In 2020, it’s fair to ask if someone who wants to buy a home needs to use a buyer’s agent. Huge websites like Zillow and Redfin allow buyers to browse properties at their leisure, and even provide analytics-backed values. Industry disrupting iBuyers like Opendoor have made the real estate market more efficient and transparent, and trends like “for sale by owner” (FSBO) sales have put more power back in the hands of buyers and sellers.
But the fact is, buyer’s agents still bring a lot of value to the table. Real estate websites often don’t include every property on the market, market dynamics shift from week to week, and squaring off with a listing agent at the negotiating table is tough even if you’ve done it a hundred times before.
Let’s look at what, exactly, a buyer’s agent does for a buyer, how much they cost and who pays them, the difference between a buyer’s agent and a listing agent, and the often overlooked reason most buyers should go ahead and work with one.
Table of Contents
- What Is a Buyer’s Agent?
- What Does a Realtor Do for Home Buyers?
- What’s the Difference Between a Buyer’s Agent and a Listing Agent?
- Do I Need a Buyer’s Agent?
- So Why Should You Use a Buyer’s Agent?
What Is a Buyer’s Agent?
To put it simply, a buyer’s agent is a real estate agent who represents the interests of the buyer in a real estate transaction. In practical terms, that means they help the buyer find properties that fit their needs, advise them on offers, and represent them at the negotiating table. Whatever you can think of that a typical buyer might want— a lower price, a faster sale, added concessions — a buyer’s agent’s job is to get that for them.
Of course, a buyer may not know exactly what they want, and that’s where a buyer’s agent’s value really comes through. Let’s go down a list of all the things a good buyer’s agent can do for a buyer.
What Does a Realtor Do for Home Buyers?
A good buyer’s agent provides vital services, from the beginning of the home purchase, to the very end. These are some of their most valuable contributions at each phase of the process.
Suggest Suitable Properties
Most buyers have some idea of what kind of property they’re looking for, but finding your dream home isn’t as simple as just browsing one of the big real estate websites for homes that have the right number of bedrooms. When it comes to the right neighborhood, school district, neighbors, and amenities, a buyer’s agent will have a much richer and more granular understanding of the market than you can get from any website.
Not only that, but many buyer’s agents may know about properties before they even hit the market, so you can get the inside track. They may also have inside information about specific sellers; for example, if someone is divorcing, or starting a new job out of state, that would make them a much more motivated seller. A plugged-in buyer’s agent could use that information to get you a much better deal.
Formulate the Offer
Everyone knows the list price is just a starting point. So how do you formulate your initial offer? Most buyers will want to start low, of course, but lowball offers can be insulting and start the process off on the wrong foot, especially if there’s a lot of interest in the property. On the other hand, if there’s very little interest in the property, putting together the right offer can be a delicate matter of walking the line between “insulting lowball offer” and “an acceptable discount.”
A good buyer’s agent will have a handle on the local market dynamics and the level of interest in a specific property, and they can help you formulate an offer that will be accepted— or will lead to an acceptance down the line without alienating the seller right off the bat.
Connect You with Other Real Estate Professionals
Once your offer is accepted, you’ll then have to work with a whole army of supplemental personnel, from mortgage brokers, to home inspectors, to real estate attorneys, to movers. All of these people perform vital functions, and all of them cost money. So it’s very important to both your timeline and your bottom line to find reputable, trustworthy people to work with. A buyer’s agent will be able to tell you which providers to use, and which ones to steer clear of.
Counsel and Advise
Buying a home is rarely easy. It requires the buyer to make momentous decisions, gather tremendous financial resources, and can take months from start to finish. If the buyer is shopping in a hot market, they may lose out on multiple bidding wars before they finally secure their dream home, and even then, it’s common for obstacles to pop up— everything from worrisome inspections to problems with the lender.
For first time home buyers, this process can be an emotional rollercoaster, and it’s easy to become frustrated or discouraged. A buyer’s agent’s experience can be hugely valuable in these situations, to calm and reassure the buyer.
Their role goes beyond simple comfort, too; if there is a problematic inspection, or a bidding war, a buyer’s agent can offer actionable advice that translates to real savings.
What’s the Difference Between a Buyer’s Agent and a Listing Agent?
A buyer’s agent represents the buyer; a listing agent represents the seller.
Buyers and sellers have different interests which, in many cases, are directly opposed; for example, a buyer wants to pay as little as possible, while a seller wants to sell for as much as possible. The buyer’s agent and the listing agent each represent their client’s priorities, and come to a compromise that’s acceptable to both sides.
Most real estate agents can work as a listing agent or a buyer’s agent, though it’s very rare for an agent to perform both duties in a transaction. When this happens, it’s called dual agency, and the same agent is working for the buyer and the seller.
There are some obvious conflicts of interest in a dual agency situation; for example, the agent’s commission is paid by the seller, and the higher the final sale price, the higher their commission. That conflict alone makes it doubtful that they’ll effectively look after the buyer’s interests.
For that reason, many states have made dual agency illegal, and even in the states where it’s allowed, the buyer is often required to sign a statement saying they understand the risks of entering into dual agency. As a general rule, buyers should steer clear of dual agency.
Do I Need a Buyer’s Agent?
Technically, no. No one absolutely needs a buyer’s agent to buy a home. But the most compelling reason to use a buyer’s agent is inarguable: you don’t actually pay them a cent.
Because of the way that real estate commission is paid, the seller pays both the listing agent and the buyer’s agent. When you look at it from that perspective, there’s very little reason to not use a buyer’s agent. The seller is literally paying for you to have an expert negotiator on your side of the deal.
And the reality is that unless you’re a high-powered attorney or a hostage negotiator in your private life, it’s going to be extremely tough for you to sit at the negotiating table across from the seller’s listing agent and extract a good deal. You won’t have a proper feel for the market, or for the industry jargon, to mount an effective counterargument. The result? You’ll probably end up paying a lot more than you need to.
If getting the lowest possible price isn’t a high priority for you, you might not need a buyer’s agent. But if you do want to get the best price possible, working with a buyer’s agent is the best way to do that— and it doesn’t cost you a penny.
So Why Should You Use a Buyer’s Agent?
We’ve touched on a lot of the basic services a buyer’s agent provides above: things like negotiating, finding properties to fit your needs, and formulating offers. But there are also big picture reasons why you should probably use a buyer’s agent.
They Know the Market
Your local real estate market is a delicate and ever-changing system. Home prices fluctuate from month to month and even from week to week, and having a handle on that cycle can save you tens on thousands of dollars when it’s time to put in an offer.
One small example: a good buyer’s agent knows when the market is the least active, and can help buyers get exceptional deals during that time. The week between Christmas and New Year’s is especially slow, which means that buyers showing in the period are probably highly motivated to sell. This isn’t totally intuitive, and this advantage would probably be overlooked by an unagented buyer, but a good buyer’s agent will help you tap into that opportunity.
They Know a Bad Deal When They See It
Sometimes, when a buyer’s home search has stretched on for months, or if they’ve lost several bidding wars, they can get desperate. This may lead them to fixate on a home that’s overpriced, or to accept conditions (say, a disastrous home inspection) that they shouldn’t.
Telling a buyer to walk away from a bad deal is one of the hardest things a buyer’s agent has to do, but also one of the most necessary. The buyer may think a leaky roof is “no big deal” or that overpaying by $30K in a neighborhood that’s trending downwards is an acceptable compromise, but a good buyer’s agent can explain why they shouldn’t settle.
They Know the Process
Buying a home takes a long time; according to Zillow, the average home search takes 4.5 months, followed by 30-45 days for closing. A lot can go wrong during that time, and having an experienced buyer’s agent can help you handle all of that unforeseen adversity. This can include big problems (your financing falls through at the last minute) and small ones (the seller asks to keep the appliances the day before closing).
And even if everything goes off without a hitch, buying a home is complicated. There are stacks of paperwork to sign, dozens of people to pay, and local, state, and federal regulations to worry about. Having a buyer’s agent to guide you through everything can make the process so much less stressful.
It Doesn’t Cost You a Penny
One of the most compelling reasons to use a buyer’s agent is simple: it’s free to you, the buyer. The seller pays all the commissions, so you might as well take advantage of a buyer’s agent’s expertise.
When you look at the big picture, there just aren’t many reasons to not use a buyer’s agent. The only situations where it might make sense is if you’re a real estate professional yourself, or work in a real estate-adjacent industry, like the legal profession. But as a regular buyer, working with a buyer’s agent will dramatically increase your chances of getting the best possible price, and having the smoothest possible transaction.
Real Estate Witch has partnered with Clever Real Estate to connect our readers with top agents in their area. Clever agents are pre-vetted, elite agents with proven track records in their market, so they’re well-positioned to help buyers find their dream home for a dream price. Best of all, Clever offers a buyer’s rebate of $1,000 or more in states where buyer’s rebates are legal. Like what you hear? Contact Clever today for a free, no obligation consultation, and start the process of finding your dream home!
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