Someone On Your Side - The Benefits of Buyer Agency Imagine that you have been looking for a home for the past two months and you think you may have finally found the one. You turn to the real estate agent standing next to you and ask, "Do you think this is a good house?" "Is it worth what they're asking?" "How much should I offer them?" The agent smiles, looks you straight in the eye and says, " I think you should offer them $500 over the asking price and we should write the offer right now." Pop quiz: "Who is this agent representing-you or the seller?" If you said the seller, think again. How about a little more insight on the situation... Two months ago, you interviewed three agents and chose to work with this one because you sensed you could trust her. Since you've been working together, she has shown you twenty-two houses and used each one to teach you more about construction, market values, offer negotiations, and the home buying process. You laughed together at the outright disaster of a home that just needed "a little TLC." She talked you out of the first house you fell in love with, convincing you that it wasn't a good investment to back up to the freeway even if you could get more house for the money! And now, here you are at a house that feels just right and you know it because you have really studied the market together. Still think this agent is working for the seller? Or how about the well-known fact that the agent's really working for herself: everyone knows that the higher the sales price, the more commission for the agent, right? Well, what I didn't tell you is this: the house just went on the market. The sign was put in the yard last night and the information was entered into the Multiple Listing Service computer this morning. There have already been several showings to other buyers and the sellers have received two written offers on the home. Now, who is the agent really working for? Working with a Buyer's Agent may be a new concept to you unless you've lived in other parts of the country that have already embraced the idea. However, you might just find that it's the best relationship you've ever had-for buying real estate, that is. All it takes is a little understanding of the relationship involved and how it can benefit you. Many people have come to think of real estate agents as self-serving, manipulative salespeople. I've seen cases where this is more fact than fiction. However, there are many agents who have come to realize that the key to a successful career in real estate is customer satisfaction through good service and a trusting, respectful relationship. And if it's the bottom-line you're thinking of, consider this: it is much easier and more profitable to deal with referrals and repeat customers than having to start over every time with new clients. The agent has a lot to gain by looking out for your best interests. So then, what's in it for you? Why agree to work exclusively with just one agent and sign a lengthy, legally binding agency agreement? The most important benefit to working with a Buyer's Agent is the sense of trust you develop. If you have chosen your agent carefully, you will know that it is their sole purpose to serve your best interests. If a house has problems, they'll tell you. If the road is going to be widened, they'll tell you. If there are less than obvious factors that could affect the resale potential of the home, they'll tell you. Recently, I was in a home with clients that really seemed to fit their needs. They were beginning to talk about making an offer to the seller. I thought they might need a few minutes to talk together so I stepped outside. While they talked, I went to check out the crawl space. I was amazed at what I saw. There were trenches full of water and several of the concrete foundation piers were so deteriorated at the base from water that they looked like dental cavities. The seller's property disclosure statement made no mention of this situation. I went back into the house and my clients told me they wanted to make an offer on the house. If you were the agent, what would you do? As a Buyer's Agent, my choice was clear. We went together to look at the crawl space and they walked away from the property without a second thought. I'm sure my clients were discouraged, but in the end they found a much better house. Having a Buyer's Agent can be a real advantage in the Raleigh/Durham/Chapel Hill marketplace particularly. We are definitely in a "Seller's Market" here and it can be very challenging for buyers. Properties are appreciating quickly, making it difficult to define the value of a home. Supply is low and demand is high. Many homes in the Durham/Chapel Hill area (my area of expertise) sell for list price or more and they only last on the market a few short days. Often, by the time the ad is in the paper, the house is already sold. A Buyer's Agent will know exactly what you're looking for in a house and can notify you as soon as it is available, studying the new listings daily through the Multiple Listing Service. They can help you write and negotiate an offer so that you will beat out any competing bids on the property. A Buyer's Agent will also help you analyze recent comparable sales to be sure you're not buying an overpriced home. Strangely enough, even in this environment, if a house is overpriced it will not sell. Some homebuyers believe that they should not limit themselves to just one real estate agent. They believe that it is better to have several agents working "for" them- maybe they'd have a better chance of finding that dream house with so many agents out there looking. There are two problems with this line of thinking. First of all, put yourself in the shoes of the agent for just a moment. If you were going on two job interviews and both jobs turned out to be equally desirable, which one would you choose? What if one employer guaranteed you that if you worked hard and successfully fulfilled your job duties that you would get paid? The other employer told you that if you worked hard and successfully fulfilled your job duties...well, you might get paid or you might not. Now which job would you choose? Realtors are no different than the rest of the world. We would like to know that if we work hard to do a good job for you, the client, in the end we will get paid for our services. If you choose to work with several agents, you are being like the boss who may or may not pay for the work that's been done. If I know that a buyer is working with several agents, I won't do much work for them because I have no guarantee that my time will ever be compensated. Likewise, I feel that it is unfair to my other clients who have signed up with me exclusively. They deserve my undivided attention because they are counting on me to find them a house! The second problem (and the more important one) that I see in working with multiple agents at the same time is the lack of relationship. It is hard to develop that sense of trust and confidence that comes from working together so closely when you are working with multiple agents. When you find the right house and have many tough decisions to make about the offer, the repairs, the loan, etc., you may not feel sure about the information you are receiving because you hardly know this agent at all. Not a comfortable position to be in when you are making such a large investment. So you say you're convinced-you'll go with a Buyer's Agent. Now what? Who pays for it? What documents must you sign? In our marketplace, most sellers are agreeing to compensate a buyer's agent for their work. If they have listed their property with a realty company for a six percent commission (for example), the sellers have probably agreed to let three percent of that commission be paid to the buyer's agent for representing the buyer. The key is this: when you are interviewing Realtors to be your Buyer's Agent (something I highly recommend) have them go through the agreement document with you. There is a standard form known as the Exclusive Buyer Agency Agreement that sets out most of the provisions, but it does have a number of blanks that can be filled in by the agent and the buyer. How these are filled in can make a huge difference. For example, if the Buyer Agent's commission is agreed to be three percent of the purchase price but the seller is only willing to pay 2.5 percent, who pays the difference? It might be you. This is something you should discuss with the agent before you sign the agreement. You should also talk about how each agent handles working with For Sale By Owner properties. Most importantly, you should find an agent who you feel is trustworthy and who is working in real estate full-time as a career. Then sit down and work out an agreement between you that is mutually beneficial and does not expose either of you to undue financial risk. Most of the time, I am able to work out agreements with my buyers where they don't have to pay any extra fees above and beyond the purchase price of the home and yet they get the full services of a professional Realtor serving as their Buyer's Agent. You should expect nothing less-you deserve it!