“There’s no such thing as a free lunch,” was my answer to clients’ questions about “too good to be true” investments when I was a CPA and Certified Financial Planner™.
Home buyers, however, do have a remarkable “free lunch” that can transform their home-buying experience: buyer agency.
What Is It? Buyer agency is just what it sounds like. In addition to Realtors® who help people sell their homes, there are Realtors® who help people buy homes.
What’s So Great about It? By entering into a buyer agency agreement with your Realtor®, you are hiring your own real estate consultant to get to know you, your interests, your preferences and your priorities. They will show you homes, negotiate on your behalf, and look out for your best interests. Your agent is your one-stop-shop for all of your real estate questions and will walk you through the entire home-buying process.
Where’s the Free Lunch? The best part of the buyer agency process? In most cases you don’t pay for it. The seller does. That’s right: the seller pays the fees for the agent who represents the buyer. To comply with the law and codes of ethics, the buyer’s agent must put their client’s needs first, even if they are paid by the seller.
What are the Risks if You Don’t Use It? Even experienced home buyers mistakenly believe that by going to the listing agent to buy a house (instead of enlisting a buyer’s agent), they’ll get a better deal. However, rather than this resulting in a lower price (the listing fee is generally fixed), their negotiating position is compromised. They disclose too much information to the listing agent—who by law is looking out for the seller.
How Do I Start? Before showing you a house, an agent will generally ask you to sign a buyer’s agency agreement. This is not to rope you into something you don’t want. It’s simply to lay out the expectations of the relationship. There must be a fixed end date of the contract, but many agents allow you to cancel the agreement at any time if you no longer want to use their services.
Conclusion? If you are buying a house, don’t pass up this opportunity to enjoy a rare “free lunch.” Enlist the help of a buyer’s agent, and experience the financial and other rewards that go with it.