1. “Why Do I need a Buyer’s Agent?”
Buying a home is probably the most important purchase you’ll ever make. Do you want to go it alone? Until a few years ago, home-buyers had no choice. They decided upon a home to buy and negotiated the contract without representation. Traditionally, all residential real estate agents represented the home seller. That was true of the “listing agent” who put the home up for sale, as well as the agent who found the buyer. That agent – who helped the buyer find the right home – actually worked for the seller as a “sub-agent” of the listing agent. Under that traditional system, all agents were legally bound to represent the seller and the buyer had no representation.
2. “Now Buyers Have A Choice”
Buyers no longer need to represent themselves during the home search and purchase while all agents represent the seller. Smart home-buyers today can receive undivided confidential representation by choosing a “buyer’s agent.” In fact, 71% of home-buyers surveyed in a recent Gallup poll for the National Association of Realtors said they would use a buyer’s agent next time they purchased. At last, you don’t have to buy a home alone. Now you, like the seller, can have someone on your side looking after your best interests.
3. “How Can A Buyer’s Agent Help Me?”
A buyer’s agent usually owes duties like these to their home buyer:
These responsibilities are defined by provincial laws, the REALTORS® Code Of Ethics, general principles of agency and court decisions. That’s the legal definition. But what does a buyer’s agent actually do for the home buyer? Like other agents, a buyer’s agent will show the buyer available homes, point out the property’s features, provide financing information and submit the offer to purchase. But that’s not all.
As your representative, a buyer’s agent will share valuable and essential information with you:
- Whether the seller would accept a lower price;
- The sellers reason for selling and timetable;
- How long the home has been on the market;
- Previous offers and counteroffers for the property
- Strengths and weaknesses of the property.
Best of all, you can ask a buyer’s agent for advice and assistance in setting your offering price and structuring the other terms of your offer. What’s more, you’ll have peace of mind knowing an advocate is working on your behalf to help you buy at the best possible terms.
4. “Who Needs A Buyer’s Agent?”
If you want to make sure you buy smart, you need a buyer’s agent. If you’re a first-time buyer, if you’re relocating or unfamiliar with the local real estate market, if you’re buying for investment and want negotiating help, or if you need to purchase anonymously, you’ll be best served by a buyer’s agent who puts your interests first. Also, if the real estate professional helping you find a home is a relative, close friend, or business associate or you previously were the agent’s home-selling client, chances are you’d expect the agent to represent your interest and should establish a buyer agency relationship. Or, if you just want to get the best value in a property and an agent, you owe it to yourself to be the most knowledgeable buyer you can be.
5. “Can A Seller’s Agent Or Sub-Agent Help Me Buy?”
Without a buyer’s agent, you’re really on your own. Keep in mind, the seller’s agent or sub-agent is actually working for the seller and is the seller’s legal representative. Yes, a seller’s agent or sub-agent can offer buyer’s some services, including a diligent search to find the right home, an explanation of available financing, calculation of monthly payments, estimation of settlement costs, presentation of your offer to buy. What a seller’s agent cannot do is disclose information not in the best interest of the seller such as an opinion of the home’s real value to what price and terms the seller would accept. By law, the seller’s agent or sub-agent must negotiate on behalf of the seller and may not withhold from the seller information that could strengthen their bargaining position. That means you as a buyer, should be careful not to disclose to the seller’s agent or sub-agent any financial or personal information that could be used against you.
6. “What Will A Buyer’s Agent Cost Me?”
Perhaps the right question is, “What will it cost me if I don’t use a buyer’s agent?” Purchasing a home without representation is possibly the biggest financial mistake you can make. A buyer’s agent can guide you each step of the way to prevent costly errors. Failure to find out about defects in the property or the actual value of the property can, of course, be an expensive mistake. And failure to negotiate a contract that works for you can cost you plenty. With a buyer’s agent, you can ask for and receive advice and assistance in selecting the best property and determining an offering price.
7. “Who pays The Buyer’s Agent’s Fee?”
That depends. Surveys shows in most instances buyer’s agents are paid from the seller’s budgets; that is, buyer’s agents generally receive a share of the sales commission built into the list price. Many listings agreements between seller and seller’s agent indicate whether the sales commission will be split between the seller’s agent and a buyer’s agent. That’s because most sellers are prepared to pay a commission simply to get their home sold. They aren’t concerned whether it’s a sub-agent or a buyer’s agent that shares the commission. There are, however, other ways buyer’s agents may be paid. Be sure you understand from the start – before you commit to a relationship with a buyer’s agent – how the buyer’s agent will be paid. Remember, the question you really need to ask yourself is: “Can I afford to buy a home without a buyer’s agent?” For most home buyers today, the answer is “NO!”
8. “What Is Disclosed Dual Agency?”
Sometimes the home a buyer wants to purchase is listed by the same agent who is representing the buyer or by another agent from the buyer’s agent’s real estate company. In that case, the buyer’s agent’s ability to fully represent either the buyer or the seller may be limited. Depending upon provincial law, the resulting relationship may be classic “Disclosed Dual Agency” or a variation of it. If a dual agency relationship occurs, it must be properly disclosed to both buyer and seller who then give written informed consent to modify the agency relationship. In a classic dual agency situation, that means the agents must not disclose to either the buyer or the seller any information obtained within the confidentiality of the fiduciary relationship and cannot favour one side over the other. Each province may vary in what is specifically required in a dual agency relationship. In some provinces, a modified dual agency situation can exist where different sales associates of the same brokerage firm each fully represents exclusively the interest of their own client – the buyer or the seller – in an in-house buyer-agent transaction without being subject to the limitation imposed by classic dual agency. Be sure to ask how your buyer’s agent handles in-house listings.
9. The Bottom Line
If you want an agent to fully represent your best interest, if you want help evaluating a property, if you want someone to negotiate to get you the best price and the best terms, if you want to purchase a home in what’s becoming the most popular way to buy, you’ll want to enlist the aid of a buyer’s agent.