(Update, the blog about why you should consider using a Listing Agent to sell is now posted here)
Now, I’m sure you’re thinking “This guy is a Real Estate Agent, so of course he’s going to believe you should hire one”, and that is somewhat true. However, I can also relate to the question as a buyer. Whenever I have looked at properties in another state, I have had the same thoughts: “Why should I call an agent? I can find what I want on the internet, and I already know everything I need to know about the process of buying a home.” I’ve had the same thoughts as I have looked at commercial properties, as well as large investment properties. However, each time I begin looking at real estate outside of my area of expertise, I quickly realize just why it’s important to call someone who is an expert in that area. I simply don’t have the necessary knowledge or experience to negotiate the best deal for myself when it comes to transactions outside of my expertise or transactions in which I don’t have the tools to do complete research.
Before getting too deep into this, I want to make an important distinction. This article talks a lot about Buyer’s Agents. Buyer’s Agent is merely a role in the transaction. In every real estate transaction involving a real estate agent, there will be a listing agent, and the vast majority will also involve a buyer’s agent. Most real estate agents actively play both roles, depending on the transaction. However, it is rare and generally ill-advised for an agent to work as both a listing agent and buyer’s agent (also known as dual agency) in the same transaction. It is also wise to avoid this scenario as a party to the transaction, particularly for the buyer.
Here are 9 reasons why buyers should use a Buyer’s Agent, which I’ve come to realize through both my experiences as a buyer and seller of real estate, and my experiences as a Real Estate Agent.
1. It’s free! In fact, working with me will put money back in your pocket, since I rebate a portion of my commission back to you.
In virtually all transactions, the seller agrees to pay a commission to the Listing Agent. The Listing Agent then splits that commission with the Buyer’s Agent. This means the buyer doesn’t have to pay their agent out-of-pocket. There’s simply no good reason not to have someone specifically representing your interests when it doesn’t cost you anything. I’m sure some of you are thinking “If I don’t use a buyer’s agent, that part of the commission simply disappears, so I can save money representing myself. Well, that brings us to point number 2:
2. The savings you think you’ll get by cutting out the buyer’s agent probably don’t exist.
Even if you write an offer without an agent and deduct the commission, the Listing Agent is under absolutely no obligation to discount the commission the seller already agreed to pay, and they usually won’t. After all, if you’re buying a house without an agent, every question you have is going to be directed at them. This means that they’re doing most of the work of a Buyer’s Agent anyway. (It’s important to note that while they’re doing most of the work of a buyer’s agent, you are not receiving the most important benefits of having a buyer’s agent.) Furthermore, even if they did agree to discount their commission, the seller is under no obligation to share any of that savings with the buyer. If the house is priced right, they will have ample interest. Generally, this means they will see a discounted commission as a way to make more on the sale, not as a way to save you money.
3. A Listing Agent has a contractual relationship to the seller, not to you. A Buyer’s Agent represents YOU.
This mean any info you give a Listing Agent can and will be used against you in negotiations. Additionally, one of the benefits of having listings is that they attract buyers, and most Listing Agents will attempt to turn you into their client, so they will ask the type of questions that would help them help you find the home you want. Suppose you are prequalified for the full sales price of the home. If you share this with the Listing Agent, they are obligated by their listing contract to share this info with the seller. This obviously negatively impacts your negotiating position. Think of the information you might give away in casual conversation. If you call an agent to see the house, and casually mention that you’re interested because you want your kids to go to the local high school, the agent now knows how limited your search is. A Buyer’s Agent will represent you, and only you, and will only share the bare minimum of necessary information with the Listing Agent. A side benefit of having a Buyer’s Agent is that you won’t be constantly fending off attempts from Listing Agents to make you their client. In fact, it won’t even be an issue, since your Buyer’s Agent is the one who makes all the phone calls to set appointments, negotiate contracts, etc.
For more information on the dangers of working directly with the Listing Agent on a property, visit this link.
4. A good Buyer’s Agent gives you an experienced negotiator on your side.
Since we negotiate more transactions in a month than you probably will in your life, we have a lot of experience negotiating real estate deals. We know strategies that work, and have the tools to make them work. Prior to writing an offer on a property, I will extensively research similar properties which have sold in the area to determine the property’s true value. This ability is completely unavailable to unrepresented buyers, and they’re left with their gut feeling. Sure, you could ask the Listing Agent to supply you with comparable sales, but they will always cherry pick the ones that make their price look the best, rather than actually evaluating the market for you.
5. A good Buyer’s Agent has resources to make the transaction flow smoothly.
In my opinion, this is the one of the most valuable service a Buyer’s Agent provides. While we are not experts on everything, and I often have to remind my clients of this, we tend to have a pretty broad range of knowledge and experience. Additionally, we usually know who you should call to get a more specific answer if we can’t answer your question. This means we can direct you to qualified professionals to answer legal questions, do property inspections or repair/remodeling bids, help answer questions about zoning ordinances or building codes, etc. Most unrepresented buyers skip several steps in the due diligence area because they just don’t know who to call or how to approach things. Additionally, a good Buyer’s Agent will be constantly aware of the contractual deadlines and all of the various people working on the transaction. One of the main jobs of a Buyer’s Agent is to juggle all these tasks and keep them flowing in accordance with contract deadlines.
6. My search tools are better than yours.
Yes, you can see all of the same listings I can on various home search sites, but my search tools are infinitely more powerful than yours. If a formal living room, master bathroom, half-acre lot, finished basement, etc. are important to you, I can search only for listings with those criteria. I can also search very specific geographic areas, while the publicly available searches limit you to zip codes. These are just two examples of ways in which my search tools are more efficient than yours. If you work with me, I could probably show you 10 other ways my search tools are more efficient. Additionally, when you turn your search over to me, I’ll set up an automated search that will automatically send search results to your email daily. You will get only listings that meet your requirements, and won’t have to continue to dig through all of the listings you have already eliminated from consideration. I could spend all day itemizing ways that my search tools can save you time, but the simple message is this: If you turn your search over to me, none of it matters because I’m doing all the work. That’s the ultimate in efficiency, right?
7. A good Buyer’s Agent understands your buying power.
Most buyers start looking for houses before talking to a lender. A Buyer’s Agent should be able to help you come up with an idea of what you can afford, as well as explaining some of the pros and cons of various financing options. They should also be able to help you find a great lender (if you don’t already have one), and have enough market knowledge to help you get the best deal on financing (not all loans or lenders are created equal). Additionally, many people technically qualify for a lot more home than they are comfortable paying for. A good Buyer’s Agent should be able to give you a close estimation of the monthly payment on any home you’re interested in. Since each home will have variables affecting the payment, this isn’t as simple as saying “my payment on $200,000 will be $1300”, and you’re not really going to call your lender and have them calculate a payment on every house you look at, are you?
8. A good Buyer’s Agent brings market knowledge.
It will amaze you how different two homes in the same general area and the same price point can be. Sometimes this is an indication that one home is overpriced or that the other is a really good deal, but other times it can simply be a sign that there’s a niche market affecting the value of one of the homes. A good agent will understand these nuances and be able to help you understand them as well.
9. An objective pair of eyes.
After seeing a few homes, things start to blend together. Frustration sets in, and buyers start missing details that may matter to them later. As a Buyer’s Agent, I think part of my job is playing “Devil’s Advocate” and helping you to see those things that you might gloss over. There are countless ways this can help to save you money: Inspection costs, future marketability, livability, and so on. If you don’t believe me, just ask my former client who sold their home after only a year because they realized on move-in day that there was no way to get their bedroom furniture up the stairs to their bedroom (I didn’t represent them on the purchase, just the sale).