What is a buyer's agent?
When you're thinking about buying a home there's a lot to consider. One of the big questions you may have at this time is whether you want to hire a real estate professional to assist you in your search.
A buyer's agent is a real estate professional who works on your behalf as you try to buy a home. Their advice may be invaluable, especially if you have never been through the home buying process before.
With that in mind, before you make a decision on whether to use a buyer's agent, you need to fully understand what the buyer's agent will be able to do for you. There are a lot of nuances to a real estate transaction and getting a clear picture of everything the agent will do for you, is a must.
Before you dive headfirst into the market, read the following guide to see how a buyer's agent might be able to help you.
Should you use a buyer's agent?
Most people would benefit from the expertise of a qualified buyer’s agent as they may not have the same level of knowledge of the local market as a real estate professional. The first step in finding a buyer’s agent is to talk to a number of people who could represent you as your agent and determine which one has the right approach for your needs. Find one who best aligns with your wants and needs, and you'll be in great shape.
Once you've chosen your buyer's agent, you should talk about what you're looking for in a home (what's a must-have versus what's a nice-to-have), your price range and so on. After that they will do the heavy lifting for you when it comes to researching, finding and inspecting homes on the market that fit your criteria.
What's a good way to find a buyer's agent?
You may need to talk with more than one buyer's agent to find one with whom you have a good connection and understanding.
Most of the time, you can find them by simply running a web search for agents who are based in the market where you're looking to buy or you can ask around with friends and families who have been through a home purchase in the past. However, keep in mind that when speaking with any agent, one of your first questions should be whether they're licensed and what kind of experience and success in the market do they have.
Can you approach a house seller directly?
If there's a home you already have in mind that you want to purchase, you could approach a seller directly with an offer. However, if you choose not to work with your own agent, you may be opening yourself up to unnecessary risk, insofar as you may not catch issues with the property that an experienced agent would. More importantly, you might not understand the legal ins and outs of the negotiation and property transfer processes.
Any licensed buyer's agent will be able to help with the negotiation process and other aspects of the buying process that may come with even a relatively uncomplicated property sale.
Can you look at a house without a buyer's agent?
As a home buyer, you are able to attend openings or inspections or look at homes on your own. However, for any opening you attend, an agent who knows that market and where a given property might fit into it, is good to have around as a sounding board.
They may recommend that you place a bid as soon as possible or they may try to rein in your enthusiasm (such as if they believe the purchase price is inconsistent with what the property provides). Think of your agent as the voice of reason when it comes to a potentially highly emotional decision.
What is the difference between a buyer's agent and a seller's agent?
A buyer's agent represents you as a home buyer in a real estate transaction, whereas a seller's agent represents the home owner (a seller's agent can also be referred to as a real estate agent). They typically should not be one in the same as this creates a conflict of interests which could negatively impact both buyer and seller.
There are some other considerations you should also look to understand about the real estate professionals involved in a sale, including how negotiations will work. It's important to talk with your prospective agent about this.
What should you ask a prospective buyer's agent?
When you're getting into the process of working with a buyer's agent, it all starts with a conversation. Agents need to know exactly what you're looking for in a property, what your goals are, what kind of purchase price you would be comfortable with and more.
This is to help you outline what criteria a property should fit before you're comfortable buying it. For instance, an agent's strategy could differ widely if you're looking to purchase a home at a reasonable price, rather than finding a great deal on an investment property.
Your role as a future property buyer is to say "yes" or "no" to any number of options your agent brings to you. Once you have some potential purchases in mind (whether as an investment property or a home for yourself), you can proceed accordingly.
When making an offer on a property, what price should you offer?
Another key aspect of working with a buyer's agent is that they should understand the local market better than anyone. This will help them find the right property for you.
If you find a home you like, your agent should be able to provide you with the proper guidance on making a bid at an appropriate price.
After all, they not only know what you're looking for and what you can afford but they also know what a home with all the features you're looking for should cost. They'll be able to advise you on the recommended value and timing of any offers.
How do you pay a buyer's agent?
You may be thinking, "That all sounds good, but what does it cost?" A buyer's agent fee is not set in stone from one professional to the next.
Generally speaking, you can expect to pay a fixed fee or a fee which is calculated as a percentage of your home purchase price. While this price may seem high, the knowledge of the real estate market and level of service an agent can provide you when buying a property, is well worth it.
What's the fee structure: Fixed or percentage of the property purchase?
What you pay for an agent can vary, as can how they calculate their fee. Some will ask you to pay a fixed rate no matter what the sales price of the home is, and others will charge you a percentage of that final price. In just about every case, however, you will have to pay a fee upfront as a "retainer."
However, fees tend to rise along with the cost of the home itself. That is, if you're buying a home for $1 million, your agent's fee is likely to be higher than it would be for a $500,000 home.
If you are looking for more information about the mortgage and home buying processes, or how Lenders Mortgage Insurance can help you buy a home sooner, have a look at the "Information for home buyers" section on the Genworth website. Here at Genworth, we are committed to helping you on your home buying journey.