What is a Buyer's Agent in Real Estate: What You Need to Know

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Are you wondering what a buyer’s agent is and why you should have one? You are probably thinking, do I need a buyer’s agent?

Many consumers wonder why they should have a representative when purchasing a home. They wonder whether there will be any value.

From my years of experience as a Realtor, I know that Hiring a buyer’s agent makes sense if you plan on buying a home.

There are multiple reasons to do so, many of which we will cover here. Buying a home is one of the most significant purchases you will likely make in your lifetime.

Having a real estate professional look out for your best interests is essential.

A buyer’s agent will help ensure that you get the best possible results—and will make it more likely that you can achieve the desired outcome.

The best agents do more than provide assistance. They provide representation and are your advocate throughout the entire real estate transaction. They will be your guide every step of the way.

Unfortunately, some uneducated buyers think that going directly to the listing agent gives them a leg up on a purchase. Wrong!

The listing agent works for the seller. They have an allegiance to the seller throughout the transaction. Their goal is to get the seller the most money possible. A seller’s agent can give you ZERO advice.

We will cover 13 reasons why having a buyer’s agent in real estate is necessary.

Before doing that, however, let’s cover the definition.

Quick Facts and Figures

1. A buyer’s agent is a real estate professional representing the buyer’s interests in a real estate transaction.
2. They help buyers find properties and neighborhoods that match their preferences and budget.
3. Buyer’s representatives negotiate on behalf of the buyer to secure the best possible price and terms.
4. They guide and advise throughout the buying process, including arranging property inspections and coordinating with lenders.
5. The services of a buyer’s representative are typically paid for by the seller or through a commission split with the listing agent. Although this may be changing.
6. Over 90% of first-time homebuyers in the United States use a buyer’s agent to assist them in purchasing.
7. More than 80% of buyers who used an agent reported higher satisfaction with their home purchasing experience.
8. Studies show that buyers working with an agent could negotiate an average savings of $10,000 off the asking price.

What is Buyer’s Agency?

Buyer’s agency occurs when a real estate agent exclusively represents a buyer’s best interests. The agent’s allegiance is to the buyer in all parts of a real estate transaction.

Buyer’s agency was established in most of the United States in the 1990s. Before the advocacy of buyer’s agency, all real estate agents represented the seller.

The introduction of buyer’s agency was a significant turning point in real estate sales. Potential home buyers now could have a buying agent in their corner.

What is a Buyer’s Agent?

A buyer’s agent represents a buyer’s interests when buying a home. A buyer is considered a “client” of the real estate agent, not a customer. The agent becomes a fiduciary to the buyer in all aspects of the transaction.

In a buyer’s agency relationship, the agent provides the client with undivided loyalty, reasonable care, obedience to lawful instruction, disclosure, confidentiality, and accountability.

A real estate agent must prioritize the buyer’s interest and negotiate the best possible terms for their client.

Understanding the Role of MLS in Your Home Search

The Multiple Listing Service (MLS) is a powerful tool your agent uses to find homes matching your specific criteria.

Access to the MLS database lets your agent quickly identify properties that fit your needs and budget, ensuring you don’t miss out on potential homes.

This access lets your agent provide detailed information about each listing, including things not always available to the public, such as seller disclosures and previous sales history.

Your buyer’s agent can leverage the MLS to streamline your home search process. The system makes it more efficient and tailored to your preferences.

For example, when working with a buyer client, I can email new listings from MLS.

What is an Exclusive Buyer Agency?

Some real estate companies choose only to represent buyers. They do not have any seller clients. Under an exclusive buyer agency, the company’s goal is only to serve the best interests of home buyers.

An exclusive buyer’s agent (EBA) only represents home buyers and does not “list” homes for sale.

What is a Buyer’s Agency Agreement?

A buyer’s agency agreement is a contract between a buyer and a buyer’s agent for the exclusive use of their services. It spells out a working relationship between the parties. The buyer’s agency agreement will outline the duties to the buyer.

The critical aspects of a buyer’s agency agreement include agent exclusivity, the length of the contract, compensation procedures, and the type of home the buyer wants.

The contract will indicate that the buyer can only work with the specified agent. It will also state how long the agreement is enforceable and outline the compensation procedure if the seller pays a lower commission than the buyer’s agent desires.

A complete description of what the buyer is looking for will be outlined. In most buyer’s agent agreements, the contract typically obligates the buyer to purchase a home through the agent.

If a buyer purchases a home without their exclusive buyer’s agent, that agent is entitled to a commission.

Given that buyers are responsible for buyer’s agent fees regardless of whether they use them, it makes sense to be one hundred percent confident in the agent before signing an exclusive buyer’s agent agreement.

Much like you would when signing an exclusive right-to-sell agreement when selling. Under the Justice Department settlement, buyers will be required to sign a buyer agency contract.

What is a Buyer’s Agent Fee?

Do buyers pay commissions to real estate agents? Usually not.

The buyer’s agent fee is the commission they will earn when finding a home for a buyer and then subsequently closing on the sale. The seller typically pays for a buying agent’s fee.

Usually, Realtor’s commissions are split 50/50 between the listing and selling agencies. The seller pays the buyer’s agent from the sale proceeds, so the buyer has no financial responsibility for payment.

If the buyer becomes interested in a FSBO, and the seller is not offering a commission, the buyer would be required to pay the buyer agent commission as spelled out in the buyer’s agency agreement.

Additionally, the buyer must make up the difference if the seller’s compensation is lower than the buying agent’s minimum acceptable commission.

Do Listing Agents Make More Than Buyer’s Agents?

On a transactional basis, the commission paid to buyers’ and sellers’ agents is usually the same. So, on a transaction basis, the compensation is the same.

However, most real estate agents who work primarily with sellers have a higher income than buyer agents.

Finding a buyer the perfect home usually takes longer than selling a property.

Here is an excellent breakdown of how much a real estate agent makes.

Navigating Real Estate Commissions

Understanding how real estate commissions work is crucial when entering a home-buying transaction. The seller paid the commission for years, usually split between the listing agent and the buyer’s agent.

Buyers would receive professional guidance from the buyer agent at no direct cost.

This fee structure was designed to facilitate the smooth operation of the real estate market. It ensured buyers could benefit from professional representation without worrying about additional costs.

This, however, is about to change. The justice department has decided that real estate commissions should be uncoupled. This means a seller may pay their agent at some point this year, and a buyer may pay theirs.

It could become a completely different landscape for compensation.

Your buyer’s agent can clarify this process as it unfolds. I recommend that you understand how commissions impact the transaction and, ultimately, the purchase price of your home.

What Does a Buyer’s Agent Do?

Let’s review all the best reasons for having a buyer’s agent in your corner.

1. It Usually Won’t Cost You a Dime.

That’s right. In most cases, hiring a buyer’s agent won’t cost you anything. No, they don’t work for free. But they also don’t get paid by the buyer.

As mentioned previously, they get paid by the seller. Typically, buyer and seller agents will split the commission on a home sale. Remember, as I just mentioned, this may change later this year.

The only situation in which you might be expected to pay the buyer’s agent is if the property is FSBO—For Sale by Owner—and the owner refuses to pay the agent’s fee.

You can avoid such situations by verifying that any FSBO home you look at is being sold by an owner who has agreed to pay the buyer’s agent.

Your agent should explain how commissions work in instances like this one. Remember, there might be a great for sale by the owner out there that fits your needs perfectly. Part of your agent’s job is to find one of these properties for you, should they become available.

If a FSBO doesn’t pay a commission, you can always deduct that amount from what you offer the seller or pay your agent. This is one of the many reasons why FSBOs rarely save money.

You won’t have to pay anything out of your pocket, which should be a significant reason for having a representative.

2. Have a Finger on The Pulse of The Market.

The real estate market is in constant flux. Unless you are a professional real estate agent, it isn’t easy to be fully aware of everything in your local market.

That is why you hire a buyer’s agent—they will have the market knowledge you need to get the best results from your purchase.

The agent can advise you on what kind of offer will likely get you the home you want. Your agent can give you an informed opinion on where they see the local real estate market headed. Will the prices of homes rise or fall? Are the inventory levels for homes going up or down?

Are you likely involved in a bidding war because so few homes are on the market? How can you put yourself in the best position to win if that’s the case?

Is having an escalation clause a good idea?

3. Coordinating Showings.

You only have so much time to spend looking at homes. Coordinating showings with sellers and their agents can be a juggling act that may become frustrating when the inventory is tight, and homes sell fast.

An exceptional Realtor will be flexible about coordinating showings and work around your busy schedule as best they can.

Your agent will figure out how to get you to the showings you want most when you want them. Sometimes, this won’t be easy, like when the seller insists the listing agent attend.

4. Research The Area and Neighborhood.

Many buyers focus on the home they are excited about but forget about their surroundings. How is the neighborhood?

How is the city or town in which to live? Are there any known problems nearby that may give a buyer second thoughts?

The best buyer’s agent will have a pulse on the local market. They will know the best attributes along with the worst.

As a buyer, you may not be comfortable purchasing a home near a toxic waste dump. Your Realtor will research issues like this and give you the lowdown.

A significant role of a buyer’s real estate agent is to perform due diligence on the house you’re interested in. They are there to protect you.

A genuine buyer’s agent’s role isn’t to be a glorified taxi cab driver. If this is the kind of agent you work with, FIRE them!

5. Researching The House Itself.

In most states, homeowners will fill out a seller’s disclosure statement. In this document, the seller tells buyers what they know and don’t know about the property.

An outstanding buyer’s rep will review this form with you. They will advise on anything that may need further clarification or possibly investigation.

Researching the history of the house will be paramount.

For example, some sellers are notorious for not getting required building permits for remodeling work they have done in their homes. This big no-no could cause problems for a buyer once it’s time for them to sell.

The agent will research the local town building department when there is suspicion that permits have not been pulled.

In a worst-case scenario, your buying agent could discover the property is stigmatized somehow.

6. Advise You on What to Offer.

A buyer’s agent’s essential role is advising you on what to offer on the home you’re interested in. This should involve a detailed comparative market analysis.

Conducting a market analysis is crucial for understanding the value of a home. A knowledgeable buyer’s agent will provide this to help you make an informed offer.

The conclusion should be based on comparable sales data of similar properties or “comps,” as real estate agents call them. The focus will be on what is sold.

The best real estate agents understand pricing well. They know how various amenities in a home will impact the ultimate value. This will be one of the most critical tasks a buyer’s agent will provide when it comes down to it. The deal will be based on real science, not some phony Zillow estimate.

You will live with what you pay for the home for years.

The Importance of Professional Referrals

A buyer’s representative does more than find your dream home. They connect you with a network of trusted professionals essential for a smooth transaction.

From real estate attorneys who ensure your legal interests are protected to skilled home inspectors who uncover potential issues with the property. With the right, their recommendations can be invaluable.

These referrals are based on the agent’s experience and previous relationships. They ensure you work with professionals known for their reliability and expertise.

This support is crucial, especially for first-time homebuyers unfamiliar with the complexity of real estate transactions.

7. Advise you on Financing and Help you Find a Lender.

The agent you work with should have extensive knowledge of different financing options. They can connect you with lenders that will meet the financing criteria you are looking for.

Choosing a lender is an essential aspect of the home-buying process.

The agent will likely have one or more mortgage brokers they like to work with. So you can discuss your financing options with the agent and ask for recommendations from mortgage brokers.

One thing to remember about financing is that working with a local mortgage company is typically best when possible.

Local companies know your market better than those without a local presence. They tend to be easier to work with and more likely to be helpful.

Here are some helpful questions to ask the lenders you are interviewing. The last thing you want is a mortgage broker or lender that will take advantage of you.

8. They Will Be Your Professional Negotiator.

You may be great at negotiating, or you may dread the prospect. If you are a good negotiator, you know the importance of knowledge regarding getting the best results.

Your buyer’s agent knows homes and the market and can use that knowledge to negotiate effectively on your behalf.

If you don’t like negotiating, having an agent solves the problem. You discuss your offer with your agent, discuss terms, etc. They become your voice. You have an ultimate say but can rely on the agent to talk and negotiate for you.

One of the most vital aspects of negotiating will likely come into play after the home inspection. A diligent buyer’s agent will help you understand home inspection reports, which can reveal critical information about the property’s condition.

If there are any significant home inspection problems, you’ll want your real estate agent to help negotiate a credit, price reduction, or repair. Dealing after an inspection goes with the territory for a buyer’s agent.

9. Navigating Emotional Territory is Part of The Job.

Real Estate agents are often associated with being therapists on the side. With so much riding on the line, getting emotional over a home purchase is customary. You may want the home but might be stretching your finances to buy it. You may find the attitude of the seller irritating or even infuriating.

Business deals are best done with a cool head, so avoid letting your emotions get the better of you.

Having an agent as a go-between is excellent for an emotional filter. Vent to the agent, and then move forward with razor focus.

10. Your Agent Has Extensive Experience Looking at Houses.

Nothing replaces real-world experience. While it is vital to research the home-buying process, you can only absorb so much information and advice.

Fortunately, with a buyer’s agent, you have someone who has viewed probably hundreds of homes. They can give you valuable insight into what a home lacks and what it has that is desirable.

They should be able to tell you what the resale value will be like. Will the home appreciate well or be a laggard?

The best buyer's agents aren't concerned about making a sale but instead what's best for the client.Click To Tweet

11. They Understand How to Navigate Real Estate Contracts.

You may be pretty familiar with buying homes, or you may be brand new to the process. But even if you have done this seven different times, you will still benefit from having a professional guide you through the contract process.

Real estate contracts can be confusing and difficult to understand, so having a representative who will look out for your best interests and not be baffled or overwhelmed by the contract process is ideal.

Your agent will know about the various contingencies that can show up in a real estate contract—both those the seller might try to include and those you might want to have based on your circumstances.

The agent can also write a formal contract on your behalf, making you look like a desirable buyer to sellers and their agents.

A buyer’s agent will guide you through the complexities of the purchase agreement. The best agents will ensure you understand every detail before signing.

12. They Have Connections to Get Through The Buying Process.

A variety of professionals may be needed to complete your transaction. Instead of spending time tracking these people down—like home inspectors, real estate attorneys, and mortgage originators—you can leave the task to your agent.

They should have a list of trusted professionals who are excellent to work with and can connect you with them immediately.

Your agent can be a fantastic resource for many things before, during, and after your purchase.

Maybe you need a landscaper, painter, plumber, or professional mover?

If you are being transferred from out of state, you may need a company to ship your car or a temporary storage unit. A buyer’s agent who is tuned in locally can provide these things.

The best agents will have connections and provide you with a list of trusted contractors.

Most importantly, your agent can recommend trusted real estate attorneys to protect your legal interests throughout the buying process.

13. Your Agent Will Ensure That The Transaction Remains on Schedule.

While some delays in a home purchase can be unavoidable, many potential delays can be spotted and avoided before they occur.

However, detecting the problems early on requires awareness of how things are supposed to go, which only comes with experience.

Your agent will pay close attention to the transaction and look for possible issues.

They are just as interested in ensuring smooth operations as you are and should be well-equipped to keep things on track.

When delays do occur, which can happen, having an agent will help you minimize the delays.

Your agent will be able to identify where things went wrong and determine potential solutions based on prior experience.

Buyer Agent Near Me

Do you know how to find a buyer’s agent?

The best way is through references from family and friends. You should seek out someone who has successfully transacted with an agent and ask them pointed questions about how they like the agent. The least important part of being a buyer’s agent is showing you homes. Anyone can do that.

You could always do an online search if you are not from the area and don’t know anyone. Head to Google and use the buyer’s agent near me as a search term. You’re likely to see several beneficial results.

Remember to do a thorough interview before agreeing to work with them.

Don’t Accept Dual Agency

You may be working with a buyer agent with a listing you want. This situation creates a dual agency, in which the agent cannot represent your best interests.

Some agents often practice dual agency – a horrible situation for you and the seller.

Dual agency is illegal in some states because it is terrible for consumers.

The real estate agent becomes a neutral party and cannot give the buyer or the seller any advice. Completely moronic! When buying a home, there is incredible value in having someone working for YOUR best interests.

If this pops up, ask for a referral for another agent representing your interests.

Are There Any Disadvantages?

The only downside of having a buyer’s agent is picking the wrong one. If you signed an exclusive buyer’s agency agreement, you would be locked into using that agent until the contract expires.

Can a Seller Refuse to Pay a Buyer’s Agent?

<p>Yes, as long as it is done upfront. Once compensation is offered, it cannot be retracted during a transaction.

Should You Hire One?

Ultimately, you have every reason to hire a buyer’s agent and no reason not to. Take the time to interview a few agents and take your pick. You will be happy you did.

Here is a summary of what a buyers’ agent does for their clients. Look for a real estate agent who will do everything for you.

Additional Real Estate Resources For Buyers and Sellers Worth a Look

Don’t go to the builder’s real estate agent when buying a new home</a> – see why you should never go to the builder’s representative when purchasing new construction.
Does it make sense to sell my home now? – Petra Norris looks at whether selling your home this year makes sense. What are the most important considerations?

Look at each of the above resources from other real estate professionals for more sound real estate advice.

About the Author: Bill Gassett, a nationally recognized leader in his field, provided real estate information on what a buyer’s agent is. Bill has expertise in mortgages, financing, moving, home improvement, and general real estate.

Learn more about Bill Gassett and the publications in which he has been featured. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. For the past 38+ years, Bill has helped people move in and out of Metrowest towns.

Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!

I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge Massachusetts.

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