your agent could even become a sticky point of negotiation.
Getting a service that someone else pays for may sound like a great deal.
Buyers should keep in mind, however, that because the agent receives a commission only when the deal is done, there is an incentive to close a sale — possibly at a higher price to earn a bigger commission — even when it might not be in the buyer’s best interest.
To get around this conflict, some buyer’s agents work for a flat fee.
Finding a buyer’s agent isn’t difficult. A common route is to ask friends, family and co-workers for referrals.
Another way is to visit open houses. You may not want that particular house, but you can size up the agent who is hosting, and who is likely to specialize in that neighborhood.
One other option is through real-estate agents’ professional associations. Both the National Association of Realtors and the National Association of Exclusive Buyer Agents have online databases.
Once you have a few names, schedule interviews. Your questions should be very different from the ones you would ask when choosing a listing agent.
“When you’re hiring a listing agent, you want someone who’s a great marketer, but that’s not our job,” said Stephen Israel, president of Buyer’s Edge, a Bethesda, Md., company that works exclusively with buyers.
Instead, the job of the buyer’s agent is to find you the right house and help you negotiate the best deal.
Early on, you need to decide how much tolerance you have for “dual agency,” in which the same brokerage is working both ends of the deal.
This is very common, especially where one or two brokerages dominate a local market.
Many real-estate agents work with both buyers and sellers, which can be awkward if one of their prospective buyers is interested in one of their listings.
Whose interests do they represent then? If you’re considering working with an agent who also works with sellers, ask the agent how the situation will be handled. State law and the brokerage’s rules will guide the answer.
That conflict doesn’t happen with exclusive buyer’s agencies, a setup that some people prefer. But such agents aren’t always the best choice, a point even exclusive buyer’s agents concede.
Call previous clients and ask if they would work with their agent again. Is the agent knowledgeable about the market? Does the agent return phone calls promptly? Negotiate assertively on the buyer’s behalf?
Fleming, whose clientele is evenly split between buyers and sellers, said it’s important to pick someone whose working hours coincide with yours. Will this person be available to show you houses on the weekends or in the evenings?