#8. Why should I use a Buyer Agent instead of going straight to the listing agent?
In every transaction, there are 2 sides to any deal: The selling side and the buying side. Some first time home buyers may or may not realize this. There are different relationships that real estate agents have with clients.
For agents representing the Sellers, their obligation and interests are with the Sellers. So for buyers to approach the listing agent for the purchase of a property, they might think they can save money or save the hastle of having a buyer agent and do it themselves. That might not be the best thing to do. First of all, buyer’s don’t pay the buyer agent’s commission, the seller’s pay that. Second of all, the selling agent has the interests of the sellers and they’re trying get their sellers the most amount of money for their home. There are things to consider in putting an offer/agreement of purchase and sale together to buy a house. If the listing agent is putting an offer in for you, are they protecting your best interests? It’s not only the price, but the closing date, clauses/conditions to make sure you are protected because there is more than just the physical structure that you’re buying. Are there any structural defects that can’t be seen by the naked eye? Is everything that’s done in renovations and alterations on the property legal? What is the zoning for the particular property? There are lots of questions that you might want answered before you actually go through with the transaction. These can all be prevented if you use a buyer agent to look after your best interests. Not only will they help you put an offer together, they will also help you negotiate based on statistics (or at least they should) on the neighbourhood, comparable sales (similar units/sales), and help you find that diamond in the rough.
For agents who are representing both Buyers and Sellers, this is known as Multiple representation. These relationships are important to understand because at the end of the day, you need to know who’s watching your back and who’s protecting you. The buyer representation agreement, BRA, is a contract that is between the buyer and their buying agent. This is meant to take out the “buyer beware” philosphy so that you know what you’re getting before it’s too late. Some buyer’s that aren’t familiar with this contract need to understand that they have to buy with that agent for the term of the contract. So before signing a BRA, make sure you are comfortable with the agent and know that they have your best interests in mind. Some buyer’s refrain from signing it because they want to shop the market and give the agents a ride to end up buying something else with someone else. I don’t blame some of them as they might not know the agent well or aren’t sure of the relationship that they have. There are a lot of agents in the GTA (30,000+), so there are some bad apples in there that ruin the perception people have of agents. You can see this with 20% of the agents do 80% of the transactions and 80% of the agents do only 20% of the transactions. Choose wisely. To find a good agent, if you don’t know any that you can trust, ask a friend, get a referral, interview a couple of agents before signing any contract.
There are 3 ways where you might be obligated to pay commission to your buyer agent if they didn’t explain to you or if you didn’t realize. By signing a BRA with an agent, they get paid by the sellers at the time of closing if you are purchasing a house that is listed on the MLS. If you buy privately, from a FSBO (for sale by owner), or from a builder (if they don’t cooperate with agents), you might owe commissions to your agent. Discuss these scenarios amongst yourself and with your agent before signing anything. Having said that, over 90% of the houses sold are on the MLS anyways so that shouldn’t be too big of a concern. Just thought you should know as some agents probably don’t explain that part to their clients properly.
Hope this clarifies the whole relationship of Buyer agents to my fellow readers.
Should you have any questions, feel free to comment or contact me!
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