If you are in the market for a home, one of your first decisions should be whether to use a buyer’s agent. There are both pros and cons to using a buyer’s agent.
Among the advantages of using a buyer’s agent when purchasing a home are the following:
1. A buyer’s agent will be your advocate not the seller’s. Except in a sale-by-owner transaction, the seller will have an agent in her corner to protect her interests. A buyer’s agent, who is required to act in your best interests, can help to level the playing field, and she will help you through the home buying process from beginning to end.
2. Using a buyer’s agent could save you a great deal of time. While scouring the local real estate listings on the internet, driving around neighborhoods that appeal to you looking for “for sale” signs, and attending open houses can be informative and fun, it can also be time consuming. If you use a buyer’s agent, once she knows what kind of home you want and where you want to live, she can direct your attention to those properties most likely to satisfy your needs and alert you to new listings that fit your criteria.
3. A buyer’s agent can be invaluable if you are moving to a new city or town. Her knowledge of the market can steer you to the most appropriate neighborhoods for you and your family, and she can provide information on important issues like schools and property taxes that may affect your home choice. She also will have local contacts with professionals, such as home inspectors, loan officers, and lawyers, to help you through the home purchasing process.
4. A buyer’s agent can help you to avoid costly mistakes by pointing out a home’s potential problems (such as water stains on basement walls or a roof that may soon need replacing) as well as its assets and by seeing that the home is inspected by a qualified professional.
5. An experienced buyer’s agent can help you negotiate the best price for a home by providing information on the recent selling prices and appraised values of comparable homes and advising you as to current price trends in the market. If most homes are selling for well below their asking prices, for example, she can help you determine the best bid.
There also are potential disadvantages to using a buyer’s agent when buying a home, including the following.
1. If a buyer’s agent is paid a commission based on the purchase price of the home you buy, the agent may not have an incentive to help you negotiate the lowest price. Buyer’s agents would argue that the incentive to try to keep the price high is small, since, at a real estate commission rate of 3% (her share of a 6% commission, which is the norm on many transactions), she will only make an extra $30 for each incremental $1,000 in the selling price. Nevertheless, when deciding whether to use a buyer’s agent, this is a factor to consider.
2. If you are willing to do the legwork to locate your dream home on your own and confident in your knowledge of local real estate values, you might be able to negotiate a lower price on a home by dealing directly with the seller’s agent. If the seller’s agent represents both seller and buyer, she will get the entire commission on the home (often about 6%). Therefore, you might be able to get the seller’s agent to lower her commission rate somewhat and to convince the seller to accept a lower price if you agree to deal only with the seller’s agent. There is, of course, no guarantee that this strategy will work and you need to keep in mind that the seller’s agent’s first loyalty ought to be to the seller not you.
Chet Boddy, www.chetboddy.com, “Working with a Buyer’s Agent”
Lynn Truong, www.wisebread.com, The cost of a free ride – why not to use a buyer’s agent
Lee Ann Obringer, money.howstuffworks.com, HowStuffWorks “Buyer’s Agent”
Eric Bramlett, top7business.com, Top 7 Reasons to Use a Buyer’s Agent in a Real Estate Transaction