Thinking of Buying Without a Buyer’s Agent? Think Again
So you’ve weighed the pros and cons of renting or buying and decided to buy. Well, you better get yourself ready because you’re in for a long process that can be confusing. Buying a home is rarely as straightforward a purchase as other things. There will be a lot of legwork involved as you scope out different properties on the market, assemble a mountain of paperwork, compete with other buyers, and a host of other challenges to overcome before you get your hands on the keys to the front door. All of this can get very stressful. Having the right agent by your side to act as a guide and confidant can not only reduce the stress and time involved but also save you a lot of money. This is where a buyer’s agent comes in.
Things have changed a bit in the real estate world in the last few years. Many listing websites and apps now make it much easier to find a property without the need for a buyer’s agent. But the problem with many of these sites is that they can’t differentiate between a desirable property and a lemon. It takes in-depth market knowledge and an understanding of a good floorplan versus a bad one to weed through all the listings on offer to find your dream home. If you’re still not convinced that you need a buyer’s agent, then let’s go through the whole buying process and see what you can expect if you go without an agent.
The search
There are many listing sites available now where buyers can use an advanced search to find properties to their liking. StreetEasy is probably the best in NYC, but it still suffers from the same problems as others. Mainly that you’ll have to comb through hundreds of different properties which have all the bad mixed in with the good. You’ll have to make a shortlist based on your wish list, preferred neighborhoods, and budget. Even if you can narrow down a list of 10 or 20 properties to call, you’ll then have to find the time to visit each one and evaluate them. All of this isn’t hard, but it can be time-consuming, especially if you’re unfamiliar with the neighborhoods, streets, and buildings.
When you hire a buyer’s agent, they will do all the searching and calling based on your needs and budget. They can then schedule appointments to view properties which they feel fit what you’re looking for. If you’re working full-time and don’t have a lot of free time this alone can be invaluable. When viewing properties together, they can explain the pros and cons of each to help you decipher which is the right one. All this saves you time and ensures that you find a desirable property with great long-term potential that matches your needs and budget.
Negotiations and making an offer
The vast majority of listed properties in NYC are represented by listing agents who you will deal with rather than the sellers. Without a buyer’s agent to represent your interests the listing agent will assume dual agency. This means that while the listing agent will help you with any questions you might have, their loyalty will be to the seller. Their job is to sell and for the highest price possible. Therefore, in negotiations, they will always lean towards favoring the seller. Unless you have a lot of experience handling negotiations on your own, you could be in for a rough ride. There may be counter-offers and other interested buyer’s which without good negotiation skills could see your offer rejected.
A buyer’s agent can handle all of this and make suggestions on how best to answer counter-offers and deal with a bidding war. If you’ve chosen a good agent, they will know the neighborhood, current market prices and perhaps something about the seller’s motivations. Also, keep in mind that in NYC real estate contracts are not binding until both parties have signed the contract. The sellers have the distinction of being the last to sign. This means that even if they gave a verbal agreement to accept your offer, a better offer might come through and lead to them canceling yours. Unfortunately, there is little you can do if this happens but at least if you have an agent, you’ll be better prepared.
Other ways a buyer’s agent can help
Once you have an accepted offer and a fully signed contract the agent’s job is largely done. Your real estate attorney will handle the due diligence, closing documents and schedule for the closing day. But your buyer’s agent can still help in a few other areas that will ensure a smoother sale.
Recommend other professionals – Buying a home requires the help of a range of different professionals. You’ll need a home inspector to ensure there are no problems with the property. A real estate attorney to handle due diligence and arrange everything for the closing day. A mortgage lender to underwrite and approve your mortgage. And a contractor if you plan to do any renovations after the sale. Your agent can provide tried and tested ones that they’ve worked with before or had recommended to them. All this helps you get through each step of the process and lead to a successful sale much faster.
Help you secure financing – Mortgage financing can be very complex and confusing. If it’s your first home purchase, it can be very hard deciding which mortgage type is right for your circumstances. A buyer’s agent will help you navigate through this stage. They’ll help you understand each of your options and help you to secure a mortgage through your chosen lender.
Help you overcome setbacks – It’s rare for a home sale to go completely smoothly with no road bumps. The home inspectors report may come back with issues that need to be addressed. If that happens, your agent can advise you on how best to proceed and handle any renegotiations. If negotiations become deadlocked at any point, it can be reassuring to know you have an agent standing between you and them.
They can act as an emotional filter – Buying a home can be a very stressful time. At such times it’s easy for people to allow emotions to cloud their judgment and make rash decisions. Since a buyer’s agent isn’t emotionally attached to a property you’re interested in they can help keep you on track and see the pros and cons.
How to find a good buyer’s agent
All the benefits covered above can be had when you hire a good agent. But as with any professions, there are good apples and bad apples. To ensure you get the services and professionalism you need, take your time in choosing the right agent for the job. Don’t just go for the first one you choose. Instead, it’s best to interview at least three agents and ask them a series of questions to determine if they’re a right match for you. Also, watch for any signs that you may have made the wrong decision.
Ask about what neighborhoods they specialize in. If they don’t have experience in your favored neighborhoods, then they’re not the right choice.
What are their schedule and availability? You’ll want an agent that is available when you need them and is committed to working for you.
Ask about their negotiation style and experience. You’re more likely to get along with them and work better as a team if their negotiation style matches yours. Knowing their level of experience will also allow you to judge their competency. However, don’t necessarily dismiss less experienced agents, they may have other perks up their sleeve.
For more questions to ask a prospective agent make sure you see our full article on the subject.
Discount/Rebate brokers
When doing your search for a buyer’s agent, you may come across agents who are willing to rebate a part of the fee back to you. Before jumping at the chance for this, it’s worth looking a bit closer to see exactly what you’ll be getting. Agents must have a reason for doing this such as a chance to drum up business. If they’re inexperienced, you may not get all that you expect with this such as a Comparative Market Analysis (CMA). This determines what the offering price should be, so you don’t offer more than the place is worth. An experienced agent will know how to put all the variable together to create the best offer price. If you go with a discount broker, you may be losing out on this and end up losing money rather than saving it.
Sign the agent/buyer contract
Once you’ve found your ideal agent, you’ll usually be asked to sign an Exclusive Buyer Agency Agreement. This outlines your agent’s duties and compensation (covered below). This agreement will also make this agent your sole representative, so you can’t work with other agents. However, some agents, like Elika Associates, don’t require long contracts that lock you in for several months. All we ask for is a two-week commitment. If you’re not happy with our service by that time you’re free to seek alternative representation.
How much does a buyer’s agent cost?
If you needed any more reasons to go with a buyer’s agent how about that fact that you won’t be paying for them. This is because their commission is built into the purchase price. If you choose to go without agent representation, you’ll still be paying that 6% commission. It will just go entirely to the listing agent. If you go with a buyer’s agent that 6% will be split between them 50/50. As such it makes little sense to go without representation as you have little to lose by it.
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