Such a simple and straightforward question deserves a like-kind answer. Most simply stated, a buyer’s agent is a real estate agent who is representing a client in the process of purchasing a home. Sorry, but this is too simplistic and short for a blog post, so I will delve into this subject a little deeper.
Are There Different Types of Agents?
Any real estate agent is capable and allowed to represent either buyers or sellers. Most agents routinely work with both buyers and sellers, but there are some agents who specialize in representing only buyers or only sellers. In all cases where a real estate agent is representing a client, a contract or agreement must have been signed stating that the client(s) have selected the named agent to represent them as a seller or buyer. Here in CNY, sellers sign an EXCLUSIVE RIGHT TO SELL CONTRACT and buyers sign a BUYER/TENANT AGENCY AGREEMENT/Exclusive Right to Represent.
There is one other significant document used in CNY and New York State, the New York State Disclosure Form for Buyer and Seller. This is a disclosure form that indicates who the agent you are in contact with represents and the nature of the agency relationship they are bound by. New York State requires that all agents provide this form so that there is no doubt who the agent is working for. It is required whenever an agent has substantive contact with any potential buyer or seller. Don’t be afraid of this form as it is not a contract and clearly states in bold letters that it is not a contract. Consider this form similar to a program at an athletic event that identifies both teams and the players on each team.
Some Buyer’s Agent Specifics
Almost all buyers will select and sign with a buyer’s agent once they reach the point where they want to make an offer. This is unfortunate since selecting a buyer’s agent early in the home buying process has been shown expedite the entire process and save buyers time, money and frustration. For more details refer to “What Is a Buyer’s Agent? A Trusted Guide Who’ll Help You Find a Home”.
Most buyers use one of many on-line sites to search for homes. When they find one or more homes of interest, they either attend an upcoming open house or contact the agent listed on the site where they found the listing. This process continues as the buyers face at least one agent at every open house or private showing. They don’t realize that these agents represent the seller directly or indirectly. If these buyers volunteer personal information during conversation, they risk providing information that could be used against them during negotiations should they place an offer for that home. I will only briefly mention the aggravation of fending off prying agents trying to sell you on their skills and experience or the hassle of trying to coordinate multiple showings.
It probably won’t matter what advice is given here, most buyers won’t discover that they need a buyer’s agent until it is already too late. If they had a buyer’s agent then they would have been given wolfsbane in the form of a business card from their buyer’s agent to fend off all other prying agents. Their buyer’s agent would have coordinated all their private showings and properly prepared them to be ready to make an offer before they found the home they wanted to make an offer on. Because they followed the advice and best practices of their buyer’s agent it may have prevented them from losing out to another properly prepared buyer with a buyer’s agent.
Selecting a Buyer’s Agent
Here is the skinny on selecting a buyer’s agent for yourself; find an agent you know, like and trust. You are certain to run into numerous agents while searching for a home. When you find one you are comfortable with, take the plunge! Keep in mind that even when you do sign with an agent as your buyer’s agent, you can tailor the agreement to specify the terms for a finite period of time or for a specific home, etc. Agents will routinely default to any home within the next six months unless you direct otherwise.
If you haven’t posed the question of cost yet, let me ease your mind. Yes, real estate agents are paid by commission, but your buyer’s agent will be paid by the seller! The commission structure is such that the seller pays the commission and offers a portion to the buyer’s agent. The good news is that there will be no out-of-pocket cost to you as a buyer. If there is, consider finding another agent to serve as your buyer’s agent. The bad news is that when it comes time to sell your new home, you’ll be paying the entire commission. It’s only fair since you get a free ride on the buyer’s side!
There is one more important point to make regarding the use of different agents to show you individual homes. Whether you have a buyer’s agent or not, the agent who shows a home to you will have “procuring cause”. Let’s say an agent shows you a home and you want to make an offer to purchase the home that they showed you. Unfortunately, you don’t like the agent, so you sign with another agent you have seriously considered as your buyer’s agent to put the offer together for you. The agent who originally showed you the home may argue that the buyer side commission belongs to them and they will most likely win the argument if a formal complaint is filed.
In summary, all buyers deserve and are strongly urged to have their own buyer’s agent. The sooner buyers sign with an agent as their buyer’s agent, the quicker and easier the home buying process will be for them. There are numerous benefits to having a buyer’s agent, but most buyer’s waste time and effort trying to go it alone until they absolutely need a buyer’s agent and make a potentially calamitous choice as an expedient. Remember, best practices are created by those who experienced setbacks or failures, so others can avoid them.