Understanding the Benefits of Working with a Buyer's Agent

People who buy a house are likely to deal with at least one real estate agent (often referred to as "real estate agents" or "realtors"). For a house buyer, understanding the duties and responsibilities of the real estate salesperson, specifically who they represent in the real estate transaction, is essential. This article gives a short summary of "normal" representation in a real estate transaction and highlights a buyer's agent and the significant contributions they may make in aiding a buyer to acquire a property.

In a real estate transaction, a salesperson serves as an "agent" for both the buyer and the seller. An agent is a person who performs services on behalf of another person. If an individual is operating as an agent on behalf of another, they have a duty to look out for their client's "best interests" under the law of agency (the person for whom they are acting as an agent). A "fiduciary" obligation is placed on them by their customer.

A listing is often obtained by a real estate agent from the home's seller in a real estate transaction. It's a legal contract between a Realtor and a Seller that binds the Realtor as an agent for the Seller in order to assist the Seller with the sale of their property (listing their home in a listing service, marketing their home, holding open houses, showing their home, etc.). Listing agent, listing realtor, and listing broker are all terms used to describe this realtor. Listing agents often get a portion of the home's selling price as compensation for their services. A percentage of the selling price of a property's value is often agreed upon between a home seller and the agent who actually sells their home (the selling agent) in order to cover their costs.

Without any disclosure, the listing agent operates as a representative of the house seller. This is vital for a buyer to know. Sellers' agents are subcontractors of the listing agent. As a result, both the seller's agent and the listing agent are working for and in the best interests of the buyer. Many purchasers wrongly believe that the real estate agent who is showing them properties is acting on their behalf, while in reality, that person is frequently working for the property seller. As a result, in many areas, real estate agents are required by law to declare who they work for to all parties involved in a real estate transaction from the outset. In addition, the "Code of Ethics" of the National Association of Realtors (NAR) mandates that realtors identify their employer at the outset of any negotiations with a seller or buyer.

Homebuyers have a hard time with the traditional "arrangement" in which real estate agents represent the seller and they are on their own when purchasing a property. Many homebuyers prefer to work with a real estate agent who is both well-trained and well-experienced. As a result, a buyer's agent (also known as a buyer's broker or buyer's representative) is often hired by homebuyers. Real estate agents that specialize in representing buyers are known as buyer's agents. A buyer's contract with the buyer's agent is similar to that of a house seller. There should be a written agreement outlining how much money will be paid to a buyer's agent if they assist a homebuyer in finding their dream house. A buyer's agent often receives a portion of the home's selling price as compensation. Buyer's agent contracts often feature a term and terms for how the contract may be terminated by either party (the buyer or the real estate agent).

Real estate transactions often include the involvement of at least one buyer's agent. They provide a variety of services, including:

It is important to understand a buyer's requirements and goals when it comes to purchasing a property
providing customers with the information they need to make an informed purchase decision
They find suitable houses for their customers' requirements by doing research and providing assistance in doing so
Answering inquiries on a variety of topics, including real estate, neighborhoods, and the house-purchasing process
Assisting a buyer in determining if a potential house is priced reasonably and in drafting an offer to purchase that property
Filling out the necessary paperwork and submitting it to the seller's agent and the home's owner
Negotiating on the buyer's behalf or aiding the buyer in the bargaining process
Listing qualified individuals for services such as lawyers and property inspections
making it easier for the lawyers representing sellers and buyers to exchange contracts
Financing the purchase of a house for the buyer

When it comes to advising a buyer, though, a buyer's agent should be careful not to go overboard. Providing legal advice is one example of when they should not be allowed to provide their services. In the event of a dispute, legal counsel should be sought out by buyers. However, a buyer's broker may assist the buyer in locating the right attorney for the transaction.

The buyer pays the buyer's agent for their services. As a general rule, the buyer and the buyer's agent will include in the offer a provision for the seller to pay the buyer's agent's remuneration. Remember that a typical seller has already committed to paying a commission to a selling agency when they sign a listing agreement. As a result, the buyer's agent is usually able to be paid for the work they do on their behalf. Several problems may happen if the seller provides less money than the buyer's agent is entitled to under the contract with the buyer:

It is possible for the seller to agree to pay the difference in order to sell their property
The buyer is responsible for the extra cost
In order to complete the sale, the buyer's agent agrees to take less pay than was initially agreed upon

An Unusual Situation: the Presence of Two Agents

There are situations when real estate agents are legally bound to both the buyer and seller, such as when the buyer's agent is displaying one of their own listings to the seller. The term "dual agency" is used to describe this situation. The real estate agent represents both the buyer and the seller's interests. As soon as the possibility of dual agency emerges, a real estate agent should notify all parties involved and get their agreement to accept this condition. In several places, real estate agents may lose their licenses, be fined, or even be sentenced to prison if they fail to declare their second agency. With dual agency, the real estate agent serves just to facilitate the transaction rather than represent the interests of one or both parties. Many consumer advocates are dissatisfied because no one is looking out for the best interests of the buyers and sellers in this situation.

Conclusion

Having a buyer's agent on your side may be quite beneficial when it comes to protecting your interests in a real estate transaction. Anyone looking to buy a house but lacking real estate knowledge should strongly consider working with a buyer's agent, who will serve as their advocate and guide them through the home buying process from start to finish.

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Understanding the Benefits of Working with a Buyer's Agent