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Dear Steve,
My wife and I are starting the process of selecting a real estate agent for our soon-to-begin home search. Is
there a downside or disadvantage to using an exclusive buyer's agent or is it as good an idea as it seems?
-- Johnny
Dear Johnny,
To me, there's only an upside, assuming you hire the right agent. That's because the job of an exclusive buyer's
agent is to make sure your best interests are always being represented in a transaction.
Sure, you might know of buyers who successfully used a seller's listing agent to work in a dual
agency role, representing buyer and seller. Such arrangements are sometimes facilitated by a dual agent who
is willing to accept a discount commission -- say 3.5 percent instead the standard 6 percent -- that will come
largely or fully out of the seller's pocket. But the ethics of such deals can be questionable, as you can imagine.
In contrast, the obligations of an exclusive buyer's agent are clear from the proverbial "get-go."
A good one will make sure your position is not compromised by any behind-the-scenes maneuvering or buddy-buddy agent
collusion. The agent won't quietly steer you to in-house or company listings of a specific agency or compromise your
bargaining leverage. Your forthcoming purchase, after all, will probably be the largest of your life.
A good buyer's agent will do his or her best to determine the seller's motivation in order for you to
strategically tailor your offer. He or she should have a sense of whether you can advance a lowball offer of 10 percent or
even 15 percent off the list price without offending the seller. And only the buyer's agent is privy to your spending limit on the home
purchase.
The buyer's agent will also provide you with the true days on the market for any for-sale house in
your area. (Some homes that have sat on the market for six months or so are often reintroduced as new listings, so
you'll want the "cumulative days on the market" number.)
A buyer's agent will make sure you use a qualified, objective home inspector that will treat you like
a client. The buyer's agent will also know how to handle -- or when to avoid -- a home that is for sale by owner, or FSBO,
assuming you haven't fallen inextricably in love with one. Many FSBO sellers balk at paying any commission, which then
puts the commission onus fully on you.
And if you are buying a new-construction home, a good buyer's agent can best advise you on things such
as cancellation rights, those too-good-to-be-true promotions, and help you aggressively negotiate builder "throw-ins"
and credits.
One caveat: Make sure your buying-agent states that you'll pay commission -- assuming the seller won't
pay all of it -- only if he or she introduces you to the home you'll be buying. Some deals obligate you to pay the agent
regardless of who finds the house.
For more information, go to the National Association
of Exclusive Buyer's Agents.
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