Should You Use a Real Estate Buyer’s Agent?
If you are in the market to purchase property or a house, then you basically have two options; to go with a listing agent or a buyer’s agent. You can also do things on your own if you prefer, but the preferred method is to use a real estate buyer’s agent to help you purchase a home.
For now, we are looking at the world of real estate agents, specifically buyer’s agents. Technically speaking, both types are labeled as real estate agents, but there are subtle and sometimes not so subtle differences between the two.
Most real estate agents are actually listing agents. A listing agent is there to represent the person selling the house. Not surprisingly, they will have the seller’s interest in mind and will try and get the best deal for the seller.
A buyer’s agent, on the other hand, is there to help the person buying the house. The buyer’s agent will do the job of bargaining for the buyer and try to get the best price or deal for their client. They will also know the current buyer trends as well.
However, as with most things the “devil is in the details” which means you should proceed with caution before deciding which agent to do business with. Once you understand all the pros and cons, you will be able to make informed decisions based on what is right for you. The following is a brief breakdown of the pros and cons of doing business with both listing and buyers’ agents.
Pros & Cons of Listing and Buyers Agents
A well informed and experienced buyers’ agent is going to have the talent to find the best deals money can. Chances are they are an accredited buyers representative (I am) with specialized training to assist with your home purchase needs. .Buying a house is not only about getting a “good price”. Just because a house you are looking at is cheaper compared to another, similarly built and aged house, it doesn’t mean it is a better deal.
What if the cheaper house has major structural issues? Then you are looking at some major expenses as soon as you buy it. Therefore, the idea is to find the best house for the money. A good real estate buyer’s agent will ask all the pertinent questions and find this out for you.
If you already have owned a home previously, you will know that buying a house is not only about the house itself. It is also about the neighborhood. If the neighborhood is located in a town or city experiencing growth, economically speaking, then there is a good chance the value of the house will go up. Other factors that affect home prices are good school districts as well as weather and traffic conditions. All these things need to factor in when looking for a good deal.
In fact, highly experienced buyers’ agents will make their pitch to customers based on these and other variables. They look at each customer on an individual basis and make recommendations accordingly.
A listing agent will not always be motivated to let the buyer know all this, especially the details. However, if you ask the right questions during the shopping stage, they may have the answers, but don’t count on it. A buyer’s agent, on the other hand, will let you know without even necessarily asking for it.
Some Ideas to Keep in Mind
So far, we’ve looked at some of the pros and cons of the two types of agents on a work-level basis. However, there are some things you need to know about buyers’ agents before you start working with one.
In many states, you may be required to sign a contract with the agent. The details of the contract will vary from one agent to another. You can expect conditions such as working with the agent exclusively, as well as details regarding commissions. It is not unusual for buyers’ agents to do short-term contracts to see if it is a good fit for both parties.
Contracts are done to protect the interests of the agent. Since house hunting can be a lengthy and time-consuming process, they want to be sure their efforts are rewarded.
However, do not be afraid of a contract. It will give you a clear picture of what to expect from the agent and what the agent expects from you. It is there to protect your interests as well. Therefore, work with it and use its maximum potential to help you find the ideal house.
Listing agents, on the other hand, will rarely ask for exclusive contracts. This may be because listing agents tend to work with a lot more customers.
Other perks of working with a buyer’s agent include being able to take a look at houses that are not on the market yet but will eventually be, giving you first pick on a house.
Listing and Buyers Agents; A Brief History
Just when you thought things couldn’t get more complicated, the truth is that agents can be both types at the same time. They will wear the appropriate hat depending on who they are going to go work for. These agents are called dual agents, as opposed to exclusive agents. While some are ok with this arrangement, it is typically better to have an agent working exclusively in your best interest.
It was only relatively recently that real estate agents began picking a specialty and started advertising themselves as a listing or selling agent. There is nothing wrong, per se, to go with an agent representing both parties, however, you should do the necessary homework yourself and have questions prepared.
The main advantage with dual agents is that they may be willing to go down on their commission to speed up a deal. However, in places where property value is high, and houses are selling like hotcakes, it is often more appropriate to go with a buyer’s agent, to ensure better deals in your favor.
In these types of scenarios, a dual or listing agent may not be as motivated to go to work for you. As with many things in life, there are no easy answers to be had and deciding on which one will depend on the context.
Identifying the Right Buyer’s Agent for You
According to the National Association of Realtors, most people will employ a real estate agent when buying a house. This figure is as high as 90% of the time. Most traditional Realtors these days like to call themselves buyer’s agents, even if they are capable of being listing agents. They change according to who they are working for.
In some states in the country, there is a caveat to all this. If you see a house you like, and your buying agent is also a listing agent for the house, they are obligated to hand off either the listing or buying portion to another agent.
There is a myth out there that each type of agent only knows their side of the market. This is simply not true. Regardless of whether they are working exclusively as a buying or listing agent, both parties have access to all the pertinent information regarding the house and any special deals. This may seem obvious, but it is worth mentioning in this context that it should always be clear who is working for whom from the very outset. If you are using an agent that does listing as well as buyers work, be very clear who they are working for.
In many states now, real estate agents are required to establish who they are working for, in writing, to avoid any conflict of interest. It is also important to remember that a listing agent is not required to disclose to the buyer the lowest price point the seller is willing to accept. Both agents can also set up house tours for you. The bottom line is that if your agent is a dual agent, proceed with caution and don’t hesitate to ask as many questions as possible.
Finding the “One”
As mentioned, what you really want is to find an agent who understands and respects your needs. This can be difficult depending on the time of year.
As with automobiles, there are popular times for a seller to sell their house. The real estate market is generally the busiest during springtime, specifically during the month of May.
For buyers, late summer and early fall are the best times to purchase a home. Houses can go for as much as 6% less compared to any other time of the year.
That means, all those people buying houses in springtime may be paying more for their homes. Not buying a home at the right time of year is a classic mistake many first-time buyers make.
It is important to note here that the best time frame to buy or sell a house has nothing to do with each other. It just means that the best time of year to buy a house is during the slow season, which is late summertime.
The point here is that if you find a good buying agent, they will let you know these types of details that can save you a lot of money and hassles. As far as finding the agent, whether they are a buyer or listing agent, the following are some helpful tips.
- Start asking around. Don’t hesitate to get referrals from people you trust. If none are available, go online and start looking at reviews. What you are looking for is a balance of good and bad reviews. If it is mostly or only good reviews, then it may be too good to be true. Look for any affiliations the agent may have. If there are any do not hesitate to contact them and get an opinion
- Once you found a few that look interesting start thinking about setting up meetings with them. Write down questions you plan to ask.
When meeting with an agent and you start asking questions, you should write down the answers. During this interaction, you may think about more questions to ask, based on the agent’s answers. The following are some examples of questions you should ask.
- How long have you lived in the area?
- How many houses have you personally sold in the last few years?
- Which mortgage brokers would you recommend and why?
- Would you consider your mortgage brokers to be trustworthy?
In some states, there is a requirement for the home buyer to sign a broker’s agreement. This agreement ensures both parties to work with each other for a specified period of time. In most cases, the time frame will be three to six months. However, before signing anything, go over and read everything and make sure there are no hidden fees, such as a break of contract fee if you do not like working with the agent.
Getting Approved for a Home Loan
Regardless of what type of real estate agent you are using and regardless of where you are buying a house, one thing all real estate transactions have in common is getting approved for a home loan. In fact, ideally, you should get the loan approval out of the way before you even start looking at houses. This way, you will get any surprises out of the way and have a clear picture of what exactly you can afford.
Ever since the housing bubble of 2008, it has become a necessity to find ethical lenders. In fact, looking into lenders has become a whole new aspect of real estate transactions. There needs to be a clear understanding of what they are offering before signing on the dotted line.
A typical mortgage pre approval is simple and straightforward. The lender takes your loan application and runs a credit check. Based on these results, the bank will issue a certificate stating how much the bank will approve, mortgage wise.
When the time comes to close the deal on the house, the seller pays the listing agent his or her sales commission. If there is a buyer’s agent involved, they will get their pound of flesh from the listing agent. There can also be situations where there is no listing or dual agent involved. In this example, the transaction happens between the buyer’s agent and the owner of the house.
However, in these cases, the agent may only get half the usual commission from the seller. Whenever you see a sign that reads “for sale by owner” this is usually what is happening. Even in this case, the buyer’s agent is representing the buyer, not the owner who is selling. The bottom line is that it is important to trust your instincts regardless of how you move forward with your home purchase.
Whether it is through an agent or you want to go “Lone Ranger” on your house hunting adventure, leave no stone unturned and don’t take anything for granted. Lastly, as a reminder, if you are in the market to purchase property or a house, then you basically have two options; go with a listing agent or a buyer’s agent.
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