I’m looking to buy a house now, and a few of the one’s I’ve seen are being sold by the owners. After a few discussions with friends, I’m considering the idea of getting a ‘buyer’s agent’, a realtor who’ll step in as a negotiator on my behalf during the proceedings.
So, here’s a few questions in that arena.
What are the primary functions of a buyer’s agent-do they simply handle the negotiations and walk away from the sale when it’s completed, or do they actually walk through the house, noting any problem areas?
One approach a friend mentioned was getting a realtor to simply buy the house I’m interested in and having the realtor assume the responsibilty for remedying any problems found in the house. I have to admit, I’ve never heard of this before, so I’m a little skeptical about the whole thing. In addition, I’d think the price would come out higher in the end-even if the realtor were able to get a better deal, they’d almost certainly be able to pad the amount a bit after all the repairs and inspections. Anyone ever heard/done this?
Do buyer’s agents usually set up inspections and walkthroughs on behalf of their clients? I’m almost certain they do, but another affirmation never hurts.
If anyone’s used a buyer’s agent, I’d appreciate some anecdotes/suggestions on finding/using one, as well as ways to let one know the ballpark area you’re able to spend in without letting them know your maximum expenditure. Maybe I’m untrusting, but I have a feeling that if I say “I can spend $85,000” then I will surely spend $85,000.
Thanks for the help. Mods, sorry if this has too much IMHO in it, but there are some factual questions and I thought the tone of it was more suited to GQ.
Well, I just bought my first house, and both the seller and us had realtors, so I’ll answer based on this experience and what I’ve determined is usual practice in the industry.
For the negotiation part, our realtor consulted with us on strategy, got the paperwork together, and communicated with the seller’s agent. After we had settled on the price, our realtor made sure that we got an inspector, but our realtor did not inspect the place himself (and we signed something saying that we have not relied on any representation by the realtor about the condition of the place or anything like that). Our realtor wouldn’t even recommend an inspector to us because of the liability involved. After the inspection and before the closing, our realtor just made sure we were doing everything we need to do to close (like getting insurance, getting financing in order, etc.).
First, a realtor is just an agent that represents people who want to buy or sell real estate, so if you want someone to buy the house from the seller, fix it, then sell it to you, you want someone besides a realtor. Second, if you were to do this, the price would of course come out a lot higher than you simply buying the house yourself and getting any repairs done because the realtor would want some compensation for doing it. I don’t see any possible benefit of doing it this way, and it will be way more expensive.
Well, I addressed this in (1) a little bit. The realtor will usually be present during the inspection because someone must open up the house (the realtor has the little doohickey that opens up the keybox), and the inspector usually likes them to be there, but the realtor won’t “set it up” by calling the inspector and setting a time or anything. Another reasont your realtor will be there during the inspection is so that you can decide on how much to ask the sellers for based on the results of the inspection.
You raise a good point: a buyer’s agent only makes money if and when you buy a place, and they make a percentage (usually 3%) of what you spend, so they do have an incentive for you to buy right now and spend as much as you can. That being said, you’ll know you have a turd of an agent if he’s only showing you the most expensive places. What we did was this: we did our own research on houses (using www.har.com; try www.realtor.com, or they may be something more specific to your area), and only got an agent involved when we knew exactly which kind of house in exactly which area of which neighborhood we wanted. Our agent then told us about a place before it was listed on the site, so we got in before anyone else did and made an offer.
Also, if you’re worried about the agent only showing you places at your upper limit, tell him you can’t spend any more than some percentage less than your upper limit.
My husband and I bought our house using a buyer’s agent, and he was great. Unlike a “traditional” realtor, who always works for the seller (even if he’s the one taking you around to properties listed by other companies), the buyer’s agent has his fiduciary responsibilities to you. In our case, this meant that he would point out everything that was wrong with a house as soon as we walked into it, instead of trying to sell it to us. Ours had previously worked as an assessor, so he was really good at spotting what had been repaired, was old, etc. He helped us find a good inspector, and worked hard on helping us negotiate the price down. (Our guy’s philosophy is that he’d rather help us get the price down as low as possible, even if he loses a few hundred bucks on his commission, and get our repeat business in a few years. If we had been uncomfortable with that, I think he’s willing to work at a fixed rate, but it’s harder to build that into the selling price and therefore into the mortgage).
You can get information about buyer’s agents and what they do at http://www.naeba.org/ .
It now seems my comments would have been more appropriate here. I will reinforce that I had no problems with my buyers’ agent. I’m just trying to be cheap and pinch every penny. I would, of course, hire an inspector (like I did on my current house).
I guess I’m soliciting more of an opinion than a fact, or maybe even a poll, but I’ll risk it anyway because I’m sure there’s some fact in the answer: would my strategy of not using a buyers’ agent net any value for me in the long run?
Allowing someone whose commission is based on the selling price do your negotiation for you has always seemed weird to me. I have an idea which sounds to me like it works out in favor of both the buyer and the buyer’s agent, and it provides some real incentive for them to negotiate well. First, you decide on a starting price for the house. This could either be the initial asking price of the house, or the amount we think we’ll be able to negotiate down to. Let’s say this is $100,000. You tell the buyer’s agent: You get 3% of this $100k, plus 3% of any negotiated discount. That way a good negotiation increases their commission by x rather than decreasing it by x. Heck, I’d be willing to say they get 10% of any negotiated discount in order to really light a fire under them. Seems like it’s in my best interest.
So are the terms of the commission generally flexible, or is the idea of a fixed percentage commission set in stone? Could I (in practice) actually find a buyer’s agent who’s willing to sign up for this sort of deal, or would they all say, “sorry, that’s not how it’s done”?
As a realtor, I feel I should post my two cents and add to what else had been posted here. Firstly, don’t confuse a real estate salesman with a car salesman. When you are buying a property and you hire a buyers agent, he is working for you and you alone (unless he practices dual agency and is represents the seller of the home you are negotialing on.) Honestly though, a buyers agent isn’t going to push you above your price limit. As mentioned earlier in the post, the buyers agent gets a percentage of the comission ranging usually from 2-3%, rememer that the agent then has to split this comission with his company. Sometimes up to 50%. You can see that there isn’t much incentive for the agent to sell you something $10-15k over what you intended to spend. Anyways, when you go to the realtor tell him what price range you want to look in, and they should only show you that.
Some of the advanteges of using a buyers agent are:
wider selection of homes
can give you a better idea of market value
help you in determining an offer amount
handles and organizes all of the paperwork
lets you do what you do, and takes care of the rest
Free!!! (the seller pays the agents comission, not you the buyer)
If you are seriously interested in buying a house that your agent is also the seller’s agent, you should look into aquiring the services of another agent, if only for the negotiations on that house. Your buyer’s agent has a legal obligation to act in your best interest, and it’s impossible for them to act in your best interest AND the seller’s best interest.
This isn’t absolutely true. You can bet that the seller of the house figured in the extra 6% the realtors get when they priced their house, so although you don’t write your agent a check, you still pay for it. Quite often, if you don’t have an agent as a buyer, you can even get the seller to drop the price by 3%.
That being said, if you’re a first-time buyer or aren’t familiar with the buying process or just want someone to do a lot of the leg-work, a buyer’s agent is great.
Ok, I get that the inherent disincentive to reduce the price of the house is extremely small – if an unscrupulous buyer’s agent negotiates $5000 too high, he’s screwing his client in order to put something on the order of $75 in his pocket. But I still think he should have a direct incentive to negotiate the price down, don’t you? And hey, $75 is $75. Why should he be penalized at all for a job well done, rather than rewarded?
Okay, so I got the email back from the link above.
And, since God hates me, there’s no one listed as a buyer’s agent in my area. So my question now is, can any realtor be enlisted as a buyer’s agent for me?
Flypsyde, remember that Realtor(R) is a registered trademark. You should just be able to walk into any agency and tell the receptionist that you’re looking for a buyers’ agent.
When we bought our house, we went straight through the seller’s agent. Yeah the guy wasn’t on our side, but he had an incentive to convince his client to favor our offer over others, since he stood to make a double commission.
When you have your own agent, you still can’t necessarily trust her, since her incentive is to convince you to buy a house NOW. Most of the agents we worked with tried to minimize the problems with the house and convince us to BID.
Flypsyde , it is true, you can go into any Real Estate office, and someone will be able to help you (i.e. Remax, Prudential, Century 21). Most agents are strictly buyer or seller agents, they do both.
Just to comment on the dual agency (same agent for both the buyer and seller) thing again, I highly recommend not doing this! Sure it may seem easier, and I am sure it has worked many of times, but the agent can fairly represent either side in the transaction. Basically you are without any assistance. Do yourself a favor and get your own agent who can provide you with the assistance that you need.
Flypsyde, if you are still having trouble finding an agent, let me know, and I can put you intouch with an agent in your area!
mjcocat, just out of curiosity, would you then be entitled to any type of referral fee from the agent you recommend (assuming s/he closes a deal). I’ve heard about referally fees in the real estate business, and despite what I said above I was going to ask my maybe-soon-to-be sellers’ agent (guy who was my buyers’ agent for the same house) to refer me to someone closer to the area we’re considering (that’s if we decide to use a buyers’ agent – I’m being convinced, and realtor.comdoesn’t have all the same details like the paper MLS’s I’ve seen). Would he just name someone – anyone – in the same chain’s office out there, or would a referral, if it exists, motivate him to give me a name of someone he know’s does a good job, even if it were a different brand of agency?
If your current agent was to refer you to another agent in a different location, he would be entitled to a small piece of the comission assuming you buy something. Many office keep referrals within the same company, but as realtors are self employed, they can refer to whom ever the feel comfortable referring too. Wheter it is within the same company or not. Sometimes they may not even know the other agent, but atleast they have a means of contacting them and arranging it for you.
You pointed out the difference between Realtor.com, and the MLS information - it is true that the MLS listing sheets have much more valuable inforamtion than Realtor.com does.
You should just be able to walk into any agency and tell the receptionist that you’re looking for a buyers’ agent.