Do you need a buyer's agent?
More house-hunters are rejecting the services of so-called buyer's agents. Is that smart?
After years of trepidation, homebuyers are finally beginning to wade back into the housing market. But, as they do, many are making the surprising choice to hunt alone, rejecting the assistance of what's known in real estate as a buyer's agent.
For years, house-hunters have had the option to work with a real-estate agent who shows them properties and may ultimately negotiate the price as a counterbalance to the agent who represents the seller. But, now, fewer buyers are taking that option.
Of the buyers who purchased a property through a real-estate agent, just 60% had buyer representation, according to a November 2011 report by the National Association of Realtors. That's down from 62% in 2009 and 64% in 2006, before the housing bust.
Many experts say this is a bad move — worse, for example, than trying to sell a house without an agent. For one thing, in most cases, a buyer doesn't pay an agent; the buyer's agent splits the commission with the seller's agent, so the services are essentially free to the buyer. Also, a buyer's agent can usually access historical price data for home sales in the area, which means the agent can recommend a bidding strategy that targets comparable properties that sold for less, rather than the midrange. John Vogel, adjunct professor of real estate at the Tuck School of Business at Dartmouth College, calls going through this process alone "a mistake." (Bing: How low is too low for a bid on a home?)
There are lots of reasons buyers may choose to represent themselves. The real-estate listings and detailed information that were once available only to real-estate agents — median sale price in a neighborhood, the number of days a home has been on the market and how many price cuts it has endured — are now online. And because most buyer's agents don't get paid until a home is purchased, they have a strong incentive to see you buy something quickly, Vogel says. They may not tell a client to wait for prices to fall further.
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On the other hand, some house-hunters may think they are working with a buyer's agent when, in reality, they're actually dealing with a seller's agent. Many buyers contact the agent listed with the property or walk into an open house thinking the agent is working in their favor, says Paul Howard, a buyer's-only broker licensed in New Jersey and Pennsylvania. Or some buyers may start working with an agent who has their interests in mind, but the house they want to buy is listed with the real-estate company the agent works for; at that point, buyers should have the option to find an agent not tied to the property.
Some seller's agents may also discourage prospective buyers at the beginning of their search from seeking out a buyer's agent. Commissions are already lower because of declining home values, and some would prefer not to split them, says Ginger Wilcox, head of training for buyer's and seller's agents at Trulia.com. "Agents are fighting for their commissions."
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Still, in many cases, buyers may be at an advantage when they work with a buyer's agent, at least compared with relying on a seller's agent for advice or guidance. A seller's agent is contractually obligated to help make the sale happen in the seller's favor, often as close to the asking price as possible. Buyer's agents can also suggest home inspectors and financing companies they've worked with before, says David Kent, president of the National Buyer's Agent Association; they're not supposed to make money off the referrals.
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When searching for a buyer's agent, experts recommend putting a few through their paces first. The most helpful agents won't just rely on what's listed online, Vogel says. Instead, they might drive around a neighborhood looking for signs of properties that are for sale by owners or mail letters to existing homeowners alerting them to a buyer who's interested in a similar property to theirs. And, by the time buyers enter a contract, their agent should be there to look for red flags.
Some may say that the seller will prefer to work with a buyer agent for professional reasons but hey, if the seller is already comfortable with seller his or her home without an agent, I don't see this as a valid argument .
One of the best ways to find a great buyer's agent is to have them compete for your business. Websites such as UpNest.com allow you to request multiple proposals from local full-service agents. It simplifies the process of finding a buyer's agent, and brings on competition that spurs savings, in the form of a buyer rebate. And, your information remains private until you pick an agent to interview.
I know some of you are reading this and thinking, that's why i'll ask the listing agent for 2% instead. Problem is, again he can FIND A BUYER WHO ISN'T SO ANNOYING and doesn't ask for anything. Remember, this is a seller's market, there are hardly any properties out there and buyers are fighting over the few. Buyers who don't ask for anything and are dying for the property are a dime a dozen.
If this were a buyers market then you might be able to get away with it. But in that case I am sure the listing agent would prefer to pay the 3% to the selling agent and lose out on that 1% difference just to avoid the hassle of working with a pain in the axx annoying buyer.
We live in a new time folks, and the average Joe (or average family) can do the same things a realtor used to do for you. There may have been a time when realtors helped and were even somewhat a relief to homebuyers, but here in the present realtors like many other things are long outdated! So I say let's do some updating and get rid of the things we don't need like realtors and many other things.
The main problem with ALL of them is that they work on commission. While the sellers agent may partly have the sellers interest in mind, they all really have their OWN interests in mind and want to sell properties for the highest dollar possible.
As for doing your own "homework", nearly all the online websites I've found, show you everything THEY want to show you and don't give you enough sort criteria to sift out everything you DON'T want to see.
As in 2+ bedrooms. What if all I want are 2 bedrooms. I have to look at 100 3 & 4 bedroom homes to find two with only 2 bedrooms. And NONE will sort out 2-story versus 1-story.
It's all a game folks!
Too many buyers look up information on the web and then assume it's accurate.
Do the buyers really know the market, neighborhood and THE CONTRACT?
Go to open houses just to interview agents to work for you as a buyers agent. Ask for referances and /or past clients.
Yes, I'm a Realtor and I love my job !!!
I've had both good and bad buyers agents and now know how to distinguish between them. While a buyer may be able to get a lower price with a provision that the sellers agent take a reduced commission when not using a buyers agent that may not always be the best deal that could have been negotiated. A seasoned and honest buyers agent is a big help. A more significant issue is the complexity of realestate laws (regardless of how they came into being) and that is where a good buyers agent becomes a major advantage - AND if they fail to comply with the law the CAN be held liable though there is a difference between non-compliance and not using the laws to the buyers best advantage.
Be very careful and do your homework if you choose to proceed without professional representation. Perform due diligence on any prospective agent if you choose to go with a buyers agent. There can be serious money at stake in both the transaction and the post-transaction cost from a bad deal and perhaps health and safety issues.