What is a Buyers Agent?
A Buyers Agent is a licensed Realtor who works exclusively on behalf of individuals who are seeking to find a home to purchase. By law, a Buyers Agent has a fiduciary obligation to a Buyer he/she represents. Fiduciary responsibilities include:
- the Agents commitment to 100% loyalty to the Buyer,
- protection and promotion of the Buyer's best interests,
- keeping confidential Buyer's personal or financial information,
- negotiating for the best price and terms on Buyer's behalf, and
- providing his/her best advice regarding matters affecting the purchase of property.
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How is a Buyers Agent different from other types of real estate agents?
Practically speaking, real estate agents may work as either Listing Agents or Buyer Agents.
- Listing Agent. In contrast to Buyer Agents, Listing Agents work with Sellers in the marketing of properties for sale; they devote most of their efforts to finding potential Sellers whose property they may list (or offer) to sell. Listing Agents have a fiduciary responsibility to the Seller (not the Buyer). Listing Agents skills focus on reaching out to prospective buyers, securing listings, preparing/staging a property for sale, advertising and promoting the property to other agents and to the public (including holding houses open for inspection) and reviewing offers from prospective buyers. Contact between a Listing Agent and his/her sellers is mostly limited to functional issues (e.g., nature and frequency of property advertising, reviewing purchase offers) and progress reports; the Listing Agents set of skills centers around marketing (both of oneself to prospective Sellers and of properties to prospective Buyers).
In summary, a Listing Agent provides professional marketing skills and in circumstances that require a somewhat less personal relationship with clients.
- Buyers Agent. Buyers Agents apply their skills to learning what the Buyer is looking for, searching for properties that match the Buyers criteria, visiting properties to evaluate property condition and value to the Buyer, preparing an offer to purchase, applying experience-based strategies to the preparation and presentation of an offer so that it serves the buyers interests and also helps ensure that the Buyers offer prevails over possible competing offers presented by other agents and buyers for the purchase of the same property. Unlike Listing Agents, contact between a Buyers Agent and the purchaser working with him/her covers the range of activities related to the entire process of home buying (e.g., financial qualification and limits, identifying types of properties to inspect, reviewing the pros and cons of specific properties in order to sharpen the search process, etc.). A Buyers Agents set of skills centers around knowing the Buyers requirements, understanding the current real estate market, and contract preparation experience (in the Washington area the typical purchase offer is over 30 pages in length).
In summary, a Buyers Agent provides a professional house-hunting service using all the tools available to a Realtor, and provides this service in a circumstance that requires a more personal, relationship-based approach.
- Dual Agent. The law permits an agent to work as a dual agent (through the agent's broker), i.e., serving the needs of the transaction and both the buyer and the seller in instances where the property that the Buyer wishes to purchase is also listed by the buyers agents real estate company or by the buyers agent him- or herself.
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Can a Realtor be both a Listing Agent and a Buyers Agent?
Yes, but a very large majority of agents usually choose to work primarily as Listing Agents, although some occasionally work as a Buyers Agent also. The time and skill demands associated with listing homes for sale permit an agent to work with 10-15 sellers at any given time; a Buyers Agent can usually work effectively with only 3-6 buyers at any given time. Although both types of agents can be successful by all conventional measures, a successful Listing Agent generally realizes a greater annual income than that realized by a successful Buyer Agent. Most Realtors pursue the work of being a Listing Agent because of the greater financial incentive associated with success in that line of work. A smaller proportion of agents who specialize in Buyer Agency usually do so because of personal preference for the nature of the work itself and because their experience shows this to be the area in which they can be the most effective.
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What are the services that a Buyers Agent provides?
A Buyers Agent provides services that address the entire process associated with the purchase of homes. Buyer Agent services include:
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connecting the Buyer with an effective Mortgage Broker who understands the Buyers objectives and who can select the best loan program for the Buyers needs and circumstances,
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learning the characteristics of a home which meet the requirements and desires of the Buyer (e.g., location, number of bedrooms and baths, types of homes the Buyer likes and dislikes, lot size and type, transportation access, etc.),
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providing the Buyer with listing information on properties that match the desired characteristics, visiting/inspecting potential properties,
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suggesting purchase and negotiation strategies,
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preparing the contract offer,
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negotiating contract terms,
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aiding Buyer in finding a home inspector, insurance coverage, settlement attorney, and
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generally assisting, informing and advising the Buyer regarding all aspects of a real estate transaction.
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How does a Buyers Agent get paid?
A Buyers Agent agrees to accept whatever compensation is offered by the Seller. Generally, Sellers offer (through their Listing Agent) a commission of 2¼-to-3% of the total sale price as Buyer Agent compensation. This amount is generally split between the Buyers Agent and the Buyers Agents real estate company.
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Can an Agent met at an Open House help a Buyer write a contract to buy that house?
Yes, but most agents who hold an open house are either the Listing Agent for that property or work for the Listing Agent. In such an instance, the agent met at an open house has a fiduciary obligation to the Seller of the property. While he/she is obligated by law to treat all Buyers fairly, the interests that agent will be looking out for are the Sellers not the Buyers. This is one of the reasons why most Buyers work with their own Buyers Agent.
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If I'm buying a home that is being built or is brand new, can I have a Buyer's Agent?
Yes, most definitely. And there is no additional cost to the buyer. Buying a new home without your own agent means that you will not have someone looking after your interests -- since the agent in the sales office works for the builder. A buyer's agent can help negotiate the sale price and construction enhancements. But, most importantly, your own agent can bring in an independent and experienced home inspector to assure that the home is built properly and in conformance with the promises that the builder has made.
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Apart from all the answers given so far, why should would I work with a Buyer's Agent?
Without repeating any of the other answers, the main reason is that you should work with someone who has come to know you -- and who has developed a real sense of all the factors bearing on the purchase of your home. The purchase of real estate is, literally and figuratively, a "big deal." You need someone who knows the real estate ropes, knows what your needs are, and is someone you trust! These are the basic criteria; if your agent meets them well, he/she can help you think through the pros and cons of any specific house you find and can be a genuine advocate for you and your interests.
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Except where indicated, all content is copyright © 2005 Jim Mulrooney. All rights reserved.
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