Home sellers hire real estate agents to market and sell their properties. If you’re a home buyer, it’s fair to ask, “What should my real estate agent be doing for me as a buyer?” That’s a fair question! Many first-time buyers are unaware of the many services buyers’ agents perform for their clients.
The seller has an agent. Why should I?
When a homeowner hires a real estate agent to represent him or her through the sale, that agent (by law) must only represent the interests of the seller. Remember, when it comes to negotiating, the seller’s agent is looking out for the seller (not the buyer).
Because the homeowner has professional representation, the buyer should too. There are so many steps to buying a home, so much paper to be filed, and so many deadlines that for a beginner, the process can become mind-numbing. Experienced agents can walk you through the process for a much smoother transaction.
It is possible to represent yourself in a real estate purchase; however, unless you are very experienced that could end up costing you money. Buying a home is a legal process. It requires special training and a clear understanding of the laws as they apply to real estate.
How much does a buyer’s agent cost?
Here’s the great news, the seller pays for both agents. Sound too good to be true? It’s not! Different companies charge different commission rates. Agents are free to negotiate those rates when an exclusive right to sell is signed.
Here’s an example:
Joe the real estate pro agrees to list, market, and sell a home for a 6 percent commission.
Because Joe is really on top of his game, he negotiates with qualified buyers to purchase the home for $500,000.
$500,000 X .06 = $30,000
The $30,000 will be paid on settlement day. Traditionally, the selling brokerage takes half and gives the buyer’s brokerage half ($15,000 in this case).
People with experience sometimes try to get a reduced price on a home by representing themselves in the sale. If you are a buyer, there is no guarantee the seller’s brokerage will reduce the rate under those circumstances. One mistake could end up costing the buyer or seller thousands.
What does the buyer’s agent do?
While real estate agents often have solid relationships with lenders, an agent does not have any influence on the lending process. It’s a good idea to ask an agent you trust for a reference or for the name and contact information for a preferred lender.
When you contract with a buyer’s real estate agent, that agent agrees to:
- help you search for homes that meet your requirements and are in your price range
- schedule appointments you to tour the homes that interest you
- accompany you to home showings
- help you evaluate the home with an honest assessment of the house, the area in which it is located, and the actual value compared to the asking price
- place an offer on the home you want to buy
- negotiate with the seller’s agent to to settle on a fair price
- negotiate favorable terms for the buyer
- identify necessary improvements and negotiate concessions or see that the improvements are made as agreed
- counter offer if the seller rejects your first offer
- collect earnest money (generally delivered when the sales contract or purchase agreement is signed)
- place earnest money in an escrow account until closing (at that time the earnest money will be applied to the buyer’s down payment and/or closing costs)
- walk through due diligence making sure all required forms are completed, correct, and delivered on time
- arrange for necessary inspections and required repairs
- educate you about the process and ensure you know what you are buying, how much you are paying, and the amount of cash required to close
- work closely with the title company to guarantee a clear title free from:
- undisclosed liens against the property
- improper title transfers (and paperwork errors)
- bankruptcy filings
- boundary encroachments
- child support liens
- back taxes
The buyer’s agent has three fiduciary responsibilities. They are: loyalty, obedience, confidentiality.
Your buyer’s agent must negotiate in your best interest with loyalty to no other party involved in the transaction.
If you express the terms you require to a buyer’s agent, that representative must represent your wishes and requirements exactly as stated.
Your real estate transaction is private and secure. Your agent must not disclose the terms to anyone without your expressed, written permission.
Don’t call the seller’s agent to save your buyer’s agent time
If you find a home on your own and decide you want to pursue it, do not call the seller’s agent directly. It is the buyer’s representative’s responsibility to set appointments for you to see the properties you want to see. It is the responsibility of the buyer’s agent to call the seller’s agent, arrange a tour, ask any questions you have, and show the home to you.
What is dual agency?
In some cases a real estate agent will represent the buyer and the seller in the same transaction. That’s called dual agency. Utah requires the consent be in writing. You must be presented with, and sign, a disclosed dual agency. There are many circumstances under which this type of representation works. Make sure the seller and the agent are people you know and trust before entering into this type of agreement.
Call me, maybe!
I have more than 30 years experience helping Utah home buyers and sellers make their real estate dreams come true. If you have questions about the process, the cost, or the current market, I am here to answer them! Call or text 801-673-3333.