What Is a Buyer’s Agent?
In the complex world of real estate, buying a home can be daunting. That’s where a buyer’s agent comes in. If you’ve ever wondered, “What is a buyer’s agent?” and how they can help you, you’re in the right place. In this guide, we’ll explore the role of a buyer’s agent in your home-buying journey. Ultimately, a buyer’s agent makes it easier to find the right home for you.
Role and Responsibilities
A buyer agent’s primary function is as an advocate for the buyer—not the seller. A listing agent is one who signs a contract with a home seller to market their home for sale. That listing agent often depends on the efforts of other agents working with buyers to effectuate a sale. Unlike a listing agent, who is legally bound to represent the best interests of the seller, a buyer’s agent is a real estate professional whose duty is to represent the best interests of the buyer. Buyers and sellers require vastly different types of services, advice, and representation, which is why it’s never a good idea for agents to engage in dual agency or dual representation.
A buyer’s agent owes fiduciary duties to the buyer in a transaction. A buyer’s agent is responsible for counseling potential homebuyers on issues such as financing, inspections, document review, and service provider referrals. As such, dedicated buyer’s agents often have a deeper knowledge of the local market and specialized negotiation skills.
The Benefits of Working with a Buyer’s Agent
Market Knowledge
Homebuyers often show interest in multiple properties at the beginning of their search. A good buyer’s agent researches each one in detail to prepare for conversations on which of those properties is most appropriate to pursue. In other words, the buyer’s agent helps the client make informed decisions. The buyer’s agent will provide guidance on things like location, market trends, traffic patterns, school districts, days on the market (DOM), specific seller needs or requests, offer price considerations, prior listing history, photos, etc. This level of research on various properties in different neighborhoods adds to a buyer agent’s market knowledge.
Let’s compare a buyer agent’s market research at this stage of client representation to that of a listing agent. There is no doubt that listing agents, or agents that typically market themselves to list homes for sale rather than to work with buyers, work hard to secure a home to list. However, their primary duty at this time is to sell that one home. Appropriate listing prices and escrow negotiations require research, but the research revolves around that one property in that particular neighborhood.
Contract Drafting Skills
Buyer’s agents typically draft a handful of offers before one is accepted and gets into escrow. In more competitive markets such as the one we had recently from 2020-2022, it wasn’t uncommon for a buyer’s agent to research and draft offers on 15+ properties for a single client before one was accepted. Not only does this add to a buyer agent’s local market knowledge and experience, but also to their understanding of the most common purchase contract provisions. It’s typically the buyer’s agent who is combing through the most recent iteration of the purchase agreement (considered an “offer” at this stage) to correctly and completely fill out the required sections. Presumably, the buyer’s agent has already had conversations with the listing agent on the best ways to complete the offer for a favorable presentation to the seller.
Comparing the buyer’s agent contract drafting and review experience to that of a listing agent, we’ll notice that the buyer’s agent clearly spends more time drafting. After all, a buyer’s agent can easily fill out, review, and present the same contract hundreds of times a year. Now, a listing agent arguably reviews just as many offers for their seller client as a buyer’s agent drafts. The difference here is that a listing agent reviews and communicates the terms. The buyer’s agent actually puts them together synthesizing the buyer’s needs and wants with the seller’s requirements.
Negotiation Expertise
Many incorrectly assume the bulk of the negotiations in a real estate transaction revolves around price alone. In fact, there are many factors to consider as negotiating points that can have a material impact on the outcome. For example, a good buyer’s agent is knowledgeable about how the following items in addition to price affect a negotiation’s outcome: escrow length, contingency periods, seller leasebacks, delivery of possession, requests for credits, and selection of service providers. A buyer agent’s experience in drafting dozens of contracts a year can influence the advice they provide to their buyer clients about drafting favorable terms.
A particularly important area of concern is handling multiple offer situations. Much of a negotiation should take place before an offer is submitted. In most instances, once an offer is presented, it may be flat-out rejected and go unanswered if the terms are not right. A buyer’s agent can effectively propose strategies for preparing an offer when competing offers are expected. Factoring in things like increasing a larger cash deposit, early release of cash to the sellers, taking a property as-is, and even handling a current tenant can go a long way, sometimes far beyond simply submitting the highest price. Here, a good buyer’s agent will read the seller’s situation through the listing agent and strategically draft an offer that stands out.
How to Choose the Right Buyer’s Agent
Many real estate agents claim they work with buyers and sellers because it’s hard for real estate agents to turn business away. The real estate license allows agents to work on either the buyer or seller side of a transaction. As we’ve learned, however, those sides are very different and require different types of expertise. You’ve likely seen postcards, flyers, ads, and other types of marketing offering services to you “whether you are looking to buy or sell.” When you see ads like this, ask yourself: is this agent equally proficient in representing buyers as they are sellers? Do they specialize in a particular type of representation? Have they undergone any sort of training focusing on either buyers only or sellers only?
Consider an agent with the Accredited Buyer’s Representative (ABR) designation. This designation is awarded to those who are members of the National Association of Realtors who have taken an extra step in educating themselves about the specific needs of homebuyers. These Realtors have undergone additional training and have an ongoing obligation to comply with the strict Realtor Code of Ethics. Visit this link to find an ABR in your area. There are important steps to take when looking for the right buyer’s agent for you. Whether or not they hold an ABR designation follow these four steps:
Ask For Referrals and Search Online
Step 1 is to search for an agent who specializes in working with buyers. As we’ve discussed above, agents who specialize in working with buyers have specific experience with market research, contract drafting, and negotiations from a buyer’s perspective. It’s sometimes easier to ask friends and family if they’ve had a good experience working with a dedicated buyer’s agent.
Check Credentials and Licenses
Step 2 is to cross reference that information with online databases. Websites such as the DRE’s website, the agent’s Realtor.com profile, the agent’s personal and/or company website, and resources like the Accredited Buyers’ Representative (ABR) Search Tool are great places to start.
Conduct Interviews and Ask Questions
Step 3 is to ask questions. Ask your pool of buyer agent candidates about their experience with representing buyers. Ask whether they prefer to represent buyers or sellers. You’d be surprised how many actually prefer to represent sellers despite wanting your business. Ask about how they get paid and whether any of their compensation comes directly from you as their buyer client. Most importantly, ask for references and don’t be shy. You may be tempted to avoid the awkwardness of asking so many questions of your potential buyer agent, but any honest and transparent agent will happily take the time to answer all of your questions.
Review the Agent’s Agreement Carefully
Most importantly, Step 4 is to review the agent’s representation agreement. First of all, if an agent says they don’t use or have a contract, find another agent. All agents representing clients should have a detailed, yet easy-to-understand agreement in writing. Unfortunately, many buyer’s agents fail to give anything in writing to their clients upon representation, leaving everyone involved in the dark about a variety of terms and conditions. This leads to confusion and frustration at best and a lawsuit at worst.
Most commonly, buyer’s agents use the Buyer Representation and Broker Compensation Agreement (click here for a sample copy), also known as Form BRBC. This form details the agent’s and client’s duties and obligations, compensation structure, length of representation, and dozens of other important points. If there is any provision in this agreement that the agent is unable or unwilling to clearly explain to you, find another agent.
Conclusion
In summary, hiring a dedicated buyer’s agent is a critical step in the homebuying process. A buyer’s agent commits to representing your best interests as a buyer, not the seller. Together with their diverse market knowledge, contract drafting, and negotiation skills, a buyer’s agent can guide you through the complexities of financing, multiple offers, property inspections, and more.
When choosing a buyer’s agent, seek referrals, verify their credentials, and conduct interviews to find the perfect fit for you. A thorough review of the representation agreement is also crucial to ensure clarity and a smooth working relationship.
Buyer’s agents provide peace of mind. They save you time and reduce stress, all while helping you secure a positive outcome, especially in competitive markets. Remember, the answer to “What is a buyer’s agent?” is simple: They are your advocate and guide on your path to becoming a homeowner.