Buyer's agent duties and loyalties
What should a home buyer expect from a buyer's agent?
- Home buyers should be able to expect loyalty and confidentiality from a buyer's agent.
- The agent should promote your best interests and provide you with all available facts that could influence your decision about making an offer for a home.
- A buyer's agent will offer research materials that help you make a realistic offer.
- A buyer's agent should give you the "what if" scenarios about the clauses in a contract. The agent may recommend additional contract contingencies to protect your interests.
- A buyer's agent should track and handle many of the day-to-day needs required to get to closing (such as inspections, helping you find a lender, tracking the progress of the loan, working with the closing attorney or agent).
Your Contract with the Agent
An exclusive buyer agency agreement normally ties you to one agent. That means in some cases you may owe the agent a commission even if you switch to another agent or agency.
A non exclusive buyer agency lets you have multiple buyer agents without altering standard contracts, but some agents won't work in that capacity.
- The contract should cover a specific time period agreeable to both parties.
- The agreement should be in writing. It should outline the expectations of both the buyer and the real estate agent.
- The agreement can be far-reaching or cover listings only in a specific geographical area.
- The contract should address agent compensation. Buyer's agents are usually paid a portion of the seller's commission at closing, but not always. Ask how agents are paid in your area. What if you buy a for sale by owner property? Will you pay the agent's commission? If not, get it in writing now.
A buyer agency agreement is a binding contract. Be sure you understand every aspect of it before you sign.
When You Contact an Agent
- Verify that the agent can work as a buyer's agent.
- Ask the agent to explain the services you can expect if you make her your buyer's agent.
- Ask for a blank copy of the buyer agency contract and take a day or two to study it. If some aspects of the contract concern you, ask the agent to delete or alter them.
- Find out how dual agency is handled.
- Don't let anyone pressure you into signing an agreement that doesn't feel right.
The Bottom Line
Don't sign a buyer agency agreement until you know the agent is the right one for your needs. Some states allow agents to initially work under an oral buyer agency agreement, but you'll usually need to put it in writing before making an offer.
An alternative is to allow the agent to work as a seller's agent until you feel comfortable signing an agreement. Do not disclose confidential information to a seller's agent.
Hiring a Buyer's Agent
Any real estate agent can sell you a home, but a good buyer's agent can offer advice on every aspect of your purchase, including details about realistic pricing and negotiation strategies.
What Can a Buyer's Agent Do
- Agent's duty is to get the best possible price and terms for the buyer.
- Agent must disclose all material facts about property (bad roof, plumbing problems, etc.)
- Agent should disclose personal facts that indicate sellers will accept a reduced price (such as impending divorce, foreclosure, etc.)
Seller's Agents Have Different Obligations
- Agent's duty is to get the price and sales terms sought by the seller.
- Agent must disclose material facts.
- Agent cannot disclose personal information about sellers without permission.
Benefits of Homeownership
Home owners provide stability. Owners typically stay in their home 12 years whereas renters stay no more than three years. U.S. Census American Housing Surveys.
Home ownership builds confidence. Owners possess significantly higher levels of self-confidence than renters. Rossi and Weber National Survey of Families.
Home owners create positive environments for families. Children of home owners are 59% more likely to become homeowners. Their children are also 25% more likely to graduate from high school and 116% more likely to graduate from college. Boehm & Schlottmann, University of Tennessee.
Home ownership improves neighborhoods. Owners are 28% more likely to improve their home and 10% more likely to participate in solving local problems. George Galster, “Land Economics” and DiPasquale & Glaeser, Harvard’s Joint Center for Housing Studies.
Home owners are more involved in civic affairs: including voting in the last election and knowing their elected officials. DiPasquale & Glaeser, Harvard’s Joint Center for Housing Studies.
Home ownership builds wealth. The median net worth of most modest-income owners is almost $60,000 compared to less than $10,000 for renters in the same income group. The Federal Reserve Board – Survey of Consumer Finance.
Home ownership provides tax benefits. The typical home owner that pays a $1,000 house payment will realize tax savings of about $120 each month.
The table below will help you see how much you'll spend in rent over the next 1, 5, 10, & 15 years.
Wouldn't you rather put that money into your own home and build equity in a secure investment?
If your current