|What to Expect from a Buyer's Agent
It's not surprising that most homebuyers hire a real estate agent or broker to
help them find a home. Without one, in the time it takes you to find and buy a
home, you'd have to learn and put into practice a special set of skills real estate
professionals spend years honing. From finding a home and matching you with
adequate financing, to negotiating the contract and closing the deal, the real
estate agent's numerous duties and responsibilities reflect the often-esoteric
nature of home buying. Ultimately, you can expect your agent to guide and
assist you through this home-buying adventure. He or she will help you avoid
potential pitfalls, and in the end, hand you the keys to your new home.
What agents do
To help you buy a home, your agent must have a vast working knowledge of
the real estate market, including price trends, neighborhood conditions and
amenities, real estate law, zoning issues, financing, taxes, insurance and
negotiating. The best agents are also "street smart" in the psychology of home
buying and the stresses that accompany it.
During your initial meeting, agents typically help you determine the viability of
your wants and needs in both a neighborhood and a home. The agent will help
you learn how much you can afford, help you find suitable financing, clue you
in on current market conditions and tell you what to expect as you shop for a
home. Your agent will also devise a strategy or shopping plan based on your
needs, how much you can afford and current market conditions.
As you shop for your home, you'll likely meet with your agent to tour available
properties and discuss myriad details, including a home's pertinent selling
points, floor plans, the neighborhood's crime rate and community proximity to
schools, shopping centers, cultural activities and work centers.
The agent is responsible for obtaining disclosures, making sure home
inspections and repairs are completed and coordinating the activities of your
lender, attorney, roof inspector and other professionals engaged in your
purchase. If bargaining over the price is necessary, your agent will be your
negotiator, and when it's time to sign the final closing documents, he or she will
accompany you to make sure all the "I's" are dotted and the "T's" crossed.
When you have a question, concern or idea as you shop, your agent should be
able to respond either directly or by referring you to someone who can help.
How agents are paid
Once you find your home and the deal is sealed, your agent is most likely paid
by commission. Typically, the seller pays the commission, making realty
services "free" to the buyer. The listing broker, for whom the listing or seller's
agent works, typically requires that sellers pay 5 percent to 7 percent of the
sales price. Because most real estate transactions involve two brokers - the
broker who finds the buyer and the broker who finds the seller -- the
commission is usually split 50-50, between the two brokerage offices. Then,
within each office, the agent who handled the transaction gets a share, usually
half of the 50 percent or about 1.5 percent.
There are a few exceptions to the commission method of payment. If you use a
buyer's agent, the contract you could be required to sign may or may not
require a fee for services or a fee in addition to the commission. Most buyer's
agents, however, simply split the commission 50-50 with the listing agent. In
any event, the buyer's agent contract stipulates that the agent works
exclusively for you and is more likely to work with your best interests at heart.
Avoiding dual agency
More and more, buyers hire a buyer's agent, especially in hot competitive
seller's markets and to avoid what's called "dual agency" -- an agent, brokerage
or company representing both the buyer and seller. It's only natural for an
agent to attempt to sell you listings from her brokerage or company. Legal in
many states, dual agency nevertheless comes with an inherent conflict of
interest as the agent, broker or company attempts to fairly exercise fiduciary
duty, represent two opposing clients and collect the full commission. Some
buyer's agents, however, split their time acting as a listing agent. To completely
remove the potential of any conflict of interest, exclusive buyer's agents work
with buyers and do not list homes for sale.
If you've gained sufficient buying knowledge, say from a previous purchase, or
if you simply don't want to pay the full commission, hiring a discount broker is
yet another option. Discount brokerage doesn't necessarily remove the conflict
of interest possible in dual agency, unless the discount broker is also
exclusively a buyer's agent. Discount brokers charge a reduced commission as
small as 1 percent or offer a menu of services in a "pay-as-you-go"
arrangement where you pay only for those services you use. Some offer a
combination reduced commission and menu of services while still others work
by the hour. While some franchise operations offer discounts and agents are
often free to charge less as they see fit, most discount brokers are
independents or discount chain operations.
The disadvantage is that you may have to pay for the hours or services you
use whether or not you buy a house. Also, discount brokers often don't provide
the one-stop set of ancillary services generally available from more traditional
brokers. Ancillary services often include referrals to proven lenders, insurance
agents, home inspectors and the like, who help speed up the home buying
process. A service that doesn't satisfy customers isn't one a broker is likely to
retain in his or her business circle.
The new "virtual" brokers on the Internet are often discount brokers offering
reduced commissions, but the affiliate and partnering approach on the Web
often allows them to offer many of the ancillary services you get from a
traditional broker. Virtual brokers may or may not have brick and mortar
facilities from which to hold your hand, should the need arise, but they are able
to cut costs because of the automation and smaller overhead. The so-called
"click and mortar" brokers typically offer their own listings and come with a dual
agency potential, but they typically also align themselves with a larger online
MLS or listing site.
With so many different types of agents to represent you, take great care in
selecting an agent to meet your needs. Ask family, friends, co-workers, other
professionals you've hired and others you trust for referrals to agents who have
recently satisfied their needs.
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