With the explosion of the way in which consumers can use the internet and tap into information, you might ask why you need the services of a buyers agent. After all you can just call the listing agent, view the home, make an offer and buy it.
Yes you can, but that’s not a best practice when buying real estate. A good buyers agent has a lot of value for home buyers, so we thought we would high-lite them for you to think about when you next buy a home. Home buying is a very large investment, make sure you get the best possible results for this significant purchase.
We’ll talk about why approaching the listing agent is not a wise idea and how it affects both the buyer and the seller and the agent. If you’ve never heard of dual agency, you will today. We’ll break it down for buyers to understand the bad and the ugly about dual agency. We oppose dual agency in our real estate practice for very good reason, although it is legal here in Illinois, we wish it were not. Most buyers, sellers and often agents don’t truly understand it.
Here are 12 reasons why having a buyers agent is a best practice.
12 Reasons to Hire a Buyers Agent
1. Generally it’s a Free Service
How does a buyer’s agent get paid?
Most commonly a seller will agree to compensate their listing brokerage and agent for the services of selling their property. This is commonly referred to as commission.
In turn the listing brokerage and agent will agree to compensate a buyers brokerage and agent for bringing the buyer. This is in the agreement made between seller and brokerage.
Your buyers agent has an agreement with their brokerage as to how much they earn for helping you.
The only exceptions would be if you agreed to your agent earning a minimum amount but that was not offered by the listing agent. A buyer may be asked to make u the difference. This would be via a written agreement you sign before working together. Also FSBO (For Sale By Owner) property sellers may not offer any compensation. A good buyers agent will approach the seller first and negotiate a buyers agent fee before showing you the home.
If a FSBO seller denies payment, you could agree to pay your agent and offer the seller a lower price so you are not out of pocket.
Whey would you not hire a buyers agent when in the majority of cases, it’s not going to cost you anything? Let’s look at more benefits.
2. They Know The Local Real Estate Market
Just like the stock market changes by the minute, real estate too is always changing. Maybe not quite as fast but your buyers agent will be keeping up with changes, may even write market reports for local areas to help buyers keep up to date.
Buyers need an agent that watches for seller trends to see if prices are heading down or up. They’ll understand a local market, one that can be affected by the weather, times of year, school holidays and so on.
If prices are heading down, you won’t want to overpay and if they are headed up, your agent can advise on the best tactics for beating other buyers.
A buyers agent likely spends more time working with buyers too. They are very much invested in your success and a happy outcome.
3. We Take Care Of Organizing Your Home Tours
Whether you want to look at one house a weekend or 12 in a day, your agent will set up all the home tours to match both your schedules. A good agent knows their territory well and can employ the best route to use. It can be a bit of a juggling act when co-ordinating buyers, buyers agent, sellers, sellers agent who often wants to attend the showing.
A great buyers agent with years of experience knows how much time to allow for each property and the traveling in-between. You’re more likely to see all the properties you want rather than making several attempts.An agent has the tools and technology to get you in when no-one is at home, a huge advantage over going it alone.
Remember that your buyers agent is much more than a home tour guide.
4. We Have Extensive Experience Looking at Houses.
There is nothing that replaces real-world experience. While it is vital for you to do your research in the home buying process, you can only absorb so much information and advice. Fortunately, with an agent, you have someone who has viewed probably hundreds of homes. He or she can give you valuable insight into what a home lacks and what it has that is desirable.
They should be able to tell you what resale value will be like in the future. Will the home appreciate well or be a laggard.
5. Area & Neighborhood Data Research To Help You.
With access to the MLS and other data tools, your buyers agent can provide you with more information about a home you might be thinking about buying. How long has it been on the market, was it listed before, has the price gone up, down, even been jumping around. What about sale history
A local agent is going to know reasons why a house may not be a wise choice. A busy road, new development going in, sitting on the edge of school boundaries, things you may not see or be aware of. It’s not a buyers agents job to imprint their opinions about a property on you, but having all the information rather than limited, may help you make up your mind and then how much to offer.
As real estate brokers here in Illinois we’ve helped hundreds of buyers, some want our opinions and others don’t. we do always recommend buyers go and do their own due diligence before making any offers. MLS data has data about the property but not its surroundings. City-data is a great source of more data. Allocated schools stated on an MLS sheet must always be verified with school district offices. The wrong data can hugely affect a properties price and can become a real problem for parents.
Your buyers agent is also going to review the disclosures made by a seller and provide those to you for any home you are interested in. This happens before you make your offer. A good agent knows what might raise warning bells and let you know your options.
6. The Client Makes The Decisions Under Guidance
It’s important to let you know that we are your representative, or in legal terms, your agent. You are a client. The state of Illinois, just like most of the country, reminds us the client makes the decisions, not the agent.
That’s not to say we are at your beck and call to please you going on a home tour for no good reason. We are running a business, you are searching for a new home. You show good faith and get a mortgage approval, we show you the properties you want to look at, not the ones we pick, unless you instruct us to do that.
We are required to abide by several laws, including Fair Housing. So if you ask us to break those laws, we can refuse to work with you. More often than not, your intent was good and you just need to be educated by us.
When you decide to make an offer, it’s not the buyers agent that decides on the terms, it’s you, the client. We’ll guide you and make suggestions. We’ll let you know how we expect an offer to be received. If you want to offer something different, we must comply, even though we might consider it ludicrous.
Let’s talk about loans and then making offers.
7. Use Our Lender Connections.
Ok so you might want to use your Mom’s, Uncle’s Friend, Bobby but is that a wise idea? You likely have no knowledge of them, how they conduct business, how successful they are or how experienced.
Most experienced buyers agents will have several local lender connections and can recommend a couple for you to talk with. Using local lenders means there’s someone you can talk with easily. They are also mindful of their REALTOR® connections and don’t want to lose future business by providing you with poor service.
Whether your agent offers you a mortgage broker or bank lender to talk with does not matter. What you the buyer needs is a solid review of your financial status and a written pre-approval, before you start your home search. This means your credit is reviewed, tax returns looked and and income and bank statements provided.
This is not the same as a pre-qualification, which any good agent can provide. We can assess your ability to buy what you desire based on asking you information. It relies on truthfulness but in no way gives sufficient information for a home seller to consider any offer you make.
Be prepared to talk numbers with your agent and a loan officer. If you have cash, provide proof in the form of a bank letter. If time passes you may need to have your loan officer update your approval.
8. What Should You Offer & How Should You Structure it?
Let your buyers agent show you comparable sales in the area that have recently closed. This will give you a good benchmark for the amount. Then you can discuss together why you feel a property is worth more or less. Remember that no two properties are ever the same and sometimes it’s worth paying more to get what you want.
In hot markets you may end up with competing offers and buyers. A good agent with come up with a winning strategy but still be mindful of your goal and your instructions.
A winning offer is not always the one with the highest dollar value. Making low offers the day a home is listed is not a good idea. Presenting offers without financial support is a waste of everyones time. A good buyers agent will direct you how to present the best offer for the market you are buying in.
9. Presenting and Negotiating Your Offer
Can you imagine calling up the seller and saying you love the house but you don’t love the price, so here’s a number you pulled out your hat and hope they like it?
We’ve already established having a buyers agent is going to help you structure a good offer, now it’s time for them to present it and negotiate it. Most likely it’ll be buyers agent and seller agent talking to each other and referring back to each client for consideration.
Sometimes it’s not what you say but how it’s said. Delivery can help a seller and their agent understand the offer, it gets them focused on all of it. Collectively the goal is to keep everyone at the table until agreement is reached. Both agents understand that emotions can run really high and knee jerk reactions could kill a perfectly viable sale. So we remain focused, talk it through and relay decisions calmly.
Offers can be accepted, countered or rejected. We’ll discuss all reactions with you and revise the strategy as needed. Just remember that what you see on the TV is rarely how things go.
In Northern Illinois things are a little different to Southern Illinois. After a home inspection is completed, here in Northern Illinois, it’s going to be your attorney that deals with negotiating repairs or credits. In Southern Illinois it’s likely going to be the buyers agent again to make a request credits or repairs.
Remember you are always entitled to hire an attorney. Transferring property is a legal transaction and you might prefer the legal safety net when dealing with such a high ticket item.
We often remind buyers not to dig heels in over what will amount to a little give and take, or a few extra dollars a month. You need to remain cognizant of the goal, buying an expensive item.
10. An Experienced Broker Has All The Home Buying Connections you Need.
In addition to lenders you’ll need more associated services when buying a home. Home inspectors, Radon testing companies, attorneys, are just a few.
A good buyers agent will have a listed of trusted professionals they have recommend to previous buyers and know to have done a great job.
Your Buyers agent should be a resource you can tap into and ask for almost anything related to home buying.
11. We Can & Should Hold Your Hands.
Buying homes is an emotional event. You see homes, you fall in love with one and all common sense flies out the window! It would be real easy to clue a seller into this and bam, away goes any negotiating power you may have had.
The process commences and all of a sudden you’ve got a laundry list of things to do on a timeframe too.
Time ticks along as you wait for things to happen and it seems so slow! Buying homes is like a roller coaster!
Your agent can help guide you through, setting the expectations for each, keeping an eye on you, your time frame, your progress, your closing date. They should be available to you for all questions, even the ones you’ve already asked more than once. No agent should drop you the minute you’re under contract!
12. Certainly Not The Last Consideration – Dual Agency
Now is the right time to talk about dual agency, now you know all the benefits of hiring a buyers agent.
Dual agency is simply one house, one agent helping buyer and seller. Dual agency is when the seller contracts with the seller to help sell his property. A buyer comes along, often believing it’s his best option to find and use the sellers agent. He engages the sellers agent to help him buy the property.
This is such a bad idea we’ll be writing a new article about it soon. For now consider this. The sellers agent is already contracted to do the best job for the seller and get him to highest possible sale amount. Does this benefit you? NO! A comparison is to think whether you would hire an attorney to represent both you and the other side in any legal lawsuit? NO!
There are many things a dual agent cannot do. Likely the most important function is not helping the buyer come to a price to offer the seller. While he cannot help the seller now either, you can bet they’ve already had that discussion before listing the property and deciding on a price. So the seller already has an advantage over the buyer.
In what world does this help any buyer? None. More in our next article.
Which Home Buyer’s Agent is Right For You?
Now we’ve established many reasons why hiring a buyers agent is a best practice for home buyers, you’ll need to now how to find the best one for you. Take some time and interview a few. Search online for a “buyers agent in town”. Ask questions that matter most to you. i.e. what areas do you service and why. Learn their depth of experience working with buyers.
The best buyer’s agents aren’t concerned about making a sale but instead are focused on what’s best for the client. This should become apparent during your interviews. No-one can fake genuine caring. Ask for testimonials too.
You may consider an exclusive buyer agency agreement. Although not mandatory in Illinois, the level of service provided to you is likely to be higher. Any real estate buyer’s agent agreement will outline services you should expect and discuss how your buyer’s agent commission is expected to be paid and how much.
Ask us to be your home buying advocate!