First, they (rather than he, she or it) are a great source of free doughnuts and coffee. For that alone, more people should be buying property.
They are a tour guide to blocks of Chicago you never knew existed, and home styles you didn't think would work for you, but turns out they just might.
Buyer's agents, and let's be clear, we are talking about the good ones, are a one stop concierge. Another poster on here mentioned the rolodex of referrals he keeps handy because that is how he pleases clients, who in turn, will hopefully consider referring him in the future. And it's true. These trusty lifesavers would take you weeks of trial and error frustration by chancing it online. Buyer's agents strive to make their client happy. It sounds cliche but it is the reality of the professionals in this business. We are confident that we will get you a home (or sell it) so there is no pressure to "make a sale". We would rather keep you happy and sleep comfortably knowing you won't be calling us months later complaining that you were screwed over.
Ok, so besides doughnuts, and coffee, and people that can help you that haven't found their way to Yelp, is it really worth it?
Let's take the most often cited reason: It's free. It is one of the few professional services we have where you pay nothing. Absolutely nothing to obtain hundreds of hours of expert guidance.
That isn't exactly true. The vast majority of homes are sold through realtors who build the buyer's agent commission into the asking price.
Before I became licensed, I thought I would represent myself since I found the home I wanted. I would negotiate a fair market price, then, get the agent to come down another 2.5%. Simple.
They did. And I beat the system.
Until there was a lawsuit.
Several years after that deal, the seller's agent for the aforementioned deal had her transaction documents subpoenaed and gave a sworn statement dealing with an outside lawsuit. I couldn't believe what I saw:
She reduced her buyer's agent commission, which she didn't have to pay because I represented myself, by a mere 20% of what she claimed. But I had no way of knowing. It is impossible.
Prices for properties are arbitrary to a point, so the 'spread' can vary enough that you can't determine what you saved, if any, by not using a buyer's agent.
And I had to contend with her recommended inspector, a total floozy who missed half the issues in the house. I had zero resources for home insurance, a real estate attorney, mortgage and the variety of issues that entailed, home repair people. Nor did I have any strategic advice on negotiating a better deal, something everybody wants.
So, if you still aren't clear what to do, you should probably go it alone, then write back to this board in a few years to share the errors of your ways. And the lack of free doughnuts.
Finding homes is easy, evaluating them . . . not so much. The best benefits come from starting with an agent, or at least getting one before you've decided on a place.
The best way to use an agent now would be to have them review the inventory with you, and review this project, to help you determine if this is, in fact, the best property for you.
If you are a first time buyer you would be well served to find a good buyer's agent. There can be a lot more to the offer to purchase than just price.
If you need any referrals to some sharp and ethical buyer's agents just drop me a line. I've gotten to know the good the bad and the ugly over the last 12 years.
I am an electrical contractor and as such only offering "layman" opinions. I was a licensed agent for a few years, but the number of deals I did was not very impressive.....Maybe 10 deals in my career...LOL I was not much of a salesperson. But I did learn a lot about the industry, enough to offer an opinion here. I also was the "beneficiary" of a pretty big mistake when I bought my condo without an agent years ago. It cost me a lot of dough.
I would ask if you are buying a FSBO or a listed property. If it is listed, there will be a commission to be split, so it would not cost you anything (to the best of my recollection.) The fee that pays your buyers broker will come from the commission the seller pays. Under those circumstances, it seems to me almost a no-brainer to get professional representation that is available for next to nothing.
The disadvantages I can imagine are being afraid the buyer's agent will disregard your needs and try to steer you into something else. A hack or novice might try to do that, but an experienced vet would surely realize the folly there. Other than that I don't see the downside. Even years ago when I was selling real estate, putting together a transaction was very complicated. It required an advocate on your side both watch "your back" and to just monitor the flow of the transaction. There are so many things to take care of, to pay attention to, and they all have their own idiosyncratic aspects. Why not have a qualified pro who has been through it a million times taking care of it for you when it doesn't cost you anything?
I'll wrap up with my own story. I was a young naive electrician when I bought my place 22 years ago. It was a FSBO and I went and looked at it and really loved it. The owners just happened to have a contract there, which we filled out in case I decided to buy it. By the time the session was done, I had agreed to buy the place with no real negotiation. I paid whet they were asking. They had a really neat pie cooling cabinet in the kitchen pantry which I thought was a "homey" feature. Of course when I actually bought the unit, it was not there. OK. So dumb kid mistakes. But then after I had a signed contract (this was in the mid 80s...I knew nothing of an attorney's approval contingency) I figured I needed a lawyer. I found a local guy who said he did real estate so I hired him. The deal was moving forward, all was hunky dory until about a week before closing, when I went to ask the condo president if they had approved me and waived the right of first refusal. He asked me if I had taken care of that electrical issue. I said what? He told me the previous owners had been cited for running an illegal service cable to the new panel and they would not approve the deal until that was fixed. This was in 1987 when mortgage rates were rising fast. I had like 3 or 4 days to close or I would lose my mortgage rate commitment. I called my lawyer and asked what I should do. He said "you still want to buy the place, right?' I said yes. He said we would not be able to close until we got the thing straightened out. It entailed letters back and forth, since the sellers were now in Minnesota. We missed the closing date. My lender raised my rate by 3/4 of a point, since my interest rate lock in expired.
We agreed that I would repair the electric service myself. The owners would let me keep the used dishwasher they had planned to give away. Instead of playing real hardball and demanding a serious price concession based on the realities of the scenario, ( By this time they had moved away and had outright deceived me) my lawyer didn't do anything. But perhaps a shrewd buyers agent would have pointed out the leverage I now had. Worse, we missed the closing date! I carried a 10 7/8 % interest rate for many years because I could not qualify for re-financing.
After I got into the real estate business, many agents told me it was a very routine situation, we could have just escrowed the money for the repair and closed on time. My tale of woe amazed them!
It was buyer's representation 101. But my lawyer never took the class. And I didn't have a buyer's agent.
I would not want you to pay the high price I paid, even if it did give me a good story to tell.
Best of luck!
Both Kathy and Eric raise good points regarding buyer agency.
Quite simply, if the seller has an agent, so should you. The seller's agent (who's fiduciary responsibility is to the Seller), is not obliged to assist your position unless they are representing the property as a dual agent. In this case, they cannot help determine the terms of the offer. Furthermore, the buyers agent is paid a portion of the listing agent's commission: A buyer's agent cost you nothing and is invaluable. I don't think I would have been able to get the contract on my first place with the terms we got without my agent (way back then).
A trustworthy agent can use their experience with the industry to help you. Some specific reasons to work with an agent include:
1. Assistance in crafting the contract terms to make sure your offer is strong, while preserving your interest.
2. Negotiation. Having advice as to what may be holding up agreement to get to a contract quickly and efficiently.
3. Assistance with the logistics of disclosures, inspections, attorney approvals, appraisals, final walk thru, contractor referrals and access for estimating, and all the transactional milestones that come with a real estate purchase.
4. Familiarity with current industry trends will help you decide if your loan package is fair and whether fees are exorbitant.
5. A strong referral network to industry professionals.
6. CMA (Comparative Market Analysis). This is invaluable to make sure your offer is a good deal for you and remains competitive.
7. Developing a relationship with a Realtor is invaluable when you inevitably need to sell.
I will also add that it may be of additional benefit if you haven't seen what else is on the market. You will want to get a good idea of what homes are currently available, at a given price, to determine if the home you're considering is the best fit.
I hope this is useful to you, and encourage you to work with an agent on any purchase. It may be that on this specific purchase, you may have passed the point of procuring cause, in which case an agent you choose may not be paid by the listing agent. This is not of concern to you. Nevertheless, the details of the showings and interaction with the seller's agent thus far should be discussed with any agent you engage to assist you.
Best of Luck.
I would like the opportunity to help you with your purchase. Please contact me so we can put together a strategy for your starting offer.
You don't need a buyers agent. However, if you have want expert advice on price and advice on the work that needs to be done to the home, a buyer's agent would be a good idea. I also bring my contractor along with clients looking at fixer uppers... an amazing value. The seller offers a co-commission that pays the buyer's agent. This can technically be considered an added cost to you, but it can be well worth it due to the relationship you will have for many years with a good Realtor.
In addition to providing you the very best market data and negotiating with the listing agent, a good buyer's agent will make sure you are comfortable with each step of the purchase process. Problems come up and questions need to be asked that you may not have experience with.
Another good reason to work with an agent (and one of my favorites), I have incentive to provide you with advice, service contractors, lenders and attorneys that will be of service to you well after the transaction... for life! You will need trustworthy contractors, electricians, plumbers etc... You may need legal advice that deal with real estate for years to come. Accountants, roofers, floor guys, inspectors, specialists... My brokerage and I have long relationships with service partners and they do the very best work for my clients. My referrals are their priority.
Feel free to contact me. I'm interested in what house you are looking to buy and may know of some others that could interest you.