Buying a Home: Find an Agent
Should you look for a realtor or a real estate agent? Most people don’t realize that these two terms don’t mean the same thing. Here’s a little flashback to high school geometry: All Realtors® are real estate agents, but all real estate agents are not Realtors®. A real estate agent is anyone who is licensed to help consumers buy and sell homes. A Realtor® is also a member of the National Association of Realtors®, which has a strict code of ethics defining the agent’s duties to clients and customers, the public, and other Realtors®.
If you don’t have any agent recommendations from friends or relatives, you may want to look for a Realtor® because you may be more likely to find a higher-quality agent this way. There are no guarantees, of course, and there are plenty of excellent real estate agents who aren’t Realtors.®
Within the Realtor® designation, you can go even further and choose an Accredited Buyer’s Representative (ABR®), someone who has additional training in serving homebuyers. Of course, someone who doesn’t have the ABR® designation may be just as qualified to be a buyer's agent..
What to Look for In Your Representative
Regardless of which type of professional you choose to represent you, ask prospective agents questions like these before choosing one:
– What experience do you have in the locations where I’m looking?
Work with an agent who is very familiar with your target buying location. Ideally, your agent will actually live in the area, not just sell there, so he or she can direct you to the best neighborhoods and advise you about quality of life issues and on-the-ground details that an agent who lives elsewhere might not know about. That said, an agent who makes lots of sales in a neighborhood probably understands it well even without being a resident.
– How many years of experience do you have as a real estate agent?
The more years of experience, the better. If you’re going to work with someone less experienced, what can they offer you that a more experienced agent can’t?
– Are you an agent full-time or part-time?
In theory, an agent who works full time and who has plenty of experience will do a better job for you, but a new agent who is eager to prove him- or herself and who has a good mentor in the field may do just as good of a job as a more seasoned professional.
– What days and times are you available to show me homes and answer my questions?
An agent should be available at the days and times you want him or her to be available. If you work from 9 a.m. to 6 p.m. Monday through Friday, you’ll need someone who can work with you in the evening and on weekends.
– Which kind of contract do you ask your buyers to sign?
Many agents will ask you to sign an exclusive contract with them for a period ranging from 30 to 90 days, because after going to the trouble of showing you houses and answering your questions, it wouldn’t be fair to them if you suddenly switched agents on a whim and someone else got the commission. Being asked to sign a contract like this is perfectly reasonable. But to protect yourself, sign the shortest contract possible, if you sign one at all, in case you aren’t satisfied with the agent’s performance.
– How many buyers are you working with right now?
An agent who has too few or too many clients may be unskilled or overworked. They might just be new or bad at advertising, or might not be able to give you as much attention or respond as quickly as you’d like.
An agent's answers to these and any other questions you want to ask (how many homes did you sell last year, how do you negotiate home prices, etc.) will help you get an idea of how qualified they are in general, how qualified they are to help you with your specific needs, how experienced they are and how much time they’ll have available to help you. You also want to find someone you like, since you’ll be spending lots of time with them looking at homes and dealing with purchase contracts.
Where to Look for Your Representative
Word of mouth remains a great way to find an agent. If your best friend, coworker or uncle worked with an agent they loved, put that person at the top of your prospect list. But thanks to the internet, it’s easier than ever to find an agent.
Sites such as Realtor.com, Zillow and Redfin allow you to search for agents near you and see how other customers have rated them. You can also see how many years of experience they have, get their license numbers and read their personal remarks, such as their experience in the neighborhood you want to move to. Another way to meet prospective agents is to attend open houses. Before you start working with them, verify their licensing online through your state’s real estate board website and check for disciplinary actions while you’re there.
Real Estate Agent Fees
Traditionally, the seller, not the buyer, pays all the real estate agent commissions for the transaction. These commissions can be as high as 6% and are customarily split between the buyer’s agent and the seller’s agent.
The biggest caveat when choosing an agent is that you should try to avoid using the same agent who listed the home (the seller’s agent) as your agent. Sometimes such a situation is inevitable; you might be working with a popular and productive agent who happens to represent both you and the seller of your dream home. But don’t choose this scenario on purpose, because even the most honest and ethical agents find themselves facing a conflict of interest when they represent both parties. Their goal will be to get the highest price for the seller, because that’s how they’ll earn the highest commission. They’ll receive both the seller’s and the buyer’s agent’s commission if the deal closes. This arrangement is perfectly legal, though.
That being said, even a pure buyer’s agent may have less incentive to haggle over price than you’d think. Not only do they get half of the sales commission, which is affected by the price; they also benefit from selling a high volume of homes, which means they’re incentivized to close deals quickly more than they are incentivized to get the lowest price for their buyer.
Some agents offer a commission rebate. As we mentioned, the buyer’s agent and the seller’s agent customarily split the commission from the sale, which is usually 5% or 6% and paid entirely by the seller. That means that your agent (the buyer’s agent), will get a commission of 2.5% to 3.0%. Your agent may then elect to give some of that money to you as an incentive for you to work with him or her. For buyers with limited cash reserves, this rebate can help offset the sting of the down payment, closing costs and other expenses associated with purchasing a home and moving.
The availability of a commission rebate, while attractive, should not be your main criteria in choosing an agent. In a transaction of this much value, the amount of money a good agent can save you by doing his or her job well could easily exceed the commission rebate offered by another agent. In an ideal world, you would find an agent who offers both, but this may not be possible. (To learn more, read Do You Need a Real Estate Agent?)
Finally, we’ve arrived at the fun part – it’s time to find a home!Buying a Home: Find a Home