Home Buying in Midtown>Question Details

Judy, Home Buyer in Sacramento, CA

What are the advantages of using a buyer's agent?

Asked by Judy, Sacramento, CA Sat Nov 24, 2007

I am considering buying one of two new properties in Sacramento. One is represented by the developer’s on-site marketing staff, and the other has a marketing agent. I have already identified the properties, so I do not need help with the search, just the purchase transaction.

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A buyer's agent will work for you and not the seller, even though it is the seller who is paying the fee. Buyer's agent are required to represent the buyer's best interests and not their own. They have a fiduciary responsibility to disclose all material facts to you, they will negotiate on your behalf, regardless of the number of counter offer it takes.

In this market, you are wise to seek the services of an experienced buyer's agent. Builders are luring buyers with all kinds of incentives, prices are soft, inventory is dramatically high, all of which points to the buyer being in the driver's seat.

The highest profit margin in new homes is the upgrades. Not only should you be able to negotiate an extraordinary price by using a buyer's agent, you should also be able to negotiate free upgrades and a few other concessions such as paid HOA dues for a year, interest-rate buy downs -- which will lower your payments for at least two to three years, in addition to the builder paying your closing costs.

Your buyer's agent should supply you with comparable sales in the neighborhood, including pending sales (which are indicative of the direction value is moving) and expired listings ( which are indicative of overpriced listings). You should look at the last 15 months of Trends for that development and neighborhood to determine the average price per square foot, the median sales price, the average days on market, the number of sold homes vs. active vs. pending. Pay close attention to the number of months of inventory. Last month, there were 15 months of inventory on the market in Sacramento. This means it would take 15 months to sell everything that is listed, which is an awfully long time.

As the home buying columnist at About.com, which is owned by The New York Times, I have written several articles that may help you with your search. Go to google and in the search box enter "Buying Brand New Homes From Builders," and my article will show up at the top.

I work at the downtown office of Lyon Real Estate, which covers all surrounding neighborhoods of downtown, and I live in Land Park. If you questions about the content in any of those articles, feel free to call or e-mail me directly.

However, as another poster noted in this thread, since you have already made contact with the builder, you might not be in a position to bring in a buyer's agent. Builders do expect buyer's agents to register their buyers. So this could cause a glitch for you. On the other hand, most builders are pretty desperate right now, sitting on a ton of spec homes that aren't moving, so they might not be too pushy about enforcing those types of self-imposed rules. Good luck to you.
2 votes Thank Flag Link Sat Nov 24, 2007
Michelle, The secret is in promoting one self with subtlety, useful answers and wisdom.
We jump all over our peers when they blatantly self promote while adding little or no value in their answer to the question.

What we saw here, amongst five posters before you, were good answers, including the horn toot. The poster who received best answer by the questioner held her horn tooting off until after 4 paragraphs of great advice. - Even then it was subtle enough for me. - And I am a rather harsh critic of some of the self promoters.
2 votes Thank Flag Link Sat Nov 24, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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Hi Michelle -

I see that you are getting into the spirit of things here on Trulia :-))

Sylvia
1 vote Thank Flag Link Sat Nov 24, 2007
Sylvia Barry,…, Real Estate Pro in Marin County, CA
MVP'08
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Hey I thought this was not a place to toot your own horn and look for business?
1 vote Thank Flag Link Sat Nov 24, 2007
The "marketing staff" or developer sales staff is interested in representing the seller's best interests in your purchase transaction. If you have your own agent, your agent is working in your best interests (called fiduciary responsbility). Not only will your agent assist you to negotiate things like upgrades, a better purchase price, etc. he/she can assist you to understand the builders purchase paperwork, coordinate timelines with your lender, coordinate different inspections (yes you should still have a home inspection when purchasing new construction - you'd be surprised the things that get skipped by builders - for example like an attic with no insulation), be another set of eyes during your walkthroughs.

Have you ever heard horror stories from someone you know who purchased a new home? No one interpreted the purchase agreement for them, they were not informed of certain upgrades available to them, no one was their advocate with regard to making repairs before and after the sale...the list goes on.

Now if you have identified a development already, there is a chance that they will try to deny you your own representation. Most builders in this area require that your agent be present with you during your first visit to the property, and fill out some "registration" paperwork in order for your agent to be compensated by the builder. If you do feel an agent would assist you in your purchase, you may not want to waste time finding one you like.
Web Reference: http://www.erinattardi.com
1 vote Thank Flag Link Sat Nov 24, 2007
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
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Simply put the Buyer's Agent only works for the buyer! An exclusive Buyer's agent will be able to negotiate the best deal for their one and only client.
The listing agent is put in a difficult position by representing the buyer and the seller. There is no way they can truly represent the best interest of both parties with conflicting interests.
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0 votes Thank Flag Link Sat Mar 24, 2012
Well value or no value - its just tacky!
0 votes Thank Flag Link Sun Nov 25, 2007
Judy, I think that Elizabeth gave you some great advice- along with some of the other advice here! I hope that you can get some representation and not use the seller's agent.

Patti Phillips
800-680-9133
0 votes Thank Flag Link Sun Nov 25, 2007
I agree with my colleges that a buyer’s agent is just as important in a new home development. I see it all the time that a buyer does not get the deals they may have if they had an agent. A deal may be upgrades or paying down your interest rate, many builders want to protect the comparable sales so a price reduction may not be what makes the deal. Also a buyer’s agent will interpret the contract with the developer; the agents at the development want your sale but are working for the developer.
Web Reference: Http://www.MIchaelRicks.com
0 votes Thank Flag Link Sun Nov 25, 2007
Hello thank you for allowing me to answer your question. When you say one of the properties is the marketing staff or developer sales staff is this a new home? If so most new home builders are offering to pay real estate agents a co-op fee for bringing a buyer to purchase one of their homes. The reason you should exercise this option to your advantage is to have a very experienced buyer’s agent who is used to working with new home builders and getting them to come down on the price and to pay your closing cost fees or buy your interest rate down. I have seen buyers go into contract with a new home builder without using a buyers agent to represent them think they got the best deal possible and I know they could have got a better deal than what they did on their own. As far as the other property same rule applies on resale homes the seller is paying the buyer’s agent’s commission so you should take advantage of that. The skill level of the buyer’s agent depends on how well they can negotiate on your behalf. So in closing in today’s market of real estate buyers should always find a top agent to protect them in the contract and during the escrow period.
0 votes Thank Flag Link Sat Nov 24, 2007
In California, any agent who is not affiliated with the agency who has the listing is effectively a "buyers agent". The main benefit to using an agent that is not the listing broker is that they are not connected to the seller and have no fiduciary responsibility to the seller. I prefer not to represent a buyer in a transaction where I represent a seller with very few exceptions. When representing the seller, it is my responsibility and obligation to get the highest and best price / terms for my client. When representing a buyer, my responsibility is to get the lowest price and best terms for my client. Hard to do when you represent both. In the case of a new home, which it seems you are referring to, the agents are representing the seller- developer and not you. In most cases, another agent will not be able to represent you other than for moral support and advice through the transaction. Most builders-developers utilize their own contracts and prohibit agents from forming a true agency relationship with a potential buyer yet, do compensate agents for referring clients to the builder-developer. Regardless, if I understand what you are saying, you will not have unbiased representation in your case.
0 votes Thank Flag Link Sat Nov 24, 2007
Hi Judy,

Congratulations on finding your property. New developments are usually marketed through their sales staff (as you mentioned). When they are closing out their development and have a just a few left and/or when they haven't been successful marketing it themselves is when they would generally find a realtor to "list" the property. I'm just wondering what you mean by "marketing agent", I'm assuming that they have a listing agent.

The advantages of using a buyer's agent are many especially in most cases the services are provided to you, the buyer for free. Finding the property is generally the easy part of the buying process, the rest that follow are complex and time consuming. You are hiring a professional to represent you and your best interest. I would find a realtor to further discuss these properties with them. Won't cost you a dime to explore the possibility! Good luck!
0 votes Thank Flag Link Sat Nov 24, 2007
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