Continuing on the thread covering the recent settlement from the National Association of Realtors, I wanted to talk about the benefits of having a buyer agent. There are a lot of questions about what real estate will look like later this year when or if the settlement is finalized.
One looming question centers on compensation for buyer agents, and some industry experts have speculated that buyer agents might become history.
Whereas in the past the seller was on the hook for both the listing and buyer agents’ commissions associated with the sale of their home, with the pending settlement, it seems likely that buyers will be expected to compensate the buyer agent working on their behalf. How this would work and play out is the question on the minds of many in the real estate world.
I’m not convinced of the speculations around buyer agents going away, though I admit such speculation is not without some substance and worry. I add worry here because for homebuyers having their own agent is vital and necessary. Without them, buying a home could become a more difficult and insecure process for wannabe homeowners.
Before I explain more, I thought I should clarify that the class-action lawsuit against the NAR was not a direct attack on buyer agents. The lawsuit concerned clients’ abilities to negotiate commissions prior to selling their house.
Nevertheless, how a buyer agent should be compensated is an integral part of the litigation and the ongoing uncertainty around the NAR’s recently announced settlement.
The benefits of having a buyer agent in any real estate transaction can’t be understated, and I believe and stand behind these benefits whether I’m working on behalf of clients looking to buy or with clients listing a property.
A buyer agent has many roles, including helping their clients find suitable homes for sale, advising their buyers on market prices, writing up offers and ensuring a smooth home sale process. An experienced agent knows the process from accepted offer to closing day well, and a diligent agent makes sure every step from inspection period to appraisal to clear to close has been met.
Let me break down and explain all these parts in more detail starting with finding a suitable home. With a preaprroval and knowing your affordability range, your agent can give you expectations on the types, sizes and locations based on the current temperature of the market, setting you up for your search and allowing you to go into the process of finding your home with a realistic and honest perspective.
With the advent of online listing sites, home searches for buyers have never been more user-friendly. But your agent is still a good asset. Dutiful and diligent agents often are aware of properties that have not been listed yet. They also search the market multiple times a day to see new listings and have a good pulse on market prices.
Buyer agents help their clients write up offers too. This is probably the most obvious benefit for having a buyer agent. After you’ve found a home you love, the next step is the offer. Your agent is there to help advise you on what to offer and on any contingencies you might want included in your offer. Your agent works with you to structure an offer that both protects you as a buyer (as much as possible) and gets you a deal within your budget. Your agent is not only there to advise you, but will write up the offer for you and help you through any negotiating process that might come after.
The next great benefit of having a buyer agent is their knowledge of professional services and their ability to refer you to other professionals. Need a home inspector or mortgage person? Your agent likely knows several trusted inspectors and mortgage brokers. Need an attorney, movers, junk removal or a local carpenter, plumber or electrician? Just ask your agent!
Finally, and perhaps most importantly, though often under-appreciated, a buyer agent will be your most valuable asset through the process of an accepted offer to closing on your home.
If you’ve never gone through the process of buying a home, you might be under the impression that it’s seamless and self-propelling. But there are a lot of problems, missteps, mistakes or forgotten items that can occur during this time.
The process can involve several parties, including you, the listing client, your mortgage broker and bank lender, inspectors, appraisers, attorneys and title companies, and other lenders and banks with liens on the property.
A good agent is able to navigate and facilitate communication among all these involved parties while prioritizing their clients interests.
I’ve had appraisals that accidentally went unscheduled, nearly pushing out a closing day. I’ve had nightmare walkthroughs of finding a home only half-packed and with furniture still inside on closing day. I’ve had offer sheets unsigned or with added wording outside an original agreement.
We were able to resolve all these issues in a timely manner, allowing for a successful transaction despite all the added stress and commotion.
A trusted, experienced and diligent buyer agent knows the process inside and out, knows when something is missing or late, and knows how to resolve any outstanding issues. Chances are that the agent has faced the problem before and is ready…
Before I conclude, I’d like to also take a moment to highlight what I think is an unfair characterization of buyer agents as presented by the defense in the litigation against the NAR. The defense argued that percentages offered up by listing agents to other agents with buyer clients created an unfair advantage, implying that buyer agents would only show their clients listings with higher percentage commissions being offered to them.
I found this characterization and implication baseless. I don’t know of any buyer agents withholding a listing from their clients. This isn’t an idealist’s point of view of things. Limiting a client or clients’ exposure to available houses is bad business practice.
Not only is it ethically dubious, it decreases the likelihood that your client will find a home. And, again, I know of no instance, either directly or in conversation with colleagues, of something like this happening. It’s a conjured theory that sheds an unfair light on buyer agents and real estate agents as a whole.
I don’t mean to suggest that there aren’t unethical and just plain bad agents out there. But the majority of professionals in this field are honest, hard-working and client-oriented. As I’ve stated and reiterated, despite some recent maligning, buyer agents are universally valued by their clients.
Buyer agents are necessary and beneficial in the real estate world. Though the future of the real estate landscape is in question, there’s little doubt that without buyer representation, everyone loses.
If you have any questions or concerns, or want to discuss the real estate market further, feel free to shoot me a message or give me a call.
