Buyer’s Agent: What Is It, And How Do I Find A Good One?
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Whether it be your starter home or forever abode, buying a house can feel like a mammoth task. Thankfully, real estate agents can make the process less daunting. As a buyer, you’re going to want to find a buyer’s agent who can help you obtain your perfect home. But what is a buyer’s agent, and how does one differ from a listing agent? This article will teach you the difference between these two types of agents and help you find the perfect one to customize your home shopping experience.
What Is A Buyer’s Agent?
A buyer’s agent is a real estate professional who guides a buyer through the process of purchasing a home. As a representative of a purchaser in a real estate transaction, a buyer’s agent has a legal obligation to protect the interests of the buyer and work to ensure they’re getting the best deal possible. Although there are some real estate agents who specialize in working with buyers, most agents can work as a buyer’s agent or listing agent, depending on the specific transaction.
Buyer’s Agent Vs. Listing Agent
In a real estate transaction, there are usually two real estate agents involved: a buyer’s agent and a listing agent. The buyer’s agent works on behalf of the buyer, while the listing agent represents the interests of the seller.
The buyer’s agent will aid the buyer in navigating the real estate landscape by finding listings and advocating for the buyer and their unique needs. The listing agent, on the other hand, is responsible for listing a property for a seller. A listing agent – also referred to as a seller’s agent – has a fiduciary responsibility to look out for the seller by ensuring that they secure the best terms possible for the sale of the seller’s property.
Instead of hiring their own agent, some buyers believe they can find a property they like and work with the listing agent to actualize the sale. While this type of dual agency can be done, it’s highly discouraged because it leads to a conflict of interest. When it comes down to the negotiation process, there’s no way that one agent can be loyal to both parties of the transaction. Buyers and sellers inherently have distinct interests, especially when it comes to the purchasing price.
What Does A Buyer’s Agent Do?
When working as a buyer’s agent, a real estate professional is responsible for acting as a resource for their clients by guiding them through each step of the home buying process. As a result, a buyer’s agent generally takes on the following tasks:
- Finding listings: At the outset of the process, the buyer’s agent will ask buyers about their needs and preferences to determine what their ideal home looks like. They will then use that information to begin searching for appropriate properties. As new listings enter the market, the agent will send the buyer any properties that match their needs.
- Scheduling showings: The buyers will peruse the listings their agent sends them and pick out the ones they would like to view in person. The agent will then coordinate with the respective listing agents (or sellers if the home is for sale by owner (FSBO)) and schedule a time for the buyers to tour the property. The buyer’s agent will also inform buyers of any open houses that they may be interested in attending.
- Asking and answering questions: The buyer’s agent will typically go with buyers to all showings and any particularly interesting open houses. While buyers tour the property, the buyer’s agent will be present to answer any of their questions and provide thoughts about the property based on their expertise. Furthermore, the buyer’s agent will ask the listing agent (or FSBO seller) questions the buyers may not know to ask and get more insight into the seller’s circumstances and property’s condition, taxes, etc.
- Pricing consultation: Once the buyers find a property they’re interested in, the buyer’s agent will ask the listing agent if there are any disclosures on the property (potential issues that the seller must reveal to buyers), which may affect the home’s desirability or pricing. Then, the agent will run a comparative market analysis to determine an appropriate offering price for the property based on similar properties that have recently sold in the area. The agent will recommend that the buyers make a particular offer based on the analysis and specifics of the property.
- Negotiating with listing agent or FSBO seller: After making the offer on the buyers’ behalf, the buyer’s agent will negotiate both the price and terms. The agent will inform the buyers of any counteroffer made by the seller and consult them on whether to accept or amend it. The buyer’s agent will also inform clients of possible ways to make their offer more competitive, such as eliminating contingencies or adjusting the closing date. As soon as an offer is accepted by the seller, the buyer’s agent will work to draft the contracts.
- Recommending other real estate professionals: The buyer’s agent will guide and advise the buyers through closing. Before the closing date, they may refer other real estate professionals, such as real estate attorneys, inspectors, etc., to help expedite the closing process and ensure the buyers’ interests are protected.
Who Pays A Buyer’s Agent?
Typically, it’s the seller who pays the commission for both the buyer’s agent and listing agent. The usual process by which real estate agents are paid is important because it means that buyers get the benefit of working with buyer’s agents for free. If buyers are unable to find a home to purchase, the buyer’s agent doesn’t get paid.
Unless otherwise stipulated in the sales contract (or exclusive agreement between agent and client), the commission is 6% of the purchasing price and split evenly between the listing and buyer’s agents. The reason the seller technically pays for both agents is that their fees are deducted from the proceeds of the sale.
For example, if a home is purchased for $400,000, 6%, or $24,000, would be withdrawn from the seller’s net proceeds to pay the agents’ commission. Of the $24,000, the buyer’s agent and listing agent would each receive $12,000, and the seller would walk away with $376,000.
Can A Seller Refuse To Pay The Buyer’s Agent?
In general, the seller pays the commission of both the seller’s and buyer’s agents. If a seller wants the buyer to pay the buyer’s agent’s commission, they must negotiate this with the buyer and come to an agreement. Who pays the agent’s commission is outlined in the purchase agreement, which both parties will sign at the start of the real estate transaction.
Can You End A Contract With A Buyer’s Agent?
Since buyer’s agents only get paid if buyers find and close on a new home, some agents will insist that buyers sign a buyer’s agency agreement to solidify their working relationship. This contract stipulates the terms of the relationship and ensures that the buyers will work exclusively with the agent to procure a new home.
The terms of these contracts are negotiable, though some brokerage firms may place restrictions on the extent to which agents can alter certain provisions. While buyers can often negotiate the duration of the contract, these agreements generally specify that buyers must work exclusively with the agent for a period of 90 days.
If the buyers still haven’t closed on a new home once the contract expires, they are allowed to find a different agent. However, buyers should read the terms of their agreement carefully, as some contracts stipulate that the agreement automatically be renewed at the end of the 3-month period.
So, if buyers don’t see eye-to-eye with their agent, their ability to end the contract will depend on its fine print. With that in mind, buyers may have more flexibility in terminating the contract if their agent fails to perform the duties listed in the agreement.
To ensure that you don’t get stuck working with an agent with whom you don’t feel comfortable, you can try to avoid signing a buyer’s broker agreement or negotiate for a trial period. While some agents may refuse, it’s always worth asking if you can add a provision in the agreement that provides you with a 30- or 60-day opt-out period.
How To Find A Buyer’s Agent
There’s no question that buyers should work with a buyer’s agent, given the free expertise they offer; however, you may wonder how to find a buyer’s agent who’s right for you. As mentioned, there are some agents who work exclusively with buyers, but most don’t. So, how do you determine who will be best at representing you?
The trick is to interview a handful of agents and ask them enough questions to get a sense of their personalities and experiences. Your ideal agent will be someone who is not only experienced in finding homes in your desired location and price range but also makes you feel comfortable. To help you find that perfect buyer’s agent, you should ask the following questions when interviewing:
- How long have you been working in the industry?
- What are the hours you typically work?
- Do you specialize in working with buyers?
- How many different buyers/sellers are you currently working with?
- What experience do you have finding homes in my desired location/price range?
- Why should I work with you? What do you bring to the table that other agents may not?
As you describe your ideal home to the agents you interview, you should also pay attention to how well they seem to understand your needs and preferences. The right agent for you will be someone who gets you as well as they do the industry.
The Bottom Line
If you’re unsure of how to begin looking for agents, create an account on Rocket Homes Real Estate LLC. The company partners with highly rated real estate agents in all 50 states and helps to match buyers with agents suited to their circumstances. With their help, you’ll be ready to start your home search in no time! If you haven’t already, be sure to check out current mortgage rates from Rocket Mortgage®.