It’s not surprising that most home buyers hire a real estate agent or broker to help them find a home in Northwest Arkansas. Without one, in the time it takes you to find and buy a home, you ‘d have to learn and put into practice a special set of skills real estate professionals spend years honing. From finding a home and matching you with adequate financing, to negotiating the contract and closing the deal, the real estate agent’s numerous duties and responsibilities reflect the often-esoteric nature of home buying. Ultimately, you can expect your buyer’s agent to guide and assist you through this home-buying adventure. He or she will help you avoid potential pitfalls, and in the end, hand you the keys to your new home.
What Does a Buyer’s Agent Do
To help you buy a home, your buyer’s agent must have a vast working knowledge of the real estate market, including price trends, neighborhood conditions and amenities, real estate law, zoning issues, financing, taxes, insurance and negotiating. The best agents are also “street smart” in the psychology of home buying and the stresses that accompany it.
During your initial meeting, agents typically help you determine the viability of your wants and needs in both a neighborhood and a home. The agent will help you learn how much you can afford, help you find suitable financing, clue you in on current market conditions and tell you what to expect as you shop for a home. Your agent will also devise a strategy or shopping plan based on your needs, how much you can afford and current market conditions.
As you shop for your home, you’ll likely meet with your agent to tour available properties and discuss myriad details, including a home’s pertinent selling points, floor plans, the neighborhood’s crime rate and community proximity to schools, shopping centers, cultural activities and work centers.
The buyer’s agent is responsible for obtaining disclosures, making sure home inspections and repairs are completed and coordinating the activities of your lender, attorney, roof inspector and other professionals engaged in your purchase. If bargaining over the price is necessary, your agent will be your negotiator, and when it’s time to sign the final closing documents, he or she will accompany you to make sure all the “I’s” are dotted and the “T’s” crossed.
When you have a question, concern or idea as you shop, your agent should be able to respond either directly or by referring you to someone who can help.
How agents are paid
Once you find your home and the deal is sealed, your agent is most likely paid by commission. Typically, the seller pays the commission, making realty services “free” to the buyer. The listing broker, for whom the listing or seller’s agent works, typically requires that sellers pay 5 percent to 7 percent of the sales price. Because most real estate transactions involve two brokers – the broker who finds the buyer and the broker who finds the seller– the commission is usually split 50-50, between the two brokerage offices. Then, within each office, the agent who handled the transaction gets a share, usually half of the 50 percent or about 1.5 percent.
There are a few exceptions to the commission method of payment. If you use a buyer’s agent, the contract you could be required to sign may or may not require a fee for services or a fee in addition to the commission. Most buyer’s agents, however, simply split the commission 50-50 with the listing agent. In any event, the buyer’s agent contract stipulates that the agent works exclusively for you and is more likely to work with your best interests at heart.
Avoiding dual agency
More and more, buyers hire a buyer’s agent, especially in hot competitive seller’s markets and to avoid what’s called “dual agency”– an agent, brokerage or company representing both the buyer and seller. It’s only natural for an agent to attempt to sell you listings from her brokerage or company. Legal in many states, dual agency nevertheless comes with an inherent conflict of interest as the agent, broker or company attempts to fairly exercise fiduciary duty, represent two opposing clients and collect the full commission. Some buyer’s agents, however, split their time acting as a listing agent. To completely remove the potential of any conflict of interest, exclusive buyer’s agents work with buyers and do not list homes for sale.
If you’ve gained sufficient buying knowledge, say from a previous purchase, or if you simply don’t want to pay the full commission, hiring a discount broker is yet another option. Discount brokerage doesn’t necessarily remove the conflict of interest possible in dual agency, unless the discount broker is also exclusively a buyer’s agent. Discount brokers charge a reduced commission as small as 1 percent or offer a menu of services in a “pay-as-you-go” arrangement where you pay only for those services you use. Some offer a combination reduced commission and menu of services while still others work by the hour. While some franchise operations offer discounts and agents are often free to charge less as they see fit, most discount brokers are independents or discount chain operations.
The disadvantage is that you may have to pay for the hours or services you use whether or not you buy a house. Also, discount brokers often don’t provide the one-stop set of ancillary services generally available from more traditional brokers. Ancillary services often include referrals to proven lenders, insurance agents, home inspectors and the like, who help speed up the home buying process. A service that doesn’t satisfy customers isn’t one a broker is likely to retain in his or her business circle.
The new “virtual” brokers on the Internet are often discount brokers offering reduced commissions, but the affiliate and partnering approach on the Web often allows them to offer many of the ancillary services you get from a traditional broker. Virtual brokers may or may not have brick and mortar facilities from which to hold your hand, should the need arise, but they are able to cut costs because of the automation and smaller overhead. The so-called “click and mortar” brokers typically offer their own listings and come with a dual agency potential, but they typically also align themselves with a larger online MLS or listing site.
With so many different types of agents to represent you, take great care in selecting an agent to meet your needs. Ask family, friends, co-workers, other professionals you’ve hired and others you trust for referrals to agents who have recently satisfied their needs.