I was making some calls last week to my database of clients, asking for referrals. In this business of real estate, it’s ideal that most of your business comes from referrals from friends, past clients, etc., and I find that happy clients actually love to refer their friends to you. Win/win! Anyway, during the course of one of my calls, my client told me he has a friend who was looking to buy, but he was looking on his own right now, he was writing offers through the listing agent and he was still missing out on properties that sold before he even knew about them.
OK, there are several things that jumped out at me with that conversation. There is a misconception sometimes amongst those casually looking to buy that it costs you money to align yourself with a buyer’s agent. For this reason, buyers are afraid or embarrassed to hook themselves up with one. This is false—there is no charge to you for the services of a buyer’s agent. A buyer’s agent is paid by the seller of the property at the close of escrow. You really have nothing to lose. Often a buyer’s agent will ask you to sign a form called a Buyer Representation Agreement, which is an agreement of sorts between you as the buyer and the agent stating that you won’t two-time your agent with other agents, and your agent will fulfill his fiduciary duties to you to the utmost of his ability, among other things. But there is no cost to you to hire one.
The other thing that jumps out at me is that his friend had lost out on properties that had sold before he even knew about them. Now, in the internet age, I will grant you that consumers have resources allowing them to see new listings pretty much as soon as they hit the MLS. With that said, the listings don’t propagate to those sites immediately, and I don’t know many consumers who sit online all day searching for new listings as they pop up. You people have fancy high-paying jobs, which are what allow you to buy a home. You have better things to do than weed through all of the dud listings to get to the good ones. A buyer’s agent will sift through the junk, preview the good ones and allow you to focus on other things.
Beyond that, a good buyer’s agent has his finger on the pulse of the market and knows not only what just hit the market, but what is coming up that hasn’t yet been listed. Often agents have “pocket listings,” or listings that sellers don’t yet want on the open market. Or it may be the home just isn’t ready to list yet but the agent is putting the word out in advance. A buyer’s agent will have his ears constantly open for these off-market listings. At the very least, they can ask around to the hundreds of other agents they have access to, to see if they might have a listing coming up that may be perfect for you.
Last, notice that this person was writing offers through the listing agents. Many times, buyers will do this thinking they’re crafty and that it’s going to get them a better deal. Occasionally it can. It can also backfire. When an agent represents both buyer and seller in a transaction, this is called “dual agency.” It’s perfectly legal in California, as long as the agent performing dual agency doesn’t breach any of his obligations that he holds to each party. Dual agency is not something I personally am a huge fan of. I feel strongly that both parties need to have their own individual going to bat for them on everything from price to terms to negotiations for repairs, etc. Why would you as the buyer want to be represented by a person who is legally bound to act in the best interest of the seller? Where will the loyalty fall if the agent is playing both sides of the fence?
I’m not saying that dual agency deals should never happen, but I am saying to weigh all the circumstances before getting yourself into a dual agency transaction. I personally think it’s very difficult to best represent the interests of both sides equally.
To summarize, if you’re in the market and thinking about taking the plunge into the wild world of home ownership, get yourself an experienced agent of your own who knows the market you’re looking in. They can run comparables for you to make sure you aren’t overpaying, and they will fight for your best interests in negotiations of asking price, repairs, credits, terms, etc. You need someone on your side!
If you’re thinking about buying a home or selling a home, or know someone who is, please drop me a line. If you’d like a free market analysis of your home’s value, give me a call and I’ll be happy to provide one.
Jefferson Hendrick is an L.A.-based realtor with Keller Williams. Contact him with questions, concerns and real estate inquiries at [email protected] or facebook.com/jeffersonhendrickrealtor.