If you are looking to buy a home you should really understand the difference between a buyer’s agent and a seller’s agent.
Simply put:
- a Buyer’s Agent represents the buyer
- a Seller’s Agent (or Listing Agent) represents the seller.
It’s almost always free to use a Buyer’s Agent. The reason is because the seller almost always pays for the commission for the sale of a house. That means that you, the buyer, are able to utilize the services of a Real Estate Agent for FREE. That’s a pretty good deal for you. So you might as well choose a real estate agent to represent you.
We encourage you to read through our “Frequently Asked Questions” to learn more about why you should use an agent to represent you.
Below are some Frequently Asked Questions:
1. Why should I use a Buyer’s Agent to help me buy a home?
2. How much does it cost to use a Buyer’s Agent?
3. Can’t I save money by just calling the name on the sign?
4. What happens when I go to Open Houses?
5. Can you explain how real estate agents are paid?
6. What is a Buyer Broker Agreement?
1. Why should I use a Buyer Agent to help me buy a home?
Once you have decided to seriously shop for a new home, your best bet is to work with one agent. Find an agent who is willing to work with you and stick with that agent. Any agent can show and sell you any home listed in the MRIS – so it is best to work with one person whom you like, rather than skip from agent to agent. Keep in mind that even though this agent is working with you – his or her commission is paid by the seller not by you – the buyer.
After you find an agent to help you in your search, you might want to consider signing a Buyer Broker agreement with the agent. In the past and agent was bound by law to represent the seller of a home – which meant that even though the agent might be working with you and showing you homes – that agent still represented the seller and could not disclose certain information to you as a buyer. Now, Maryland law ‘presumes’ that if an agent is showing you homes than you – as the buyer- are being represented. However, this still appears to be somewhat of a ‘gray’ area.
So, your best bet is to sign a Buyer Broker agreement with your agent. This agreement protects you and your agent. An agent acting as your buyer broker can disclose information to you that he could not as an agent working for the seller. The agent’s goal is now to get you the best deal and not the seller. In return for this service, you agree to use this agent exclusively to buy your new home.
Here are some more reasons to use a buyer agent…
A real estate agent has the tools to help you find a house that fits you and your budget. This includes access to more listings, educating you on the types of home loans that you might qualify for, assisting you with escrow requirements and eventually preparing the final contract for your new home. Plus, it sure helps to have a pro by your side when you’re dealing with something as expensive as buying a house.
Here’s the biggest tip you can get regarding agents: make sure that you are talking to a buyer’s agent and not a seller’s agent. For example, if you see a house you are interested in, don’t use the agent representing that property to make the deal for you (translation: don’t call the name on the “for sale” sign). That agent represents the seller and will try to make sure the deal is to the seller’s advantage, not yours.
Some other points to consider…
A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes
Selling or buying a home is time consuming.
Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with someone who speaks that language.
REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. That’s why having an expert on your side is critical.
REALTORS® provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they’ll every make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you. [return to top]
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2. How much does it cost to use a Buyer Agent?
It’s almost always free! The reason is because the seller almost always pays for the commission for the sale of a house. That means that you, the buyer, are able to utilize the services of a Real Estate Agent for FREE. That’s a pretty good deal for you. So you might as well use one. [return to top]
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3. Can’t I save money by just calling the name on the sign?
NO. The listing agent (and company) owes his or her loyalty to the seller and cannot legally help you get a better deal. Some buyers believe that the listing agent should be willing to take a lower commission because he or she does not have to share with another agent. That may happen, however it almost always benefits the seller and not you – the buyer. Any commission savings may be very small compared to buying an over-priced home, buying in the wrong area, buying the wrong home, etc. REMEMBER: The seller’s agent (and their company) is working for the seller and CANNOT, legally or ethically, give you, the buyer, any information contrary to the seller’s best interest. [return to top]
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4. What happens when I go to Open Houses?
If you go to an open house and are not represented by your own agent, you may run into something called ‘procuring cause’ which may be an issue if you later decide to buy the home with your own agent. The easiest way to avoid this is to tell the agent at the the open house (or write on the sign-in sheet) that you have an agent. Don’t yet have an agent? Send me an Email or give me a call – 301-414-5414 and I will send you some of my business cards. Tell open house agents that you have your own Realtor and give them a card. That way they will bother us for feedback and not you. It doesn’t cost you a thing. [return to top]
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5. Can you explain how real estate agents are paid?
Real estate agents work on commission, not salary, and get paid only after your home search is over, the contract negotiated and the transaction complete. Under the typical arrangement, the seller pays the commission to the real estate agent, and the agent’s services are free to the buyer. Most listing brokers get sellers to pay 5% of the sales price.
Because most real estate transactions involve two brokers — one that produces the buyer and one that helps the seller — the commission is divided, usually 50-50, between the two brokerage offices. Then, within each office, the salesperson who handled the transaction gets a share, usually 50% of the broker’s half. [return to top]
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6. What is a Buyer Broker Agreement?
A Buyer Broker Agreement is a written agreement between a buyer and a real estate agent. An agent cannot represent you when writing an offer without one. [return to top]
You may view a sample of a buyer-broker agreement here . [return to top]
