The Pros and Cons of Using a Buyer’s Representative
Picking a great buyer’s agent can make your home buying experience more enjoyable, protect you from potential problems and make your transaction progress more smoothly. However, like most things in life, there are important pros and cons to consider when making this decision.
You Have a Real Estate Professional On Your Side
When you commit to working with a buyer’s agent, you have an experienced real estate professional to answer your questions and a skilled negotiator looking out for your interests. A buyer’s agent can tell you if the seller’s asking price is reasonable, or if it’s too high (or too low).
You won’t get good answers to pricing questions from the seller’s agent because their fiduciary responsibly is to the seller, which precludes them from giving you such advice. In fact, any conversations with the listing agent may inadvertently reveal information about your situation that could hurt your negotiating position.
You Can Get the Best Deal
An informed buyer’s rep will have the knowledge and experience to help you get the best price AND the best terms. If this is your first house purchase, it’s particularly important that you have help navigating the process. Buyer’s agents can “go to bat” for you with the seller and their listing agent, negotiating the best possible transaction details.
They Warn You of Potential Pitfalls
You can rely on a buyer’s representative’s experience to help you avoid potential home buying mistakes. They generally know if an area is in decline or if an upcoming development will negatively impact property values. They can also let you know about developments that may increase a home’s value.
They’ve seen many other properties—and buyers’ reactions to them—giving them firsthand knowledge of which types of homes are most desirable (and have the best resale value). They’ve also seen a wide variety of problems pop up and can recommend ways to factor this into your negotiating strategy.
Their job is to serve as your advocate and help you find the home that best fits your needs and desires—NOT to get you to buy a particular home. Conversely, a seller’s agent is tasked with selling a particular property.
You May Have to Sign a Contract
Details vary by state, but most buyer’s agents require a signed agreement. The terms and duration vary, but many agents may be amenable to a one-day contract, just to be sure you are comfortable with the fit before signing a longer agreement (and before they invest a great deal of time in helping you).
Signing a contract helps ensure a buyer’s agent will receive their share of the commission if you complete a transaction—and that you will work with them exclusively. It also opens up the possibility of them showing you for-sale-by-owner (FSBO) properties, properties that may not yet be on the market, and other potential “gem” opportunities.
Beyond this, realize that signing an agreement means that the agent will be working for you to ensure you find the home you want, with the features you desire. Their contract should outline their responsibilities to you as well as yours to them. In this sense, a contract actually works FOR you and ensures you are receiving the best representation as a homebuyer!
Buyer’s Agents Only Know One Side of the Market
Not true! Some agents represent buyers exclusively, but most work with both buyers and sellers. Besides, all licensed real estate professionals have the same access to information on homes listed for sale in their market.
As a buyer, it’s more important to be certain that you’re working with an agent who has extensive experience in representing buyers and understands the nuances of your side of the transaction. That’s why it’s good advice to find an agent who’s earned the Accredited Buyer’s Representative (ABR®) designation.
The Buyer’s Agent’s Commission Comes Out Of Your Pocket
This is more myth than fact. When a seller signs a listing agreement and the property enters a Multiple Listing Service (MLS), every agent participating in that MLS can see what commission is being offered to buyer’s agents (compensation that comes directly out of the seller’s proceeds). This is determined long before you appear as a potential buyer. In effect, buyers pay nothing for representation!
One important exception to this rule is FSBO properties. Your buyer’s agent can still represent you in a FSBO purchase and may even be able to negotiate directly with the seller to cover their commission, especially if the seller is motivated and/or your agent can provide market data on comparable properties that demonstrates it’s in their best interest to adjust their price in a manner that takes care of the buyer’s agent’s compensation.
If not, and you still want to proceed, this is one instance where you may need to compensate your agent directly. The best advice is to discuss these possibilities up front, so you’ll know all your options for these rare exceptions.