What is a Buyer's Agent? Aside from showing buyers the homes listed in the local listing service(s), new homes and possibly For Sale By Owner (FSBO) homes, a buyer's agent is an unbiased and independent licensed real estate agent who is focused on promoting the buyer's interests. The buyer's agent should have no affiliation with the home seller or his agent; this person is there to seek out a better price and terms on the buyer's behalf.

What is a seller's agent (listing agent)? Generally speaking, this is a real estate agent who has entered into a contractual agreement to sell the seller's home (for a commission) and to promote the best interest of the home seller; this usually entails getting the highest possible price and best terms on behalf of the seller. The agent with the "For Sale" sign in the front yard is the seller's agent and represents the seller; it is important for a home buyer to be aware of this fact.

How are seller's agents & buyer agents compensated? On paper, they are compensated by the predetermined commission or fee paid by the seller upon closing. Regardless of the negotiated price and terms of the transaction, the home that you are buying -- if it is listed by an agent -- has a predetermined commission, or fee, built into it; you could call it a marketing fee. Generally, the funds from this marketing fee are distributed to the seller's agent and to the buyer's agent at closing. If you have opted out of buyer agency representation, then 100% of the funds is rendered to the seller's agent; or, depending on the terms of the listing agreement, the seller and/or builder retains the overage. Therefore, since this marketing fee is built into the home you are buying, shouldn't you have your own buyer's agent who is looking out for you?

Does this apply to Foreclosures (bank owned properties)? Yes. The banks hire agents to list and sell their foreclosed homes through the listing system by means of the same process. In this case, the bank is the seller and the listing agent represents the bank.

What if I don't have my own buyer's agent? Generally, if you elect not to have a buyer's agent represent you, then you will rely upon the seller's agent for every issue that will inevitably arise during the entire course of the transaction. Can you see the conflict of interest in that case? You are left to fend for yourself; and, depending upon the listing agreement with the seller, the listing agent retains the entire commission. While the buyer doesn't directly pay for the sales commission, they do bear a burden for the commission indirectly through the sales price. If you have handled much of the legwork when searching for a home, you may consider a buyer broker's commission rebate, which is a means to reduce your buyer agent's commission directly to you, the buyer; these are monies that can be credited to you at closing for your use, or issued after closing in the form of a check.

Note: If you have opted out of a buyer agency service, it would be wise to hire your own buyer's attorney in that case. For clarification, the closing attorney in Georgia only represents the lender in the transaction, not the buyer. With the mortgage fiasco that has taken place, independent consultation would be a good idea.

Do I really need a buyer broker (agent)? Instead of giving my opinion, I will refer you to what HUD (U.S. Department of Housing and Urban Development) in Washington DC has written on the matter. Here is more information for first-time home buyers regarding this issue.

Lastly and probably most importantly, not all buyers' agents are equal. You should research and interview your buyer's agent. You want a buyer's agent who will go to bat for you -- even against your mortgage lender; this may include checking for oversight or inaccuracies of the HUD-1 settlement statement. Contact me and I will give you a no-obligation over-the-phone consultation. Click here to learn about a discount for resale homes.