A buyer’s agent is a real estate agent or broker who represents the buyer’s fiduciary interests in a real estate transaction. Buyer’s agents search, evaluate, and negotiate the purchase of property on behalf of a home buyer, guiding and assisting them through every step of the home-buying process.
What Is the Role of a Buyer’s Agent in a Real Estate Transaction?
Here are the three primary roles and responsibilities of buyer’s agents perform for home buyers:
1. Help Buyers Find the Right Property
This process begins by uncovering the buyer’s needs and wants, including what they can afford. They then research homes in the area meeting this criteria, and sort through active listings to make suggestions after cross-referencing the buyer’s needs. To help the buyer decide which home is right for them, they schedule appointments to tour homes that fit the bill, explaining the pros and cons of various properties and neighborhoods.
2. Submit and Negotiate Offers on the Buyer’s Behalf
Once the buyer settles on a property they want to purchase, they advise the buyer on an appropriate price to offer and will write up an offer to purchase the property and present it to the listing agent. If the offer is rejected, they either renegotiate the offer or try the alternative properties on their list.
3. Refer Buyers to Reliable Professionals
For example, a buyer’s agent may have a great relationship with a local contractor. They can refer buyers to real estate attorneys, home inspectors, mortgage brokers, movers, and more.
Can You Buy a Home Without a Buyer’s Agent?
Yes, you can, but having a good buyer’s agent will make the home-buying process a whole lot easier. Even better, since the buyer’s agent is paid by the seller, it won’t cost you anything.
Perhaps the most important benefit to hiring a buyer’s agent is peace of mind. Buyer’s agents have a fiduciary duty and are legally bound to advocate for the buyer’s interests only. That means they are legally obligated to act in the best interests of their buyers. It’s imperative that you have an agent who is looking out for you and is there to represent your wants and needs. If you don’t have a buyer’s agent, the listing agent would be representing both your interests and the seller’s interests, and those interests are bound to be in conflict. This is known as dual agency, and is generally frowned upon in the real estate industry.
Who Pays the Buyer’s Agent’s Commission?
Typically, the seller pays the buyer’s agent’s commission after the deal closes. This commission is usually split between the listing agent, the listing agent’s broker, and the buyer’s agent and their broker.
How Much Money Do Buyer’s Agents Make on a Deal?
The amount of money a buyer’s agent makes per deal can vary widely depending on the price of the home, the commission offered or other factors. Generally speaking though, buyer’s agents get a fixed percentage of the real estate commission paid by the seller. That commission is generally half of the total commission paid by the homeowner which can range from 4%-6% of the home’s sale price.
However, the buyer’s agent will still have to split their half of the commission with the brokerage they are associated with. That means that most buyer’s agents typically make only around 25% of the total commission paid by the seller.
Avoiding Dual Agency
When thinking about using a buyer’s agent, it’s important to understand that legally speaking, your interests are being represented by your buyer’s agent’s boss, the designated broker. That means that if you decide to purchase a home listed by another agent who works for the same brokerage as your buyer’s agent, the designated broker is technically representing both your interests and the seller’s interests. This is known in the industry as Dual Agency, and as you can imagine, can be a thorny conflict of interest for both parties.
One way to avoid potential dual agency is to work with, and sign a contract with a an exclusive buyer’s agent who works for a brokerage that only represents buyers. This can be tricky, but if you are very concerned about potential conflicts of interest then this is the best way to go.
If you want to learn more about then benefits of working with an exclusive buyer’s broker, check out the Consumer Advocates in American Real Estate site here.
How to Find a Buyer’s Agent
Here are the top three ways to find a great buyer’s agent:
1. Use Agent Matching Tools on Websites Like Zillow or Homelight
Zillow Agent Finder helps match you with a qualified real estate agent. It’s a tool that takes into account ratings from Zillow users, as well as data on past sales and any listings an agent may have.
In order to find a great buyer’s agent on Zillow, look for someone with great reviews and experience working with homes in your neighborhood and price range. An agent who sells $2,000,000 homes is probably not a great fit for your $100,000 house.
Like Zillow, HomeLight is another service that helps match buyers with qualified real estate agents. It analyzes data from over 18 million transactions and ranks agents by performance.
2. Ask People You Trust for Referrals
Ask family, friends, or coworkers you trust if they have someone they can recommend. Just make sure they work in the areas you’re looking at buying in. However, don’t just take the first buyer’s agent you meet or blindly accept the recommendation of a friend without checking them out first. Instead, look them up online and make sure they have good reviews and experience selling homes like the one you’re looking for.
3. Interview the Top Candidates
Once you’ve selected a few buyer’s agents who you think might be a good fit, the next step is to interview them. Here are the four most important questions to vet your buyer’s agent:
What neighborhoods do you specialize in?
Find an agent who has local expertise and has recently closed a large number of deals in the areas you’re interested in.
What’s your schedule and availability?
You’ll want an agent who will be readily reachable when you are. If you work odd hours, make sure they will be available when you are.
How long have you been a real estate agent?
You ideally want someone with a couple of years of experience and a proven track record of selling homes.
Assess their personality.
Remember, you will be spending long periods of time working with your buyer’s agent. You will also face stressful situations. Is this someone you want to spend time with? Are they calm, focused and friendly? If not, walk away.
The Bottom Line
The home-buying process is complicated and stressful for many buyers. However, a buyer’s agent leverages his or her knowledge and experience in helping buyers find, evaluate and negotiate the purchase of property. Buyers should have no second thoughts about using a buyer’s agent since their commission will be paid by the seller.