Why You Should Utilize A Buyer’s Agent

Buyers’ agents are agents who are experienced in representing the needs and desires of the buyers. Many buyers incorrectly believe that if they don’t use a buyers’ agent they can get the seller to “discount” the property in-lieu of paying the full 5% to the listing Broker. A seller enters into a listing agreement (a legal and binding contract) with the listing Broker for an agreed upon percentage of the final sales price; usually 5%. The 5% is roughly divided 4 ways, the listing side gets 2.5% and the selling side gets the other 2.5%. The 2.5% is then split between each office and sales agent. If the listing agent sells the property directly, the firm that agent works for gets 100% and is shared with the listing agent. Most agents cannot negotiate the company commission. The contract states that the agent has a fiduciary responsibilty to represent only the seller. Included in that representation, it is the agents job to negotiate the best possible price for that home. An agent cannot represent both the buyer and a seller in a contract. The agent may not disclose personal information about the seller without the sellers consent. If for instance you wander into an open house and you decide you want to make an offer with the sellers agent, you the buyer and the seller must agree in writing that this is taking place. Be aware, the sellers agent is still representing the seller, you are not represented by anyone. Futhermore, the seller’s agent and the firm they work for stand to receive 100% of the commission. So the agent has a different finacial stake in your specific offer. No agent cannot promise you she/he can do better on the price if you buy directly from them. It is illegal. Of course the agent wants you to make an offer with out another agent, they receive the buying and selling side of the commission. It has been my expereince that buyers without buyer representaion pay more for the property.

Reliable advice and information is the key factor in making a good decision. A buyer’s agent will provide you with information, but not necessarily limited to the following.

The original purchase price of the house

The mortgage amount still owed on the house

Comparative market analysis for similar homes in the neighborhood

The original list price and any price adjustments since listing date

The number of days the house has been on the market

If the house has been listed for sale in a previous year and did not sell

Information about a house having been under contract but is now back on the market

Evaluating improvements the seller may have made to the house and whether the seller obtained proper permits. A town permit requires all subcontractors to be licensed by the state

The relationship to assessed value and market value

Accompanying you to the inspection and re-negotiating on your behalf if nesessary

Introduction to reliable mortgage lenders, home inspectors, closing attorneys

Keeps track of important dates (mortgage commitment, inspection contingency) and communicating their importance to you.

Protects your P&S money..by keeping track of these dates and communicating effectively with seller’s agent, mortgage broker and attorney.

Provide a list of pre-schools, churches, temples, restaurants, transportaion, however, we cannot make evaluations or offer an opinion regarding the schools and temples etc.

So why do buyers think they are getting such a good deal when they buy a house without the aid of a broker? They haven’t been educated. Most believe the seller’s agent is also representing them. A seller’s agent must be honest and disclose what she knows about the house, but their fiduciary responsibility is to the seller. Would you go to court without representation? Would you have surgery without discussing what was going to happen with your Doctor? Buying a home is a huge financial and emotional undertaking, you shouldn’t go it alone..

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3 comments

  1. 5 Worst Questions to ask Your Buyers Agent

    When you ask your Buyers Agent questions, the answers you get should help you
    establish fair market value. The answers to these gems however, never help but only get in the way. Avoiding these questions will take confusion out of the business at hand which of course is establishing current fair market value for the home.

    Worst Question #1. “What percentage below asking price should I bid”?
    My advice must be to first find a Buyers Agent you trust. With a little bit of grade school math and some common sense he can arrive at a number that makes the asking
    price look like a wild guess. Your Buyers Agent should be able to give you the fair market value within 5 percent. The
    fair market value may be higher or lower than the asking price but we are going to ignore the asking price. The number your
    Buyers Agent comes up with only takes 15 or 20 minutes but that will be a number you can hang your hat on if it was arrived
    at statistically and hopefully not influenced by personal opinion or conjecture. If you want to check your Buyers Agent’s figures ask him to show you all the sold units he did or didn’t use in his calculations.

    Worst Question #2. “How much did the seller pay?”
    Absolute nonsense! Could any number be more irrelevant to the job of establishing fair market value? What if he bought it from his mother for one dollar? The answer to this question always hurts and never helps establish fair market value. Not only does it not give us a number we can use but it opens the door to a myriad of negative human
    emotions. If the price paid by the seller was low, this information can inspire jealousy and resentment in the
    unenlightened buyer. Then the ego gets going and I hear ” Well I’m not going to pay 500K when the seller only paid 350K, 2
    years ago, he’s making out like a bandit!” Whatever someone paid for a property has absolutely nothing to do with what it’s
    worth today.

    Worst Question #3. “When did the current owner buy the property”?
    Again another question whose answer can only
    confuse the basic issue for buyers, which is the current fair market value of the home. Whether it was purchased yesterday
    or 30 years ago is totally irrelevant if what you are looking for is objectivity. Fair market value is based on comparable
    units that have sold in the last 6 to 12 months and when the current owner bought the property has nothing to do with that.

    Worst Question #4 “How long has this property been on the market?”
    Whats the difference if it was put on the market yesterday or 2 years ago? Again the answer to this question won’t help anyone. Any assumptions you might make as to how
    negotiable they are are strictly conjecture. Some sellers keep the same property on the market for 5 years without reducing the price. He may be no closer to being “open to negotiation” now than he was 5 years ago. I can’t find any possible
    conclusions the answer to this question can inspire that affect current fair market value for the home.

    Worst Question #5
    “If I buy this property, will the value have appreciated in five years when I want to sell?”
    The answer to this one calls
    for a fortune teller. It can’t be answered! Where will the DOW be in 5 years? The five year time frame is the minimum we
    are taught to use with real estate. As an asset class the returns on real estate average 5 to 6% per year but that doesn’t
    mean we can’t have 15 straight years of decline or many years with consecutive double digit gains. This is a market and
    there are risks involved and there is always the risk of the fair market value of the home that you buy going down for
    years to come. Or maybe this current dip in the real estate market is the dip that should be bought.

    Like

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