Purchasing real estate is a complex and major transaction with many details to be handled. Depending on the laws in your state and the business arrangement you have with a licensed real estate agent, that agent may actually be negotiating for the seller, not you the buyer.
The best way to be certain that an agent is working in your best interests is by signing a buyer representation agreement with an agent.
A real estate buyer's representative represents the buyer who is purchasing property in a real estate transaction. Research by the National Association of REALTORS has shown that when a buyer's representative is used, the prospective buyer found a home one week faster and examined three more properties than consumers who did not use a buyer's representative.
So you've decided to buy a home...
If you're looking at a buyer representation (agency) agreement only as protection for the real estate agent or broker, you're missing a good deal of its value. There are significant values that can accrue to you, the buyer client, as well.
1) The Buyer is Assured of Your Best Efforts
If you the buyer is working with multiple agents, or you're out cruising the open houses, you don't have dedicated professional support. It's only logical that your Realtor would have a significantly higher level of comfort with a representation agreement, and thus be willing to spend more time and effort in scouring the market for the right properties for their buyer clients. To help you put this perspective in a positive way, Realtors are more attentive to their buyer clients. Due to the time and expense requirements, they're unable to offer this to non-clients.
2) Your Buyer Representation Clients are Exposed to Every Eligible Property
This is a big one. If this doesn't get you into the mode to sign the agreement, then nothing else is likely to do so. This might also indicate a less-than-serious buyer. Basically, Mr. & Mrs. Buyers, not all properties that meet your requirements are listed in the MLS. I feel it's in your best interests, and my your agent's duty, to look for FSBO properties that you might want to see. But you'll need to agree that they'll get paid a minimum commission if one of these properties turns out to be the right one for you. You can negotiate its payment as part of the transaction."
3) Last, But Not Least, They Get Paid for Sure
This one is for the Realtor's mental and financial comfort level. It's a whole lot nicer going to the office each day knowing that they'll be showing properties to buyers who are serious enough to guarantee that they'll get paid. There's also that better feeling they'll get knowing that they were able to show you all the homes that met your requirements, as well as having you well-informed as to your choices in representation. It's not fun having a buyer ask you after a purchase why they didn't see the home three streets over at a better price.
The buyer's representative works for, and owes fiduciary responsibilities to, the real estate buyer and has buyer's best interests in mind throughout the entire real estate process. A buyer's representative will:
Evaluate the specific needs and wants of the buyer and locate properties that fit those specifications.
Assist the buyer in determining the amount that they can afford (pre-qualify), and show properties in that price range and locale.
Assist in viewing properties -- accompany the buyer on the showings, or preview the properties on behalf of the buyer to insure that the identified specifications are met.
Research the selected properties to identify any problems or issues to help the buyer make an informed decision prior to making an offer to purchase the property.
Advise the buyer on structuring an appropriate offer to purchase the selected property.
Present the offer to the seller's agent and the seller on the buyer's behalf.
Negotiate on behalf of the buyer to help obtain the identified property -- keeping the buyer's best interests in mind.
Assist in securing appropriate financing for the selected property.
Provide a list of potential qualified vendors (e.g. movers, attorneys, carpenters, etc.) if these services are needed.
Most importantly, fully-represent the buyer throughout the real estate transaction.
* Produced using excerpts from About.com article by James Kimmons and REBAC.net webiste