Should I Hire a Buyer’s Agent?

You can easily find 25 houses for sale on your phone without the help of a real estate agent.  So you might be asking yourself: Should I hire a buyer's agent?  If I can find a house that I like without the help of an agent, why bother?  Well, there is much more to the process than you might initially think.

Almost every single home that you see listed for sale on sites like Zillow or Realtor.com are listed with the help of a real estate agent.  What this means is that the seller of the home has someone representing and protecting their best interest...and it would be wise for you to do same!  Even if you think that you can "do it yourself," and "I don't need an agent to help me," it really is in your best interest to hire a buyer's agent.

Below are the Top 10 Reasons to Hire a Buyer's Agent When Buying a House.

 

1.) Your Buyer's Agent Will Have Fiduciary Duties

When you hire a buyer's agent, they have fiduciary responsibilities to you.  What this means is they are required by law to act in a way that benefits your best interest, even over their own best interest.  Think about that for a second.  You have an industry professional that will be looking out for your best interest, during the entire process, even over their own best interest.  This is a major advantage to you as a buyer.

Over 94% of homes are listed for sale with the help of a real estate agent.  So, this means that the sellers of 94% of the houses you find online will have a professional representing their best interest in a purchase transaction.  Why is this important?  Well, when you find a house on Zillow and click on the "contact agent" button, you are being directed to the listing agent...who is representing the seller's best interest.  If this agent helps you submit an offer on the home, don't you think it would be in the seller's best interest to get you to pay more for the home?

"Well that doesn't seem very fair!"  You're right, it is not very fair.  But what is fair, would be hiring your own agent to represent you in the transaction.  That way, you never have to question the motives of the person that is "helping you" or giving you "advice" during the transaction.

Okay, all that seems great, but "I have a tight budget and cannot afford to hire an agent to represent me!"  Well don't fret!  Check out the 2nd reason you should hire a buyer's agent.

2.) It's Free to Hire a Buyer's Agent

"Wait, what?!  You're telling me that I can have a professional be legally required to represent my best interest and I don't have to pay them?  That doesn't make sense.  I don't believe you."

Yes, you read that correctly.  When you hire a buyer's agent, there are very few instances where you would be required to pay them.  Let me explain.

When a seller hires a real estate agent to help them market and sell their home, they agree to pay the real estate agent a percentage of the sales price for representing them in the transaction.  In turn, when a real estate agent list the home for sale on a multiple listing service, they are required to offer compensation to any agent representing a buyer who purchases the home.

So when you purchase a home that is listed by a real estate agent, someone is going to get a commission on that sale.  It is either going to be the listing agent (representing the seller), or your buyer's agent (representing you).  One is required by law to represent the seller's best interest, while the other is required by law to represent your best interest.  I don't know about you, but if someone in the transaction is going to get paid either way for facilitating a purchase, I would much rather know that it is a professional representing my best interest.

One circumstance that could lead to you potentially having to pay an agent representing you would be in a for sale by owner (FSBO) purchase.  In the event that you signed an agreement with an agent to represent you, and they found you the perfect home that was listed as FSBO, you would be required to pay your agent if the seller did not agree to do so.  It is very rare that a seller refuses to compensate an agent for bringing them a buyer who agrees to purchase their home.  But, since it is a possibility, it is something that you should be aware of when looking at a FSBO.  Of course, you would essentially negotiate your agent's fee off the purchase price, and it would be paid out of the transaction, not out of your pocket.

3.) A Buyer's Agent Will Be Your Sounding Board and Advisor

You may think that you have found the perfect home online and just need to make a formal offer.  That very well might be the case, but what if I told you that less than 10% of my clients actually bought the home they "loved" and found online prior to hiring me as their agent?  That might be surprising, but looking at a house online, and seeing it in person, are two totally different experiences.  Not to mention, if you have never bought a house before, you may not know exactly what you are looking for in a home.

An agent should be able to sit down with you and help you really think through the entire process.  They can help you determine: what your non-negotiables are, where you might can make trade-offs in-order to stay within your budget, what you can actually afford, what type of loan is best for you, and many other aspects of the home buying process.

Likewise, they will be able to help you understand all of the terms and questions that will be thrown your way during the process.  An agent's advice can be crucial to helping you make the best decision for any unexpected items that pop up during the transaction.  After all, the decisions you make when buying a home can end up costing, or saving you, thousands of dollars.  Trying to make these decisions on your own can not only be intimidating, it can be costly.

Your agent will also be able to speak from an objective standpoint during the process.  Buying a home is an emotional experience, but it should be a rational decision.  Your agent is there to ensure that your emotions don't get in the way and lead to a decision that you may later regret.

4.) Your Agent is a Local Market Expert

Real estate is hyper-local, meaning that it differs from town to town and often from neighborhood to neighborhood.  Having someone who is an expert in the area that you are looking for a home, can be vital to you making the right purchase.  When you find a home that you like, chances are you may not know if the price is standard for that area, or what your alternative options are.

A buyer's agent should be able to take your purchase criteria (after they help you determine the criteria, see #3) and direct you toward homes that fit your needs.  These homes might be in an area that you had not previously considered.  50% of my clients end up purchasing a home that was outside off their initial search area, but one that better suits their needs.  Without the help of an experienced buyer's agent, they never would have considered the home they ended up purchasing.

Local market knowledge also extends past the home itself.  Chances are that you may not know everything about the area you are looking, but your agent should.  Maybe you wouldn't consider purchasing that home you found on Zillow after you find out that they are building a concert venue across the street.  A qualified agent should be able to help you identify if a home you are looking at is in a similar situation.

5.) They Know What to Look For in a Home and Coordinate Showings

Sitting around all day at work and scrolling through home listings doesn't make you an expert when it comes to looking at homes.  Unless you are also going and viewing all of those homes in person, you probably do not know all of the things to look for when you tour a home.  An experienced buyer's agent should be able to help you identify any red-flags, or items that you may not realize until you are living in a home.

What's even better is that you agent is actually required to help you identify anything that might influence your decision to purchase a home (refer back to #1).  You may look over little things like a spot on the ceiling, or a pipe sticking out of the ground, but they could be an indicator of a larger issue with the home (a leaking roof or underground tank).  An agent can you help you identify these things before you risk any of your hard earned money.

Recently, I was showing a couple a house that they absolutely loved, until I informed them that the home was right in the middle of a flood zone.  After discovering this information, they decided to not put an offer on the home and ended up finding another home they loved even more.  Incidentally, the home in the flood plain has been on the market for over two years, in an area where the average home is listed for less that 35 days.

Not only can they help you identify potential issues, and different perspectives when you are touring a home, a buyer's agent can also help you schedule the showings.  This can take a lot of headache out of trying to coordinate seeing a home; competing with other buyers and the listing agent/seller's time.

6.) They Know How to Prepare Legal Contracts

Unless you are a lawyer (and even if you are), you probably aren't familiar with legal contracts.  Especially, those related to the sell of real estate.  Since the legal contract is- well- the law, you need to make sure that you have a good understanding of what you are signing.  Having a fiduciary that is an expert at completing real estate contracts will be a major plus to charting the waters yourself.

There are many parts to a real estate contract and your agent will make sure they are all completed accurately, and that you understand what you are signing.  If anything comes up during the course of your transaction, and the legal documents weren't completed correctly, you will wish you would have hired an agent!  The smallest thing can cost you lots of unwanted headaches, time, and money.

For instance, not accurately describing the refrigerator that is to be included with the purchase of the house might leave you a yard sale find in place of that brand new stainless steel fridge you thought you were getting!  There are many parts to a contract that you will want an expert on your side to help you understand.

7.) A Buyer's Agent Can Help You Evaluate and Secure Financing

The world of real estate financing can be extra ordinarily tricky.  You will hear all kinds of terms thrown out at you, that you may or may not have a clue what they mean.  A 30-year fixed, 5/1 ARM, 10% down, PMI, conventional, FHA, debt-to-income ratio, and the list goes on and on.  Every lender that you talk to is going to tell you that they have the best deal in town.  But how do you know?

Your agent can help you shift through all the lingo, and all of the different quotes, to help you find what is right for you.  There is not a one size fits all approach, and there are many different options that all have different positive and negative features.  Chances are that your agent may advise you about a philosophy that had never even crossed your mind.

Even if you saw a commercial about a space ship and that space ship gives you a mortgage (I think that's how it went?), that doesn't mean you have the best quote for your situation.  Recently, I had a client who came to me pre-approved through a lender that told them they had the best rate available.  I helped them shop around to find a lender that not only beat their lender's rate by .5%, but one that charged no lender fees!  So in addition to saving $70/month on their mortgage, they also saved over $2,000 at closing!

8.) You Will Have a Negotiator

The most common question that buyers ask after they find the perfect home always relates to how much they should offer.  I am still yet to find someone who likes spending extra money.  That is exactly what buyers are trying to avoid when they present an offer to purchase a home.  Without a professional negotiating on your behalf, you may very well over pay for your home...or worse yet, send in an offer that gets passed up on the house you LOVE.

Knowing how much to offer is extremely important when purchasing a home.  The amount of your initial offer may determine if the seller even engages in a negotiation with you, or just rejects your offer altogether.  You need to make sure that you have the right leverage when you are negotiating to secure your future home for the right price.  Hiring a market expert will help lead you toward a fair value for the property and an agent skilled in negotiating will keep the leverage on your side.  This will save you money and lot of heartache.

Negotiating a house isn't always about how much money you are paying for a house.  It is about presenting terms that are favorable enough to the seller to get them to sell their home.  A skilled agent can help you determine what terms might be more favorable for the seller, and not require you to give up anything extra.  I am currently working with some clients who were in a multiple offer situation on a home they just "HAD TO HAVE."  I was able to determine that the seller found a shorter closing time-frame to be more favorable.  After some research, we found a lender that could close on the home in 21 days (much shorter than the standard 30-45 days).  The offer we presented was accepted, even though it was for the same amount of money as one of the other offers, all because the terms were more favorable for the seller.

9.) They Are Process Experts

Buying a home can be a very intimating process if you are not a real estate professional.  There are so many different items that need to occur during your home search, and after you are under contract, that it can make your head spin.  A buyer's agent can make sure that you do not miss anything along the way.

Often buyers are unsure what is supposed to happen, and when.  When does the home inspection occur?  What about the appraisal?  Even if you have a grasp on those items, you might not know what to do if something unexpected comes up.  For instance, what do you do with the results of a home inspection?  A buyer's agent will walk you through and advise you throughout the entire process.

Recently, I was representing some clients on a purchase where they had an issue with the appraisal.  The initial appraisal had come back slightly under purchase price.  After some back and forth, I was able to negotiate with the home seller to lower the purchase price to an amount that was more beneficial to my clients.  An appraisal coming back below purchase price is not unheard of (especially in developing areas).  What wasn't common was when the appraiser came back a week later and actually lowered the appraised value of the home!

My clients had already maxed out the amount of extra money they could bring to the closing table, and the seller had already come down as low as they could on this particular property.  The choice of the appraiser to change the appraisal value was going to completely blow apart this deal.  With my clients emotionally distraught, thinking they were going to lose the home, I did the only thing that I could do to save the home for them.  I completed a full comparative market analysis and rebuttal to the appraiser's decision to reduce the initial appraised value.  I used market trends and comparative properties to justify the initial appraised value.  After a review of my rebuttal, the appraiser agreed that I was correct, and the initial appraised value was justified.

In the end, my clients got the home, and I gained further real estate insight.  When the unexpected comes up, it is important to have the right expert in your corner!

10.) Your Transaction Will Stay on Schedule

When you buy a piece of real estate, there are many reasons that the transaction might be delayed.  Often, delays can be both frustrating and costly.  By hiring a buyer's agent, you can greatly improve the chances that your transaction closes on time.

A buyer's agent will ensure that all important contract dates are met.  They will also make sure that you take care of all the things you are responsible for doing when you purchase a home.  The last thing you want is for the lender to inform you the day before closing that you cannot close on time because you're home owners insurance policy isn't active.  "What do you mean my home owners insurance isn't active?  I didn't even know that I was supposed to set that up!"  A good agent would have told you well in advance that you needed to take care of this piece.

By understanding the process, knowing the dates, being organized, and following up with all parties involved, a buyer's agent will give you the best chance to ensure your transaction stays on schedule.

Final Thoughts

The reasons listed above are just ten, of many, reasons why you should hire a buyer's agent when you are looking to purchase a home.  There are almost zero, to no good reasons not to hire an agent.  So, once you've made the decision to buy a house, the decision to hire an agent should come easy.  Now that you know why you should hire an agent, it is important that you choose the right agent!

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