Do You Need a Buyer's Agent? No, But Keep a Lawyer on Speed Dial

Written by Posted On Thursday, 26 June 2014 10:39

Do buyers “need” a buyer’s agent to buy a home? No. Is it smart to do it alone? No. The reasons why are many, as opposed to the two main ones for not using one – saving money and “I know the market”. Buyers will not save money; buyer representation is almost always at no cost and despite the piles of “data” on line, unless it’s properly applied it’s just white noise. Dual agency is a terrible idea and the listing agent will ALWAYS keep the seller’s best interests first.

Unrepresented buyers allow the listing agent to write the contract; losing the advantage of negotiation, terms and specifically those trap doors that can be inserted to get out of situations that turn bad. The negotiation disadvantage remains along the way with inspection issues, appraisal issues and any other things that invariably pop up. And if that listing agent is ineffective, not well versed or not a full time pro, a significant financial purchase can become a nightmare.Buyer Broker

As far as saving money, wholly unlikely. The seller pays the listing broker a fee; when a buyer broker is not involved, the full fee goes to the listing broker. Buyers walking into new construction unrepresented are arguably even more misguided. The sales agent is legally bound to represent the builder in all aspects; always use a buyer’s agent when buying a new home. Builders have their swagger and attitude back and when issues arise (all but certain with new homes) buyer’s not having a dedicated agent to represent their interests will find tough sledding.

An overview of “Buyer Brokerage” as conveyed by the Georgia Association of Realtors:

All brokerage relationships fall into one of two broad categories: (1) broker-client relationships; and (2) broker-customer relationships. In a broker-client relationship, the real estate broker is representing the client and is acting as his or her legal agent in buying, selling, or leasing property. In Georgia, a broker-client relationship can only be formed by the parties entering into a written agreement. The agreement must explain, among other things, how the broker will be paid, the duty of the broker to keep client confidences, and the types of client or agency relationships offered by the broker. The real estate broker represents the buyer in locating and assisting the buyer in negotiating for the purchase of property suitable to the buyer. A buyer agency is created when the buyer enters into an agreement commonly known as a buyer brokerage agreement. A real estate broker can be compensated by one party yet represent another party. In almost all buyer brokerage agreements, the fee or commission received by the buyer’s broker is actually a portion of the fee or commission paid by the seller to the listing broker. In these situations, the seller also agrees that the listing broker will share the commission or fee with any buyer’s broker who finds a buyer ready, willing and able to purchase the property. With some buyer brokerage agreements, the buyer pays a fee or commission directly to his or her broker. Buyer agency is sometimes referred to as buyer brokerage.

The other type of brokerage relationship is known as a broker-customer relationship. With this type of relationship, the broker is not representing the customer in a legal or agency capacity. However, the broker can still work with the customer and help him or her by performing what are known as ministerial acts. These include, for example, identifying property for sale or lease, providing pre-printed real estate form contracts, preparing real estate contracts at the direction of the customer, and locating lenders, inspectors, and closing attorneys on behalf of the customer.

It pays to understand the role of the buyer broker and how to properly select a real estate agent to fill that role. On the surface, purchasing a home appears to be relatively simple – and it’s not splitting atoms – but when issues arise, the impact can be very significant an very costly.

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Hank Miller, SRA

Hank Miller is an Associate Broker & Certified Appraiser in the north metro Atlanta area. Since 1989, real estate has been his full time profession. Hank´s clients benefit from his appraisal and sales experience; they act upon data, not baseless opinions. He is an outspoken critic of the lax standards in the agent community.

Hank remains an active certified appraiser and completes specialty work for FNMA, lenders and attorneys. He is a well-known blogger and continues to guest write for multiple industry publications as well as national outlets like the WSJ, NYT, RE Magazine, USA Today and others. He is a regular on public Q&A sites on Zillow, Trulia and many others.

Hank consistently ranks in the top 1% of all agents in the metro Atlanta area. He runs the Hank Miller Team and is known as much for his ability as he is for his opinions. He is especially outspoken about the lack of professional standards and expectations in the real estate industry.

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