You've reached one of the most exciting moments in life - buying a home. It's a significant decision to make and one that can impact a large part of your life, so no details should be overlooked. Beginning the process can be daunting, but having the right person in your court can help alleviate any overwhelming feelings.
Many questions will pop up, like what type of agent is best to work with? Or what is a good way to find a buyer's agent? You might think there is only the option for a real estate agent who supports all sides of the transaction, but there are agents who specialize in one side of the transaction.
An exclusive buyer's agent is one type of specialized agent and is the best person to help you make such an impactful decision. They're there to represent your needs and interests in a real estate transaction and make sure you get the best possible deal, not the sellers. They're a smart choice, especially if you're a first-time homebuyer.
It's important to understand how a buyer's agent functions before beginning the process of finding one. After reading this article, you'll understand how a buyer's agent works, how buyer's agents get paid and earn their commission, why they're the best type of agent to work with, and how to find one.
What Is an Exclusive Buyer's Agent?
An exclusive buyer's agent specializes in helping homebuyers purchase property. They have elected to help homebuyers specifically instead of helping both a homebuyer and seller in a real estate transaction. They are unique from a listing agent because they are legally bound to help you, the buyer, and not the seller on the other side of the table.
A buyer's agent can also be called a selling agent once a contract is entered, but this term is not to be confused with the listing agent or seller's agent. The name stems from them now helping facilitate the sale of the home on behalf of the homebuyer. When you work with an exclusive buyer's agent it means that you have someone looking out for your best interests to ultimately ensure you receive the best deal on the home of your dreams.
It is important to note that not all buyer's agents are exclusive buyer agents. Exclusive buyer agents not only do not represent home sellers, but they work for real estate brokerages that do not represent sellers. By representing homebuyers only, these real estate firms and agents avoid the conflicts of interest common in the real estate industry.
What Does a Buyer's Agent Do?
As mentioned earlier, a buyer's agent is there to be your guide through the entire homebuying process. They'll be the person to help you compare homes, explain the details of a transaction, and organize all the logistics involved. A buyer's agent also understands the local market, the real estate laws specific to your area, and provides other fiduciary duties.
Because they're experts in working with homebuyers, buyer's agents understand your perspective better than any other type of agent, especially if you're a first-time homebuyer.
Find the Right Property
A buyer's agent is usually very familiar with the available homes in a specific market. They understand the current inventory, what prices make sense in the neighborhood, and when a good deal is on the table. Their experience allows them to provide a perspective on small nuances that an outsider won't have.
Just as they specialize in working with homebuyers, they also often specialize in certain markets, which can be helpful if you're buying in an unfamiliar part of town or another state entirely. They'll walk you through potential homes and help you find the information you need to make the right choice.
Educating Buyers on the Homebuying Process
A buyer's agent with experience moving through a real estate transaction is there to help educate you every step of the way. Conducting a real estate transaction can be incredibly involved, and it's hard to find the time to research every part of the process.
Topics like escrow, the difference between title insurance and homeowner's insurance, digital closings, and cybersecurity are complex. Having someone there to answer questions, provide resources, and catch you from making a mistake is incredibly valuable.
Submitting a Good Offer
Submitting an offer on a home is incredibly exciting and may seem simple, but there are many details to consider. The timeline of the sale, closing costs, inspection details, and what is being paid for by the buyer or seller are just a few. Understanding offer contingencies is essential.
When you make an offer on a home, you want to make sure it's an appealing one for the sellers you're comfortable with the price and the terms. A buyer's agent will help you accomplish this.
Assisting With Negotiations
Very few people enjoy negotiating, but many buyer's agents are experts at it. They not only understand what a good price is for the home you're interested in, but they also know when and how to make a deal happen.
Inspections can bring issues to light, and a buyer or seller can often make requests that aren't reasonable and effectively ruin a deal. Emotions can be high when someone feels an attachment to a home and a large sum of money is on the table. A buyer's agent is there to help you know when to accept an offer or walk away.
Providing References for Home Service Professionals
It's common knowledge that referrals can be one of the biggest factors in the decision process for the purchase of a product or service. Just as you might turn to a family member or friend to refer you to a buyer's agent, asking for a referral from your buyer's agent is a good strategy. They often have local partnerships with many of the professionals you'll need when buying a home and help you find the right person. This might include finding a title company or closing attorney, a mortgage lender, a home inspector, a builder, an insurance agent, trades people, and more.
Organizing All the Moving Pieces
Just as with other portions of the real estate homebuying process, a buyer's agent is there to help organize all the moving pieces. It's hard enough having a full-time job, doing research, and comparing homes, so trying to handle the paperwork and check off the to-dos is a big challenge. A buyer's agent can be that person to communicate with the multiple parties involved, document everything that occurs, verify requirements are being met, and review the process as it proceeds. They'll also communicate with your lender, title company or lawyer, home service providers, and more, saving you time.
What's the Difference Between a Listing Agent and a Buyer's Agent?
The sellers hire a listing agent to list their home appropriately. They'll conduct market analysis to help find the right price based on local conditions. They can be called a seller's agent as well, but they are the ones who get the house ready to be sold and communicate with the buyer's agent (if one is being used) to negotiate any terms. The listing agent has a fiduciary responsibility to the seller to get the best price and terms. The listing agent has no such responsibility to the homebuyer.
Who Pays for the Buyer's Agent?
The commission for a buyer's agent is built into the home's sale price. If a buyer's agent and a seller's agent are utilized, the commission likely will be split but not always. The amount typically falls between 4 percent and 6 percent of the total price. Sometimes the commission for the buyer's agent will technically be the homebuyer's responsibility if it is negotiated as such. There are many variables to what this commission split looks like and how the brokerages handle it. Homebuyers should ask potential buyer's agent how they get paid before agreeing to work with them.
In most cases, the commission is not paid out until the home is closed on and is managed by the brokerages. The seller's agent's brokerage receives the commission from the sale and then distributes that to the seller's agent after the fact. The remaining split of the commission will then be distributed to the buyer's agent's brokerage and paid out accordingly.
What Is a Dual Agency?
With dual agency, the agents that work within a brokerage are able to represent both buyers and sellers in a real estate transaction. Having a broker or brokerage representing both parties is the most common practice, but it is not the ideal situation for a homebuyer. Because these agents and firms work for both the buyer and the seller, their commission isn't split with anyone else, which is part of the reason these types of agencies exist. In some states, it's illegal because of the ramifications that can occur between the buyer and seller; however, in every state there is a way for traditional brokerages to earn both sides of the commission.
Why is Dual Agency an Issue?
When listing agents and brokerages represent both parties - dual agency - it creates an obvious conflict of interest. It's nearly impossible to perfectly balance the needs of two parties who have separate goals at hand. In today's competitive market, you want to know your real estate agent has your best interests at heart and is 100 percent loyal, not just the intent of making the transaction happen quickly for both parties and earning the commission from the sale. Imagine you're being sued, and you hire the plaintiff's attorney to represent you as well. It wouldn't be a wise choice.
What Is a Good Way to Find a Buyer's Agent?
When beginning your search for a buyer's agent, it's important to think local. Local agents are the most familiar with market trends for cities and towns that interest you, understand regulations that may impact a home purchase or new-build, and have the best idea of desirable areas to live. There are several steps in finding a buyer's agent to guide you to the right fit. Take time in this process because once you make a smart selection, the rest of the homebuying process will become easier.
Use a Trusted Resource
With the myriad of advertisements, online sites for finding a real estate agent, and digital information guiding you, it can be overwhelming to begin your search for a buyer's agent. An easy way to filter down the overload of options is to start with a trusted source.
You can use various websites to find a buyer's agent who is truly invested in helping you find the best home at the best price. An easy place to start is an association like NAEBA (National Association of Exclusive Buyers Agents) which offers a “digital Rolodex” of exclusive buyer's agents that have been vetted for their commitment to serving the homebuyer's interests only.
Simply fill in a few details about your home search and find the perfect local agent to match your needs. Of course, you will want to do your own due diligence and interview prospective buyer's agents.
Compare Options
Just as you would check online information to purchase a new television or similar item, your process in finding a buyer's agent should be the same. You'll spend a considerable amount of time working with your buyer's agent, asking questions, and trusting them to help with decisions, so you should make sure that you find someone with who you feel comfortable.
Take the time to compare different agents, ask friends and family if they've used an agent, and read online reviews of agents that appeal to you. Many search platforms support and simplify this process too.
The important thing to remember is that it takes time to find the right agent, and while buying a home can be exciting, you don't want to rush through things just to make that happen.
Check Their Online Presence
In today's world, it's a good idea to include social media pages and websites as part of your research process for a buyer's agent. Look for the content they're producing and what level of effort they're making. Many real estate agents have professional accounts highlighting market trends, exciting properties, neighborhood information, real estate data, and partnerships with local businesses.
Websites are another telling portrayal of a buyer's agent's knowledge and connection with technology. During times like the pandemic, there was a usage spike in digital tools that can help process parts of the transaction. Remote Online Notarization or RON is just one example of the many tools that have changed how a home is bought and sold.
Another component of digital utilization is the materials they provide to educate you on important real estate topics. Numerous websites offer this information, but if a buyer's agent is producing these resources as well at a local level, it indicates they are experts in real estate.
Conduct an Informal Interview
It might sound like an intensive step to take, but having an initial call, whether on the phone, in person, or over video, can be a great way to start the process of finding the right buyer's agent. It's an opportunity to see if their strategies align with what makes you most comfortable during the transaction process.
Covering several topics with your potential agent before moving forward in the working relationship is essential. Some of these include compensation, market knowledge, services offered, and more.
There are a few questions you'll want to ask:
- How long have you been working in the industry?
- How long have you been working in this area?
- What is your negotiation strategy?
- What makes you unique from other buyer's agents?
- What kind of referrals can you offer? Do you have strong partnerships in the area?
- Do you have referrals from previous clients?
- How does your expertise align with my specific needs?
The Strategy for Success
While buying a home can be a stressful process in some moments, doing the proper research to find a buyer's agent to work with can make things much more manageable. When you have a rapport with someone who is fully dedicated to helping you, there is less concern about everything being handled effectively during the homebuying process.
It's crucial that a buyer's agent stay up to date with the market, technology that plays a role in the transaction process, and real estate regulations that may impact the purchase of your home. Checking their knowledge of these things through online sources is a good approach but asking them in an informal interview is an even better idea.
An exclusive buyer's agent is advocating for you every step of the way and answering the many questions you're likely to have. Real estate changes constantly, and a buyer's agent will save you time spent researching the topics yourself.
A good way to find a buyer's agent begins with research, time, and having conversations to see if they're a good fit. Don't underestimate the benefit of having a skilled person in your court to help to land the best deal on your future home.