Home Buying: Benefits of ‘Buyer Representation’
The vast majority of homebuyers are represented by a real estate agent or broker in the transaction. This is understandable when one considers that it is customary for the seller in the transaction to pay most or all of the brokerage fees or commissions due to the buyers agent. In one sense, the buyer is getting “free” representation out of the transaction, although a reasonable argument can be made that most sellers are probably passing at least some of this extra cost onto the buyer in the purchase price.
Some may wonder whether it is necessary or desirable to even involve a real estate agent on the buyer’s side of the transaction. This page addresses the very reasonable question: What value does a buyer’s agent bring to the table?
Before answering the question, it should be acknowledged that real estate is like any other industry in one regard: There are competent professionals in real estate and less than competent ones. The following outlines the main benefits to a homebuyer from having carefully selected, competent representation from a real estate agent professional.
Listing Agents Represent the Seller; Buyer Agents Represent the Buyer
Although this point may sound obvious, having a thorough understanding of who agents represent is an important aspect to the real estate transaction.
Under Maryland law in normal circumstances, a real estate broker or agent that advertises a home for sale represents the seller. This means the seller’s agent (often called the ‘listing agent’) has contractual and fiduciary duties to that seller, not to any buyer. Although realtors are bound by duties of fairness to all parties, the listing agent’s primary responsibility is to protect the interests of and negotiate on behalf of the seller. Buyers who do not understand this may be at a significant disadvantage if they operate under the assumption that working with or even speaking to the listing agent is no different than having a buyer agent represent them.
Accordingly, a main advantage exclusive buyer representation is that homebuyers can have a real estate professional available to represent their interests.
As a side note, state laws vary significantly concerning which party real estate agents represent in the transaction. Furthermore, even in Maryland there exist somewhat complicated rules related to “Dual Representation” that permit the buyer and seller to be represented by the same brokerage or agent when full disclosure is provided to the parties and other steps are taken. Implicit in this relationship is the possibility of conflict of interest because the objectives of the buyer and seller may be adverse.
For these reasons, it is advisable in most cases to make sure as a homebuyer that you have a buyer representative that represents you in the transaction, not the seller.
The Maryland Real Estate Commission has a disclosure form called Understanding Whom Real Estate Agents Represent that is required to be delivered by all real estate professionals to any home buyer or home seller who use their services.
Competent Buyer Agents Understand and Facilitate the Transaction
Having buyer representation as a prospective homebuyer can save time and money. The real estate agent can help make sure the home purchase transaction is a smooth one and assist the buyer in getting a good deal. A competent buyer representative can also help homebuyers avoid some significant liability exposure that accompanies a real estate contract.
The following is a partial list of the types of services that should be offered by real estate agents to their buying clients:
- Assist with Financing Pre-Qualification/Pre-Approval
- Facilitate the Home Search Process
- Determine a Fair Market Values for Target Properties
- Prepare the Offer
- Negotiate Terms
- Schedule & Attend Inspections
- Facilitate Settlement/Closing
- Provide Post-Sale Homeowner Resource Services
As an associate broker with the full-service real estate brokerage of Prudential Carruthers Realtors, my buyer clients the above benefits plus a comprehensive array of other services. For example, I am able to offer various in-house brokerage services under the umbrella of PCR Home Services. There is absolutely no obligation for buyers to use any of these affiliated service companies, but there is certainly a convenience to having the following services available all under one roof if buyers choose to use them (click the links to learn more):
- PCR Mortgage Services
- PCR Inspection Services
- PCR Settlement Services
- PCR Insurance Services
- PCR Warranty Services
- PCR Moving Services
- PCR Home Buyer Premium Reward
- PCR Home Connections
