Are you getting ready to start looking for a new home?
That’s great! But do you know where to start?
Are you sure?
Buying a new home isn’t something you should jump into without first preparing yourself for what’s ahead. There are some pretty important things that need to be done first, as well as some common home buying mistakes you will need to avoid.
The best way to avoid any home buying mistakes is to hire a buyer’s agent who can and will help you avoid those mistakes. So let’s dive right in and learn about what you need to do and know before you start looking for a new home. Let’s also talk about the one thing you must never do, if you want to protect yourself from being taken advantage of and potentially losing out on thousands of dollars.
Can you guess what that is?
Hint…hire an experienced buyer’s agent!
What Is a Buyer’s Agent?
In real estate, a buyer’s agent is a real estate agent or broker who represents the buyer and has a fiduciary responsibility to do everything in the best interest of their client. This requires a high level of trust between both parties. More on this in a moment.
What Is a Fiduciary Responsibility in Real Estate?
Once a real estate agent or broker officially takes on a client, be it a buyer or a seller, that real estate agent then has a legal responsibility to make sure everything is done in their client’s best interest. That means the agent’s responsibilities must all be legally carried out and no confidential information should ever be given to the other party without that party’s written permission.
For example, a buyer’s agent has a legal responsibility as a fiduciary to not disclose to the seller or seller’s agent that their client is willing to pay a higher price for that home if the seller was to reject the initial offer, even if it would mean the buyer’s agent would receive a bigger commission for that higher-priced offer. It also means the buyer’s agent should not try to influence the buyer’s decision in any way for personal gain. Additionally, the agent must not release any personal information to the seller or seller’s agent about his/her client’s place of employment, education level, or anything about their finances, etc. If any of the fiduciary responsibilities are broken, there are legal ramifications available to a client and all real estate agents know this.
What Does a Buyer’s Agent Do?
A buyer’s agent will have in-depth knowledge of the market area, as well as access to information and details that might not be readily available to the general public.
Here is what a buyer’s agent will do for their clients.
- Navigate all aspects of the home buying process.
- Look through the MLS activity reports on a daily basis for homes that will best match their clients wants and needs.
- Search for homes that have not hit the market yet, but that the agent has access to through their network or brokerage relationships, etc.
- Inform and educate their clients about the home buying process and provide them with buyer education information packets covering everything they need to know for a successful transaction.
- Send their clients lists of matching properties to review.
- Helps clients narrow down their home selections based on market trends and experience to make it easier for them to proceed.
- Provides their clients with home information packets for any home they have chosen to pursue.
- Schedules and shows their clients the homes they’ve chosen to tour.
- Makes offer, contingency, and contract recommendations so their client’s offer has the best chance of being accepted.
- Helps their clients navigate the escrow deposit process.
- Uses their professional negotiating skills for all counteroffers, contract issues, and buyer/seller hurdles.
- Helps with the mortgage and financial requirements for getting a lender approval.
- Assists with selecting the right home inspector and follows up on all inspections and other processes until the closing has been completed. And, will negotiate any home inspection repair or price reduction requests with the seller’s agent.
- Sits with the buyer at the closing to make sure everything is in order and is as it should be.
These are just a few of the many duties of a buyer’s agent. A buyer’s agent does so much that it’s impossible to list everything on one page—literally!
Should I Hire a Buyer’s Agent?
A listing agent represents the seller and the seller’s best interest. So you can go through the listing agent to buy any given house, but you really shouldn’t. Only when you choose a buyer’s agent can you be sure you are receiving an unbiased relationship and one with a legal responsibility to do everything in your best interest.
Some people think going through the listing agent will save them money when buying a home. However, what you think you are saving is generally far less when compared to what you could have saved overall using a buyer’s agent who is working exclusively for you versus the listing agent who is working for their customer—the seller.
Remember, the listing agent is working in their client’s best interest, not exclusively yours. When using a buyer’s agent, your agent will use his/her negotiating skills and market knowledge to get you the best possible price, which could far exceed what you might have saved otherwise.
Additionally, having a buyer’s agent is like having someone on your side who knows exactly what to look for when showing you a house. A buyer’s agent will be able to immediately recognize red flags and possible future problems and issues. This is because they do this for a living and can spot potential issues immediately. There are things such as structural issues, pest control issues, potential mold issues, roof and or leaking issues, as well as being able to recognize when a home has some aging major components. All of these things could end up costing you thousands of dollars in the long run. Money you probably wouldn’t have otherwise anticipated spending sooner rather than later. This alone makes having a buyer’s agent priceless!
So YES! You should always hire a buyer’s agent when buying a home.
What Is a Buyer’s Broker Agreement?
Once you’ve found a real estate agent you like and feel comfortable with, that agent will probably ask you to sign a buyer’s agreement, or at least they should. The Florida buyer’s broker agreement is generally a three to six-month contract that is extremely important because it protects your interests as a buyer. It also spells out the responsibilities of both the buyer and the broker.
Here’s what’s included in a buyer’s broker agreement.
- Both the buyer and broker will sign the agreement.
- The agreement states where (city, county, or state) the broker will be representing the buyer.
- What type of property and price range you’re looking for.
- A starting and expiration date of the buyer’s broker agreement.
- Spells out the responsibilities of both parties.
- States the legal relationship the broker has to you the buyer.
- Confirms the broker/agent will not share any of your information without your written consent.
- States all negotiations will be performed with your best interest in mind.
- Confirms the buyer has not enlisted the help of another Realtor or brokerage.
- Confirms how the broker is paid.
- States that the brokerage/agent will not unlawfully discriminate.
- Advises you that can seek legal and/or tax advice if you wish.
- Confirms the buyer’s broker contract follows the laws of the State of Florida.
- States that you can cancel the buyer’s broker agreement at any time specifying how that is handled and the number of days required to end the agreement early. It also includes a dollar figure that a buyer might owe an agent if the required early termination notice isn’t given. This will depend on where you are in the buying process.
- And will include any other case-specific details agreed upon by both parties.
The Importance of Signing a Buyer’s Broker Agreement
As a buyer, do you really have to sign a buyer’s broker agreement? No, you don’t, but…you should, and here’s why.
While signing a legal document makes some people nervous, signing a buyer’s broker agreement shouldn’t because it comes with specific benefits that protect you throughout the entire home buying process.
By signing a buyer’s broker agreement, you are confirming yourself as a broker’s client, which then puts into place all the legal fiduciary responsibilities a real estate agent/broker are then required to provide you. If you are not offered the option or are unwilling to sign the buyer’s broker agreement, that broker/agent doesn’t necessarily have to provide you those same fiduciary duties. That means they don’t have to do anything in your best interest when showing you homes and negotiating with other agents and sellers. Having said that, all agents are still obligated to treat you with integrity and honesty, while treating you fairly, but, in this case, they don’t represent you exclusively. Therefore, anything about your situation could be disclosed to the other party.
Alternatively, had you signed a buyer’s broker agreement, the broker/agent now legally must disclose all pertinent information to you while exclusively working on your behalf. Additionally, when signing a buyer’s broker agreement, the contract clearly spells out all the important details in the contract so you can more easily understand the role of your buyer’s agent along with your responsibilities as well.
Just remember, while the buyer’s broker agreement looks very formal and has loads of legal ease, it’s a protection mechanism for both of you, perhaps even more so for you as the buyer than for the broker/agent. Therefore, you shouldn’t hesitate to sign one after reading it thoroughly. And, another thing, you can always terminate that agreement if anything happens that you are not happy with. You will have to read that contract’s fine print before doing so, though, because you might, in some cases, be required to provide a specific length of a written notice of early termination. And, in some cases, you might also be responsible for some fees, depending on where you are in the buying process.
How to Find a Buyer’s Agent
Once you have decided to enlist the help of a buyer’s agent, you will then need to find one that’s right for you, and there are several ways you can go about doing just that. One of the best ways to vet a buyer’s agent is to ask lots of questions.
- How long have you been in the real estate industry?
- How familiar are you with the area?
- Do you live in the area? If so, for how long?
- Is this your full-time job?
- What are your credentials and do you hold any certifications?
- How will you be paid and are there any extra fees?
- Do you have any client testimonials or reviews? If so, can I contact them?
- Ask him/her how they plan on helping you find a home. This should be more than just providing you with a scraped MLS list of homes.
- How many people have you helped buy homes in the past three years?
- Can you provide me with the names of several ethical mortgage brokers?
- What hours do you work and who handles your clients when you are off, sick, or on vacation?
Don’t forget to check online reviews to see how your proposed buyer’s agent has performed for other clients in the past. Look at the agent’s website to make sure they are on the leading edge of technology. If they don’t have their own website, they might not be. That doesn’t mean he/she isn’t good at what they do; however, the real estate industry has changed significantly over the years and for an agent not to have their own website could be an indication that they are a bit behind the times. If that’s the case, use your gut instinct about whether they are the right agent for you.
If you need a buyer’s agent, and/or are trying to sell your home while buying another one, please Contact Us today. The Lakeland Real Estate Group is a 5-Star real estate broker in Lakeland, FL that prides themselves on helping their clients find the home of their dreams quickly and for the lowest possible price.
Let’s Do This!
Other Valuable Resources to Consider
Do you keep losing in bidding wars due to multiple offers? Eileen Anderson offers valuable tips on how to become a stronger buyer in a Seller’s Market
Most offers will contain contingencies, such as financing, inspections, appraisal. Bill Gassett provides insights into various contingencies to know about in a real estate transaction. Contingencies do protect both buyers and sellers.
Fixtures, Furniture and Finishes in a real estate transaction can be problematic for buyers and sellers. Vicki Moore takes out the confusion that can arise and provides real-life solutions that may work.
While bidding war are very common in our real estate market, so is an escalation clause. Sharon Paxson goes into depth explaining the 5 critical things to know about escalation clause.
About the author: The above real estate article “Should I Hire A Buyer’s Agent” was written by Petra Norris of Lakeland Real Estate Group, Inc. With over 20 years of combined experience of selling or buying, we would love to share our knowledge and expertise. Petra can be reached via email at firstname.lastname@example.org or by phone at 863-712-4207