Is engaging in the home buying process without a real estate agent a wise decision? Some may wonder about this. While it would be nice to say that all agents are ethical, honest, experienced, and care about their clients – especially first-time homebuyers – this is not true.
There are agents who aim to earn as much money as possible in the shortest time, without much regard for the buyers they encounter along the way. The problem is that some of these agents look and act just like ethical agents, making it difficult to distinguish between them. This confusion may lead some first-time homebuyers to feel excessive doubts. They wonder if they would be better off without a real estate agent. They think that perhaps they could buy their first home themselves and do a better job. This is when buying a home without a real estate agent starts to look like a popular option.
Why might you want a buyer’s agent?
Buying a home without a real estate agent is not necessarily the best option for you. For first-time homebuyers, they know very little about real estate. Most experienced real estate agents work full-time in this field, so they gain knowledge daily.
The home buying process is complex; it requires expert negotiation and extensive knowledge of the required paperwork. There are often small problems that arise during initial negotiations and paperwork that, if ignored, can jeopardize your entire deal.
Homebuyers should hire a buyer’s agent to work on their behalf. In most cases, the seller pays the buyer’s agent fees, so it doesn’t cost you any additional expenses.
Hiring a seller’s agent to buy a home
There is a little-known agreement called “variable commission,” which leads some buyers to believe they will get a better deal by going directly to the listing agent. Let’s say the property commission is eight apples, and the listing agent is willing to split that commission with the buyer’s agent, so each gets four apples.
In the case of the variable commission agreement, the listing agent may have a side agreement with the seller or agree to a side agreement when submitting the offer. If the listing agent also represents the buyer, the listing agent may reduce the commission from eight apples to six apples, saving the seller two apples.
The National Association of Realtors’ Code of Ethics states that the agent representing the buyer or tenant must disclose that they are receiving a variable commission before the buyer or tenant makes an offer. However, even with the disclosure, there may be negative consequences to this strategy. For example, you must realize that the seller will not share the two saved apples with you. The only way to see that savings is to reduce the sale price by a similar amount.
Some people believe that the listing agent has more incentive to close the deal when representing both parties in dual agency, but this behavior may be unethical. If the listing agent represents the seller, how can they keep the buyer’s interest in mind?
Note: If needed, a buyer’s agent can usually match the variable commission rate of the listing agent. So, don’t let the attractive variable commission rate of the listing agent lure you too much.
Buyer’s agent duties
One of the main benefits of hiring a buyer’s agent is that they have a fiduciary duty – a legal duty to put your interests first. These duties include loyalty to your best interest, confidentiality of your information, and disclosure of any important information about the property that the agent may have. For example, a buyer’s agent can do the following:
- Negotiate
- Selling price and terms and conditions on your behalf
- Anticipate problems and address them proactively
- Inform you of the truth and disclose any defects they observe
- Provide you with the seller disclosures and every legal document they are entitled to
Conclusion
After buying several homes and getting used to the process, you might think there’s no need to hire your own agent to buy another home. If you know the process and the risks associated with going it alone, it may be fine. However, something unexpected can happen – even to experienced buyers. For first-time homebuyers, these risks are greater, so it is likely a good idea to hire a buyer’s agent.
You will find that agents who specialize in working with first-time homebuyers enjoy a considerable level of personal satisfaction from providing superior customer service and fulfilling buyers’ dreams. These are good qualities in a buyer’s agent.
Source: https://www.thebalancemoney.com/do-first-time-home-buyers-need-an-agent-1798228
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