Many people start looking for a home rather haphazardly. They don’t really understand how buyer agency works, and they incorrectly assume that if they have a real estate agent working for them, it will probably cost extra. Often, a buyer will just call the agent on the sign of each home they are interested in. Although this does accomplish the intended outcome, I’d like to point out a few of the pitfalls.This buyer is what is referred to as being unrepresented. No one is protecting his interests, or working on her behalf. Yes, this person can make an appointment to see a home and even write up an offer, but the agent on the sign is representing the seller.
This buyer is missing out on the benefits of working with a Realtor as a buyer’s agent. By taking the time to develop a relationship with one buyer’s agent, that agent develops a strong perception of what the buyer is looking for. Then, the agent gathers the information, does the research on various properties, sifts through all options for potential matches, and then arranges for the showings. This saves the buyer time.
The buyer’s agent can also check on the history of the property: what it sold for in the past, what the tax assessment is, how long it’s been on the market, and the sales price of similar homes in the area. This information can be used to help determine value. This aids the buyer in determining how much to offer. Wouldn’t it be nice to have an unbiased opinion when determining the offer price?
The buyer’s agent also helps protect the buyer through the inspection process. After the inspections are done, agents negotiate to have the repairs done. Again, a buyer’s agent is working for the buyer, another advantage to buyer’s agency.
In an ordinary transaction, the listing agent represents the seller; the selling agent represents the buyer. Both are necessary. Can they be the same person? Yes and no. If both are to be “represented by” the same agent, a dual agency is necessary. If the agent is only representing the seller, but is writing the offer for the buyer, then the buyer is unrepresented. Though this is completely legal, it is to the disadvantage of the buyer. You have the right to be represented, and it doesn’t cost extra.
You may be wondering how this is possible. It’s because agents are only paid when a sale is accomplished. Agents get paid either when they have a listing sell or by finding a buyer. Traditionally, the commission is paid by the seller, but it is split between all parties involved: the listing company and its agent & the selling company and its agent.
From the buyer’s perspective, it would be prudent to have an agent working on your behalf. It is in your best interest to be represented, either through a dual agency agreement, or through buyer’s agency. Having someone working for your best interest not only helps make the transaction go smoothly, but it gives you the assurance you need in making one of the largest purchases in your lifetime.