by: Sean Engmann
CA DRE # 02117899
Reasons to Work with a Buyer's Agent
Agents matter when buying a home, and as a buyer using an agent usually doesn’t cost you a dime.
The internet makes information about real estate incredibly easy to access. According to the National Association of Realtors, 93% of homebuyers look for homes online. Even so, in 2018 87% of all homebuyers worked with a real estate agent and the breadth of information available makes it more critical to work with an agent. Here are some of the top reasons why it’s important to work with a buyer’s agent to represent you in the buying process.
1) Your Agent Has a Fiduciary Duty to You.
When you work with a Realtor, that Realtor has a fiduciary duty of the utmost care, integrity honesty and loyalty in all dealings with you as the Buyer. In fact, all real estate agents are legally obligated to provide you with notice of these duties to you as soon as you talk about real estate with them in a more than casual manner.
2) Your Agent is a Market Expert and Has Access to More Information than You.
Zillow, Realtor.com and Trulia are great tools for researching the market and identifying homes. Realtors, though, often have knowledge about properties that will soon be on the market and off-market opportunities, giving their clients a head start in their search. Realtors have access to agent notes in the MLS and have great knowledge about the neighborhoods in which they work, and more often than not, they have already previewed the homes in their area. This gives agents better insight into properties than can be found in most online listings. Most agents also have access to lockboxes on properties, making it much easier for them to arrange a showing than you could on your own.
3) Your Agent Can Help You Negotiate.
While some agents are better negotiators than others, most agents are extremely aware of the prices at which homes are listed and the prices at which they sell in their area. They also know the other agents in the area and their pricing tendencies. This allows them to better advise you on how to best construct your offer once you find the property you love.
4) The Seller Pays Your Agent’s Commission in Virtually All Transactions.
Except in the rarest of cases, the buyer’s agent is compensated out of the seller’s proceeds from the deal. That means that the agent only gets paid if a deal gets completed and the buyer almost never has to pay anything out of pocket.
Compensation for real estate agents usually is done through a cooperating broker arrangement in which the seller agrees to a commission percentage, and that percentage is split between the buyer agent’s brokerage and the listing agent’s brokerage. Each agent then gets a percentage of the fee that goes to their broker.
It is possible to gain an edge in the negotiation if you represent yourself in the transaction, thereby saving the seller half the commission. The drawback is that you would need to navigate the complicated and highly litigious home buying process all by yourself which could put you in a bad position if something goes wrong down the line.
Another thing I strongly recommend against is allowing the listing agent to write the offer for you. While this practice of “double ending” is legal in California, I find that it is always best to have your own, independent representation. After all, do you want someone who’s getting paid by the seller and who earns more the higher the price of the home to represent your best interests in the transaction?
5) Your Agent Will Provide Navigation through the Homebuying Process.
The process of buying a home is extremely complicated from the initial offer through the close of escrow. Your agent can advise you on making your offer and helping you determine whether you want to include any contingencies. If there are contingencies, such as the funding of a loan or the condition of the property, your agent becomes a project manager, coordinating and scheduling inspectors, working with the lender on the timing of the funding of the loan and overseeing reams of legal paperwork to help get the deal done before the close of escrow. Through this process, your agent will exercise care and help you avoid future legal problems.
6) Virtually All Other Homebuyers Will Be Working with an Agent.
Not working with an agent can put you at a disadvantage as it relates to other homebuyers who will be working with an agent. From the seller’s perspective, the worst thing that can happen is getting into a contract with a buyer only for the deal to fall through because the buyer could not perform. If a buyer is working without an agent, it certainly increases the risk of something going wrong when in contract. Not working with an agent also puts the buyer at a disadvantage in terms of putting the offer together. Agents matter, especially in a multi-offer situation.
Using a buyer’s agent can be incredibly helpful in both helping find the right property, but also in negotiating the deal and helping you navigate the transaction. The earlier in the process you involve an agent, the better. When selecting your agent, make sure they have market expertise, the skill to manage a complex transaction, and the ability to help you negotiate to win the home.
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