Five Reasons Why You Still Need A Real Estate Agent
Are you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you the significant commission rates, flying solo may not be the way to go and could end up being more costly than a realtor’s commission in the long run. Buying or selling a home is a major financial undertaking.
1. Better Access/More Convenience
A real estate agent’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer’s and seller’s agent work full time as real estate agents and they know what needs to be done to get a deal together.
In Texas legally all agent represent the seller unless they have a buyer’s representation agreement with the buyer. As a buyer my services are free to you so there is no reason to avoid using an real estate agent.
2. Negotiating Is Tricky Business
Many people don’t like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true–assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship.
What if you, as a buyer, like a home but despise its wood-paneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can express your contempt for the current owner’s decorating skills and rant about how much it’ll cost you to upgrade the home without insulting the owner. For all you know, the owner’s late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers’ agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner’s feathers.
A real estate agent can also play the bad guy in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer’s offer for any reason–including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want.
3. Contracts Can Be Hard To Handle
If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren’t met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale–and you aren’t approved for the mortgage–you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract.
An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.
4. Real Estate Agents Can’t Lie
Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients’ best interest (not his or her own).
In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they’ll need to survive in the business. This means that doing what’s best for their clients should be as important to them as any individual sale.
When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent’s commissions by the time the transaction is complete.
5. Not Everyone Can Save Money
Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home’s sale price that might otherwise be paid to the real estate agent.
However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.
The Bottom Line
Home buyers should always have their own agent. Buyer’s agents work to negotiate the best terms and price for the buyer. Best of all, the buyer agent’s services are free to the buyer.
Most people think they have to pay a sales commission. The truth is this: only the seller pays the commission.
Whether a buyer uses an agent or not, the seller still pays the commission. The only person that wins when buyers are not represented is the listing agent.
Most buyer agents will have their clients sign an agency agreement, an Exclusive Buyer Agency Agreement. It outlines their services, how they are compensated, and how the two parties will work together.
To ensure you’re working with an agent who specializes in representing buyers, seek out an Accredited Buyer Representative (ABR).
The home buying process is stressful enough without worrying about who you can and cannot trust. Your buyer’s agent is your trusted advocate.
Buyer Agents and the Agreements
According to most buyer agency agreements, the buyer’s agent must do these things:
- Protect their client’s financial information
- Negotiate the best possible price for the buyer
- Must disclose to the buyer if they are working with another buyer interested in the same property
- Show all properties the buyer is interested in that fits their criteria and budget
- Connect you with the service providers—inspectors, lenders, home warranty companies—to best suit your needs
The buyer also has some responsibilities to their buyer’s agent:
- Buyers must work with their buyers agent exclusively
- Buyers should never give personal information to any other agent
- Buyers should not call other agents to see properties, even if they think they are saving their agent some time and effort
- Buyers should clearly define their must haves and deal breakers to help their agent streamline the showing process
Source: http://www.forbes.com/2010/05/25/why-you-need-real-estate-agent-personal-finance-commission.html and www.realtor.com