Skip to content
Welcome! Are you part of the community? Sign up now.

Posted almost 4 years ago

Top 6 Reasons Why You Should Work with a Buyer's Agent

Normal 1587744522 Working With Buyers Agent

Photo by Helloquence on Unsplash

Written by Max Vishnev, NJ Realtor and real estate investor

If you are thinking about buying your first real estate property, the first thing you should do is find a great buyer’s agent. This is important in any market, but it’s even more crucial in the market we are in now, with unprecedented and dramatic changes in how people buy and sell real estate.

Before I dive into my top reasons why having a top-notch buyer’s agent on your side is crucial, allow me to ask a few rhetorical questions:

If you needed a haircut, would you go to a professional barber/hair stylist (all of whom need to be licensed, by the way) or your neighbor, Susan, who is a retired history teacher and dabbles in hair-cutting as a side gig?

If you developed a scary-looking skin rash, would you go to a board-certified dermatologist or try to treat it yourself leveraging all the helpful information on WebMD?

If you needed to enter into an important legal agreement, where the financial stakes are high, would you hire a professional lawyer or write it up yourself because you got an “A” in an elective law course in college?

You get the point. We tend to seek out professional help in many fields – from relatively unimportant and recurring tasks such as getting a haircut or dry-cleaning our dress shirts to more important tasks like visiting our dental hygienist twice a year. We also pay professional CPAs to do our taxes for us (especially if our tax returns having many moving parts), licensed contractors to do important home repairs, and car mechanics to fix our cars.

But why is it that when it comes to one of the most important decisions in our lives – the decision to buy our first property – that we often don’t have the same mindset?

Actually, it’s even worse than that. Not only do many first-time buyers not seek out the help of a professional real estate agent, they often end up reaching out to the seller’s agent directly, because they see the “Contact Agent” form on Zillow.

Instant gratification is a very powerful force.

Let’s dwell on this thought for a second: If you were going through a divorce, would you go with your soon-to-be ex-spouse’s lawyer or find your own? (I’m not a lawyer, and it’s very possible that the same lawyer can’t represent both sides in a divorce, but I will stick to it as an analogy.)

My goal in writing this article is to bring to light the top reasons why it’s very important to have a great agent on your team.

Let’s start with the most obvious:

Reason #1: An experienced professional representing your best interests.

There is way too much on the line not to. We are not talking about buying a new TV or even a new car. What we are talking about is buying a house, which, at least in the NYC Metro area (and other large markets), could cost you anywhere from $300,000 on the low end to $1,000,000 or more on the higher-end, especially if you’re targeting a multi-family home to “house-hack” (occupy one unit and rent out the others).

There is nothing wrong with doing your research online, scouting properties on Zillow and Trulia, and even attending open houses to get a feel for different areas and neighborhoods. But while you’re doing that, make sure you start talking to reputable local agents, so you can pick the one you want to be on your side when you’re ready to start making offers.

There are many steps between making an offer and closing on a property, most of which require finesse, experience, and a high degree of professionalism, because there are many wild cards and multiple parties involved (buyer, seller, two lawyers, lender, inspector, appraiser, title company, city hall, etc.). If you don’t have an agent representing you before you make an offer (and let’s say you end up contacting the listing agent for a particular property directly via Zillow), it will be too late to find your own agent later.

This is a vital point, so let me say it another way:

If you don’t make an offer through your own buyer’s agent, and you submit one directly to the listing agent, you will not be able to bring in an agent to represent you after the fact.

And here is the worst part – if you don’t choose a great buyer’s agent to represent you before making offers, you lose out on having a licensed professional on your side, representing your best interests, guiding you through a very complicated transaction, at absolutely no cost to you!

That’s right. Working with a buyer’s agent cost you, the buyer, nothing. You’d be surprised how often I get this question from first-time buyers: “So Max, do we pay you, or how does it work?”

Reason #2: A Great Buyer’s Agent Costs You Nothing.

No, you don’t pay a buyer’s agent. The seller does. Here is how it works:

When a seller decides to put a home on the market, which is also known as “listing a home”, he or she usually hires an agent to list it on one or more local Multiple Listing Services (“MLS”). These MLS then feed all of the online real estate platforms, including Zillow, Trulia, Redfin, and many others. That agent is called the “listing agent” for obvious reasons. However, before the listing agent can officially list the property, the agent and the seller have to sign an official Listing Agreement. This agreement spells out key terms, including the duration of the listing agreement, the proposed listing price, and the total commission to be paid by the seller at the time of closing, among other terms and conditions.

That total commission is either kept entirely by the listing agent if he or she can find the buyer (and represent both sides in the transaction in what’s known as “dual agency”), or split the commission between the seller’s agent and the buyer’s agent (usually, but not always, that split is 50/50, or at least close to it).

In other words, the buyer does not have to pay for the commission of the buyer’s agent as an “added” expense. Skeptical readers, however, will correctly point out that the total commission is baked into the asking price of the home, when the seller decides on a listing price, which essentially means that the buyer is “funding” the commission. I don’t dispute that logic. But that is not the same as paying a commission out of pocket.  It’s also baked into the price whether you have a buyer’s agent or not.

Side note:

A great agent is a busy agent, so it might benefit both you and your prospective agent if you do the following before engaging an agent:

1. Talk to a lender and get pre-approved. This will inform your decision as far as what price point to target, which in turn, will help your future agent narrow properties down for you.

2. Figure out what towns or neighborhoods you want to focus on. This could be from a combination of online research, including average property values, crime and school stats, and commute times, as well as "boots on the ground" due diligence, such as walking and driving around different areas to get a better feel for them.

Reason #3: A Top-notch Buyer’s Agent is a Local Market Expert.

Another reason to have an agent represent your best interests is that a great agent is a local market expert who can provide you with invaluable information to help you make the most informed decision.

An experienced local agent can help you figure out what a particular property may be worth by running a comparative market analysis (“CMA”), based on similar properties that have recently sold nearby. An agent will also usually have access to certain information that a buyer doesn’t.

For example, listing agents often disclose certain pieces of info to cooperating brokers that are not disclosed in the advertising remarks for the property. A great buyer’s agent can often glean vital info from the listing agent that the listing agent would usually not disclose to a prospective buyer directly, including the seller’s level of motivation, reason for selling, and whether the seller has any offers already on the table. Or perhaps a deal fell through recently. Well, your agent can find out why. There is a big difference between a deal falling through because a prospective buyer lost her job and couldn’t qualify for loan and the deal falling through after an inspection, for example.

A reputable local agent can also advise on you the property’s condition, location, and other factors that may impact its market value now and when you decide to resell it. For example, is it too far from the nearest school or train station? Is it near a loud and congested commercial avenue or busy warehouse that will affect your quality of life? Or maybe a particular property is on the “wrong side of the tracks” in a given town? The listing agent usually wouldn’t volunteer this information, unless prompted by a specific question.

Reason #4: An Agent With Your Best Interests in Mind.

Allow me to return to the subject of listing agents and the concept of dual agency. Generally speaking, there is nothing wrong with dual agency (whereby an agent represents both buyer and seller on the same transaction), as long as that arrangement is properly disclosed. However, there is a difference between what’s legal and allowed versus what’s optimal for the buyer.

Think about it. The listing agent has been hired by the seller to sell his or her property for the best price in the shortest amount of time. They have a legally binding agreement for these services. Now, as the buyer, your goal is to buy the house for the “best” price for you, which is the opposite of “best” for the seller.

To state the obvious – the seller wants the highest price, while the buyer wants the lowest price. How do you think the listing agent will behave in a dual agency situation, even one with the highest moral and ethical standards?

If the agent’s original commitment was to get the seller the best (highest) price, do you think that same agent will do his or her best to get you, the prospective buyer, the best (lowest) price? Of course not. That would be impossible in a market where real estate prices aren’t fixed.

The best-case scenario for you is that the dual agent finds a “sweet” spot whereby both parties can agree on a price. But that may not translate to you getting the best deal you could have gotten had you chosen to work with your own buyer’s agent.

And that’s just the negotiation part, which brings me to reason #5:

Reason #5: Your Own Adviser and Defender During the Escrow Period.

The purchase process from accepted offer to closing usually takes about 45-days (in a typical market environment). The period of time while you’re under contract waiting to close is also known as the “escrow period”.

During this time, there are a lot of hurdles and a few treacherous “check points”, which usually involve further negotiation. For example, a lot of first-time home buyers don’t realize that the agreed-upon purchase price is often not the final purchase price (at closing). That’s usually due to two contractual contingencies – the home inspection contingency and the appraisal contingency.

Home Inspection Contingency:

The home inspection contingency allows the buyer to ask for a price reduction (in lieu of repairs) if the home inspection reveals non-trivial issues with the property. Let’s say the inspection reveals that the home needs a new roof, and you get estimates from professional roofers that the cost of repairs will be $10,000. You can ask for a $10,000 price reduction in lieu of the seller repairing the roof themselves. Of course, the seller may reject that request (and risk the deal falling apart), or they can say “I’ll meet you halfway”, but my point is that the purchase price can often change after the inspection report has been presented to the seller’s attorney.

The Appraisal Contingency:

The appraisal contingency, meanwhile, also protects the buyer in case the appraisal report (paid for by the buyer and ordered by the mortgage company the buyer has decided to use to obtain a loan) states that the appraised value (independently estimated market value opinion provided by a professional appraiser) of the property is below the contract price. The buyer may ask the seller to lower the price to the appraised value, agree to pay for the difference in cash, or either party can terminate the agreement.

With both of these re-negotiation opportunities, you really should have an agent on your side representing your best interests and negotiating on your and only your behalf.

Reason #6: A Great Agent Comes with a Great Team.

Finally, another great reason to work with a top-notch buyer’s agent is that great agents work with other great real estate professionals. Like-minded people generally stick together, so if you’re a real estate rookie, connecting with a reputable local agent will also expose you to his team of trusted and vital players in any real estate transaction, including a great lawyers, lenders, home inspectors, insurance agents, and various contractors.

This will save you not only time, in terms of searching for and doing your due diligence on every single one of these professionals but will also increase the likelihood that the transaction goes smoothly. That’s because when your “team” already has built-in rapport and a successful track record of working on other deals together, your deal is much more likely to get from accepted offer to closing.

To close and at the risk of sounding like a broken record, all the value I’ve outlined here costs you nothing as a buyer, since the seller pays the real estate commission. So, it’s a no-brainer to find a strong buyer’s agent in your area.

“Where do I find one?”

Great question!

Finding a Great Buyer’s Agent:

These days it’s not hard to find a great agent. Start with your sphere of influence (friends, family, and colleagues). Ask them if they have worked with an agent when they were buying a house that they would strongly recommend without hesitation. Word-of-mouth recommendations from people you trusted are often the best way to find top-quality real estate professionals. Of course, you should do your own homework on those recommended individuals, including reading their online profiles and reviews.

Another great way to find agents, especially investor-friendly agents, is to browse the network of professionals right here on BiggerPockets.

Finally, social media presents another good avenue for discovering great agents in your market. LinkedIn is a great example. But don’t underestimate Facebook and Instagram, as the vast majority of top-performing agents today are active on social media.

I would advise setting up a quick call with prospective agents, because there are certain things you can learn about them over the phone (or better yet, in person) that you can't glean from an email or text.

Now, go out there, talk to some top agents in your market and start making offers! It’s a great time to lock in a 30-year mortgage and become a real estate owner.