Buying Your First Home? How to Find a Good Buyer’s Agent
Home buying is a tricky road, even in the best of times. Right now we’re in a seller’s market and it’s almost impossible for a buyer to get a fair shake. So the question is: how do you find a good buyer’s agent?
What is a Buyer’s Agent?
A buyer’s agent, as the name would suggest, is a real estate professional who represents the buyer — and the buyer only — in a real estate transaction.How do you find a buyer’s agent?
You might be surprised to know that some of the larger (and even some smaller real estate agencies) represent both the buyer and the seller. If this raises all kinds of red flags for you, it should. While it’s not illegal, and not even technically unethical, it can definitely lead to unethical situations where the real estate agency is playing the buyer off the seller. The agency is looking at all the cards — they know how high the buyer is willing to go and they know how low the seller is willing to go, and the real estate agency is there to just soak in as much commission as they can possibly get — from both sides of the transaction.
Sounds sketchy? It is.
A Real Estate Brokerage Representing Both Buyer and Seller
When a real estate brokerage serves both the buyer and the seller, what can go wrong? The seller’s agent – who must get the best price for the seller – is the same company that must get the best price for the buyer. Legally, and structurally, companies are run by a broker. This is the person responsible to supervise every transaction and oversee the agents.
Since most agents work for buyers and sellers, the company is supervising both sides of the transaction. How can they serve the financial interest of two parties with opposite financial goals?
What are the dangers of dual agency?
Having the same broker or brokerage on opposite sides of negotiations can seem, on its face, like an ethical quagmire. But New York state simply requires brokers to obtain clients’ written acknowledgement that “they understand that they are giving up their right to the agent’s undivided loyalty.” From the buyer/tenant perspective, the inherent risk in dual agency is a potential imbalance. The brokerage may or may not act with a client’s best interests in mind because it has another client on the same deal.
In 2006, Massachusetts real estate licensing law changed so that brokerages could represent both buyers and sellers in the same transaction. It is called “Designated Agency” in Massachusetts. If you want to avoid this conflict of interest, you need to seek out a company that specializes in serving buyers and does not list property, in hopes of getting a high price for it.
When prospective buyers met with a buyer’s agent from a dual agency brokerage, they signed a disclosure saying that the “designated agent” represented the buyer, but someone else in the office could represent the seller.
Exclusive Buyer’s Agents are not “designated agents” because we do not practice dual agency within our brokerage. Getting an Exclusive Buyer Agent is how you find a good buyer agent.
A recent California case went against dual agency and through appeal. Will that affect the designated agency in Massachusetts? Unlikely. The National Association of REALTORS® has a huge lobby and an army of lawyers.
Designated agency works for the big companies. It just doesn’t work for us.
Why does the California case matter?
The Golden State’s court decision in Horiike v. Coldwell Banker could set a precedent for how dual agency is handled there. In the case, two different brokers from Coldwell Banker – Chizuko Namba and Chris Cortazzo – respectively represented the buyer and seller of a Malibu mansion in 2007. In November, the California Supreme Court unanimously upheld an appeals court ruling that found that the seller’s agent owed the same fiduciary duty to the buyer since he too worked for Coldwell Banker. Some industry insiders fear the ruling could change what information sell-side brokers must disclose to both parties. The California Association of Realtors argued that restricting dual-agency transactions could hurt buyers if brokers actively avoid showing them listings held by their brokerage.
What can you do?
The court is saying that dual agency is a problem for consumers, but clearly the REALTORS® are going to fight this, because big companies benefit. So, as a consumer, what can you do? If you are concerned about conflicts of interest within a real estate brokerage, and you’re wondering where to find a buyer agent, choose a brokerage that doesn’t practice dual/designated agency. The way to find them is to look for the terms “exclusive buyer’s agent” or “true buyer’s agent” or “low conflict of interest brokerage”. NAEBA has agents in many parts of the country and can help you find an exclusive buyer’s agent.
What Does a Good Buyer’s Real Estate Agent Do?
A good buyer’s agent leads the buyer through all of the steps of the buying process, from merely looking to closing the deal. And a good buyer’s real estate agent will only get their money from the commission on selling you a house–they won’t be double-dipping to get commission on both the sale and the purchase.
So what does a good buyer’s agent do?
Find Homes for Sale
A good buyer’s agent will meet with you and get to know you and understand what it is that you’re going through so they know exactly what you need — not what the seller needs. A good buyer’s agent shouldn’t worry about what the seller needs in the transaction; they should be focused on you and you alone. They want to get you the best possible house that will be your dream home, your forever home. They should have no ulterior motives aside from making you happy and getting you the best possible price they can.
Help You Make Offers
When you’ve found the home, or homes, that you’ve decided you want to make offers on, a good buyer’s agent will be your advisor, your coach, leading you through the process of how to make fair and strategic offers. They’ll be there to know the insides and outsides of the house you’re buying, finding problems and opportunities. They should be doing their utmost to make sure that when you make an offer on a home you will know everything there is to know about the sale. Does something need to be fixed? Are there problems with the property? Are there problems with the seller? A good buyer’s agent should be aware of all of this and be 100% transparent with you and lead you in the right direction.
Negotiate With the Seller
It shouldn’t be your job to negotiate with the seller. Imagine if you had one of those situations we discussed above where the seller’s agent and the buyer’s agent work for the same agency–the negotiations will take place around the office water cooler and they’ll be worked out to make sure that both agents maximize their profit. That’s not the case with a buyer’s agent. A good buyer’s agent will negotiate with the seller to make sure that you are getting the best deal possible for your dream home.
Refer You To Qualified Professionals
A good buyer’s agent knows that they’re not a lawyer, and they’re not a home inspector, and they’re not a moving company. They should be able to put you in touch with the best professionals in their fields.
How Do You Find the Best Exclusive Buyer’s Agent For You?
You could go about this the hard way. You could ask around. You could research buyer’s agents. You could track down their recent sales, talk to their former clients, and get advice about who is the best buyer’s agent for you.
And there’s nothing wrong with that! As a matter of fact, even though we’re going to present an easier way to find a good buyer’s agent, there’s nothing that should stop you from doing the following in an interview process. After all, this is the person that you’re literally hiring to find you the best place for you to spend the next decades of your life. Treat it like a job interview. Some of the things you’ll want to talk about are:
Finding a Good Buyer’s Agent With Good Communication and Working Style
How will the good buyer’s agent communicate with you? Are you going to be working with the agent themselves or with assistants and secretaries? These are things you’re going to want to know before you get into a partnership with someone who is making such a big impact on your future.
Finding a Good Buyer’s Agent That Knows How To Find Homes in Your Budget
Ask your good buyer’s agent how they’re going to go about finding homes in your budget and price range. Ask how they helped other clients. Ask for referrals so you can talk to some of those other clients. A good buyer’s agent shouldn’t be afraid to hand over the names of their previous clients–they should be proud of the work they’ve done.
Finding a Good Buyer’s Agent who is Good at Negotiating and Making Offers
Ask your good buyer’s agent how they will go about getting you the best deal. Ask them how they make offers, what their process is. Ask them how aggressive they are. Ask them what they expect from you during the process and how much leeway you want to give during the negotiation process.
But There’s an Easier Way to Find a Good Buyer’s Agent
NAEBA is the National Association of Exclusive Buyer Agents. This is an organization that will never have a conflict of interest, because we are, as the name suggests, exclusive buyer agents. We are not both buyer and seller agents, and our members’ agencies will never represent both sides of the deal.
Exclusive Buyer Agents (EBAs) have a responsibility to their buyer-clients that they sum up as:
- Reasonable Skill and Care
Exclusive Buyer Agents will always have the buyer’s best interests in mind because they only work for buyers — never for sellers. Therefore they will always provide information and guidance that will always provide an advantage to the buyer. They will negotiate exclusively on the buyer’s behalf, to get the best price and terms for the buyer — they represent you, no one else. And they work to protect contractual contingencies with your best interests in mind.
Exclusive Buyer Agents are licensed real estate professionals who work for an Exclusive Buyer Broker. NAEBA members are held to a higher level — they’re held to those attributes that we listed above and other strict standards that NAEBA lays out. They work under a strict code of ethics, professional conduct, and principals.
The Choice Is Simple: Choose a NAEBA Exclusive Buyer Broker
When looking to buy a home, work with a real estate broker who ONLY has your best interests in mind. They work for no one but you. They make no money if the seller gets a good deal — they make money when you get a good deal.