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Your Personal Advocate...The Buyer's Agent

People who purchase or invest in properties commercially, rarely do it alone.  You’ll always find a good, solid team behind those who demonstrate success.  This team may include architects, designers, attorneys, accountants, abstracting, surveying, title, and mortgage professionals.  Granted, if you’re a professional, you do this for a living and you can most likely afford to hire the best team available.

You deserve the same. Well, you may want to hire all of these people just for the construction of one home, but it’s extremely worthwhile to have access to that team when and if you decide to build your new home.

The sole purpose of a good real estate agent is to match your goals and desires with the right home, and most of us are very good at what we do.  However, as a home buyer, you may not be aware of the legal technicalities of Agency Law.  At times, it can be very confusing about just who is representing whom.  Many times, although an agent might be working with you, he or she is not working for you.  This technicality is especially important when you’re considering working with a builder to build your new home.

A typical scenario might look something like this. The builder hires an agent to represent his properties.  It’s the agent’s job to market those properties and work with potential buyers.  Of course, the builder’s agent would love to find a buyer himself and keep the whole commission. But to save time, the agent allows other agents to show the builder’s homes and bring in buyers -- with the agreement to split the commission with the builder’s agent. In the end, if you’re working with the builder’s agent or the agent who took you to the builder, both agents are really representing the builder unless you have a signed, written Buyer Representation Agreement that specifically hires your agent to represent only you. As in the case above, no agents are really working for the buyer.

The buyer's bringing all the money to the table, yet no one's on his side.

Who works for whom?

In most cases, the agents don’t particularly lie about their loyalties, but there certainly has been a lot of misunderstanding over the years. In fact, most people who are working with an agent in the purchase or construction of a new home believe the agent they’re working with represents them.

So, what’s the difference between a Buyer’s Agent and any other agent?  Although they do seem very similar and perform a lot of the same functions, Buyer’s Agents are legally bound to represent only you – the Buyer Client.  This relationship is formed in writing by agreeing to be represented through a Buyer Representation Agreement.   Right from the start, you’ll notice startling differences.  For instance, Buyer’s Agents are advocates for the home buyer.  They assist you in “viewing” properties, they don’t “sell” them to you.  They give you access to the entire market, not just the few meager listings that belong to most agents.  Once you find that property that you’re interested in, they work with you to obtain the best possible price and terms for that property – on a level that is advantageous for you, the home buyer.  Most importantly, they have a legal obligation to keep your information confidential, putting you in the strongest negotiating position you can possibly be in.  The Buyer’s Agent works for you, on your side.

What does my representation cost?

Usually?  Absolutely nothing to you.  The services of a Buyer’s Agents are most commonly paid by the builder or seller.  In most cases, the services of Buyer’s Agent shouldn’t cost you anything.  As with most agency relationships, the entire commission is paid by the builder or seller and split between two parties  - the Buyer’s Agent and the Seller’s (or “listing” agent) as well as their brokers.  Special exceptions may exist for properties where the property is listed as “for sale by owner,” since many of those properties are not listed through brokerages in order to prevent having to pay a brokerage or agent for their services.

So where do I save money when purchasing or building a home?  Most properties will sell at or near their original asking price, so don’t expect to go in and only pay 50% of the property’s market value just because you’re using a Buyer’s Agent.  Where a Buyer’s Agent saves you time and money is advising you on costly problems, undervalued assets and the negotiation process. The telecommunication company, Sprint, discovered that when a large group of their employees relocated to the Kansas City area, those who used a buyer's agent saved an average of 5 percent on the price of their homes.  Where a Buyer’s Agent really saves you time and money is making sure that you aren’t getting “taken.”

Finding a Buyer’s Agent

Buyer Agency is relatively new, so there aren’t many agents who work with Buyers only.  Most agents who work with Buyers represent sellers or builders as well.  The best way to find a buyer's agent is to ask friends, family, and coworkers for recommendations.  However, you’ll find that there are two types of Buyer’s Agents out there.  One commonly works directly for sellers or builders, and the other works as an Exclusive Buyer’s Agent – who only represents buyers and never works for the seller or builder.  Ensure that you’re working with someone who's representing YOU during your purchase.