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Retaining Services of a Buyer's Agent Usually a Good Idea
By John Adams, for the Atlanta Journal & Constitution
DATE: April 22, 2001
Q: How and where do I find a Buyer's Agent? Can this be any agent that I ask to represent me in that capacity?
A: Any licensed real estate salesperson can, with the permission of their broker, offer you the service of buyer representation. I mention the broker because, under Georgia law, the agent's broker must decide which services and forms of representation he or she wishes to offer the public.
Most brokers offer both buyer representation and seller representation, often called buyer or seller "agency." Depending on who asks first, the agent agrees to represent that particular party in their effort to buy or sell a house.
In your case, you will be asked to sign a Buyer Agency Agreement which outlines the responsibilities of the parties. You agree to work exclusively with that particular agent in your search for a home, at least for a specific time period. The agreement usually lasts 90 days.
In return, the agent agrees to provide professional assistance in your home search. More important, the agent promises to promote and protect your best interests in the transaction, to the exclusion of other parties.
By hiring a buyer's agent, you have obtained a representative who is "on your side." This agent has fiduciary responsibilities to you, and must work to help you get the best deal possible.
In the case of a seller seeking representation, he would be asked to sign an Exclusive Right to Sell Listing Agreement. That contract authorizes the agent to use his best efforts to market and sell the owner's property at the highest price possible.
As you can see, there is an inherent conflict of interest between the buyer and the seller. And if you buy a house without some form of representation, you run the risk of missing out on a negotiating strategy or inside information that might have helped your position.
And because the buyer's agent is compensated out of the commission which will be paid to the seller's agent, there is effectively no cost to you for buyer representation. Consequently, I think it just makes sense to find a real estate professional that you can hire to work on your behalf.
Buyers often make the mistake of thinking they can lower the final price by working directly with the listing agent. Their idea is that one agent should cost less than two, so they should get the benefit of a lowered cost to the seller. But in the vast majority of cases, the seller pays the same commission no matter how many agents are involved.
Also, you should be aware that conflicts can develop when the same agent (or even the same brokerage firm) represents both a seller and a buyer in a transaction. This can happen easily if you hire the hottest agent in the neighborhood to be your buyer's agent, then decide to buy one of her listings. While brokers have procedures to handle such awkward situations, they rarely provide true satisfaction to all parties.
If such possible conflicts are of concern to you, you might want to consider retaining the services of an agent who offers "exclusive" buyer representation. While such agents are the exception, these professionals have decided to work only with buyers and never with sellers. Clearly, these agents have focused their efforts, and it may be worthwhile to consider such a firm.
As a last recommendation, I still think it's a good idea to have any offer you might make reviewed by your attorney. Even though you have decided to hire a buyer's agent to assist you, it's still smart to seek legal advice only from an attorney experienced in real estate matters.
Buyer's agents increasingly used by those seeking homes
By Gene Tharpe, for the Atlanta Journal & Constitution
DATE: February 18, 2001
When demand is growing for a service, a supply is soon forthcoming. That's what's happening with buyer's agents, according to the National Association of Realtors.
In 1999, 46 percent of home buyers nationwide hired a buyer's agent to represent them in buying a home - a trend that's expected to continue, the NAR said.
That means it's no coincidence that membership of real estate agents in the Real Estate Buyer's Council, an affiliate of NAR, is rapidly increasing.
As of Jan. 1, 2001, the council had more than 36,000 members, said Janet Branton, the council's managing director.
"Our growth in membership has been outstanding in the last year," said Branton. "We have been seeing an average of 10 percent increases in every quarter."
Most members have received the council's Accredited Buyer Representative or Accredited Buyer Representative Manager designations.
Traditionally, in the home-buying process, real estate agents represent the interests of the seller, not the buyer.
"I found it an unnatural relationship driving buyers around but representing the interest of the sellers," said Curtis Hall, a real estate agent who is the council's senior instructor for buyer's agents.
A substantial number of home buyers who hire buyer's agents are first-time buyers who are not familiar with the home-buying process, which can be intimidating, and relocated buyers who are not familiar with the better areas in their new city to buy homes.
Among the services that buyer's agents provide are:
- Evaluate needs and wants of buyers and locate appropriate houses.
- Assist buyers in determining what they can afford to buy and show houses in that range.
- Help buyers identify problems with houses they may want to buy.
- Advise the buyer on an appropriate offer and present the offer to the seller's agent and seller.
- Negotiate on behalf of the buyer to work out a purchase deal.
- Ensure that the buyer understands legal documents involved.
- Assist the buyer in securing the best financing to close the purchase.
- Advise the buyer on selecting other professionals, such as an attorney, if needed.
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