In Step 4 of the First Time Home Buyer series, we will consider whether or not you need to use the services of a real estate agent to help you find a home.
Do You Need a Realtor to Buy a Home?
As an agent myself, it may seem kind of odd that I would even pose the question. Shouldn’t I be telling you that in no uncertain terms you should be using a buyer’s agent? Well, it would be in the best interest of myself and my profession, but to be honest, I’ve been on both sides of the fence and I understand where you are coming from if you don’t feel the need to hire one.
Before becoming a broker, I bought homes without the use of a buyer’s agent. My reasons? My basic distrust of salespeople (yes, really!) and I had previously bought a house so I felt I had a pretty good grip on the home-buying process. Sometimes it worked out fine and sometimes I wish I would have used an agent!
I realize now that the listing broker for those homes where I didn’t use an agent had a fiduciary duty to the seller (and ONLY the seller). I don’t think I was swindled, but I do feel like those agents didn’t have my best interests at heart. Using only the listing broker also didn’t spread the “monetary love” around - the listing agent received 100% of the commission instead of having to share it with a buyer’s broker.
Fiduciary Duty
In Oregon, real estate agents have what’s called a “fiduciary duty” to either the buyer or the seller, depending upon who they represent in the transaction. By law, agents must uphold specific duties to the person who they are representing. The duties include the following:
- To deal honestly and in good faith
- To present all communications in a timely manner
- To disclose material facts
- To exercise reasonable care and diligence
- To account in a timely manner for money and property received by their client
- To be loyal by not taking action that is adverse or detrimental to the client’s interest
- To disclose in a timely manner any conflict of interest
- To advise the client to seek expert advice on matters related to the transaction that are beyond
the agent’s expertise
- To maintain confidential information from or about the client
- When representing a seller, to make a continuous, good faith effort to find a buyer for the
property
What is a Buyer’s Agent’s Role?
A buyer’s agent is there to represent only the buyer’s best interest. Since a listing agent’s duty is only to the seller, I think it creates a confict of interest if the listing agent represents both sides of the transaction. Here is what a good buyer’s agent should do:
- Educate you about the local market - neighborhoods, prices, and market trends
- Analyze your wants and needs
- Show you homes that fit your criteria
- Share a variety of leads for necessary professionals (inspectors, mortgage brokers)
- Negotiate on your behalf
- Fill out and file the correct paperwork
- Communicate and track deadlines
- Assist you in you doing your due-diligence
- Help solve any problems that may arise
What if it’s a For Sale by Owner Home?
Many For Sale by Owner’s will pay a buyer’s broker fee. This makes sense since it usually brings more buyers their way. However, there are those folks who don’t want to pay ANY broker for ANY reason, and that’s okay. If you come across a situation like this and you want to go it alone, I would suggest that you get a real estate lawyer to look over the sale agreement before you come to a final agreement. It may cost you a couple hundred dollars, but it would be well worth the cost if it saves you thousands of dollars and a lot of heartache.
Agent - Yes or No?
It all depends upon your knowledge and confidence level. If you decide to go it alone, DO YOUR HOMEWORK. Read books. Watch videos. Learn about things like home inspections, underground oil tanks, seller’s property disclosures, earnest money, sale agreements, and the closing process. The more knowledge you have the better off you will be.
One Bad Apple - Finding a Good Agent
And if you decide to hire an agent, how do you avoid the bad apples? Yes, I know they are out there, those “used car salesman” type of agents. I’ve had the displeasure of meeting a few of them. Unfortunately, there are bad folks in every profession and it’s those people that fuel the stereotype.
However, there are those of us that work hard to dispel this sterotype and I’ve met so many more of the good ones than the bad. Good agents make their client’s needs a priority; they realize that referrals are their lifeline and will do everything in their power to make the customer happy.
Next in the Series: The Hunt and The Offer
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