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OFF-TOPIC Buyers Agents When Buying Personal Residence

JScott

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This is a real estate question, but more for buying a personal residence than an investment property...I know there are some agents on this forum, so hopefully someone can provide some insight...

What are people's general thoughts on contracting with a Buyers Agent when buying a personal residence?

While the upsides are obvious (legal obligation of the agent to represent you instead of the seller), are there any downsides?

Some specific questions:

1) How does payment generally work? I assume you guarantee the agent some % of the selling price of the house you eventually buy, and that fee is oftentimes paid as part of the seller's commission. Is that correct?

2) What about those cases where the seller is paying a reduced commission to his/her broker, and it wouldn't cover the fee your broker? Do you pay the rest out of pocket? Do you add it to the selling price and have the seller pay? Or does the broker often waive the difference?

3) What about in cases where you buy a newly developed property? Do the developers generally pay the buyers agent? Or is that out of pocket?

4) Do you recommend signing an exclusive contract with the agent? Or have non-exclusive contracts with multiple agents?

5) If you have a non-exclusive contract and find a property on your own, I assume you aren't obligated to pay the agent?

Anything else I should be considering?
 

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Runum

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I have used a buyers agent in all of my RE purchases whether personal or investment. I was asked to sign a one year exclusive buyers agent contract. The agency is a husband/wife team so I got help from both of them(2 different points of view). They were paid half of the agents fee from the seller. Around here 6% RE agents fee is typical and they usually share it half and half. I did buy one property where the total fee had been negotiated to 4% total. There is a clause in my contract that said I was still on the hook for the other 1%(the difference) to my broker. However, my broker chose to only take 2% due to the volume of my business. I personally like having another set of eyes, ears, and a brain helping me with my purchases. My broker has provided some great insights during my due diligence period that has helped me not buy an alligator and to spend my resources wisely. Good luck with your decisions.:cheers:

Greg
 

tbsells

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JScott,
I think there are obvious advantages to a buyers agent. Your original post and Runum's follow up touched on many of them. The potential problem I see is with the terms of and the length of the agreement. I would recommend the following:

Find an agent you are comfortable with. Call some, talk to them, ask about their geographic area of specialty, time in the business, hours of availability, etc. Let them talk and get a feel for them. Is this someone you would be comfortable working with? Is this a smart person who knows his/her business or just someone who's waiting for his next shift at subway to start? If you find someone who sounds promising have them show you a couple houses. As you are evaluating the houses, evaluate the agent. Do they know more than you? Do they know the neighborhoods without consulting a map? Did they see they recent solds on the block? Ask them for referrals to lenders, house inspectors, etc. Ask them for info on the local schools. Ask all the stuff you want to know. If they can give good info and intelligent answers this is probably someone you want to stick with. If not, dump them.

A buyers agent/client relationship should be based on mutual benefit and a desire to work together instead of a contract. If you, after you find a good agent, decide that you want to enter into an exclusive contract thats up to you. But, I would never into an exclusive representation agreement with someone I just met. If someone presents you with an exclusive buyers agent contract upon first meeting you I would run. Business is conducted every day with buyers and buyers agents working together without a contract. It is not required. The person who represents you as your agent has the same fiduciary responsibilities to you whether or not you have an exclusive contract. To me, the contract is an unnecessary obligation that you may not want to commit to.

Things to look for in an agent:
1) They should be local to the area you are looking in. The more local the better. Ideally, they know the neighborhoods without a map. They have sold other homes in the neighborhood. They know the movers and shakers in the community because they are one.
2) They have been in business for a while. Not necessarily forever, but not brand new. Three years or more is probably adequate.
3) They should be successful. One of the top two or three in the office. The broker or manager will share this info with you.
4) They should interview you to determine if they want to work with you. The agent you want to work with is too busy to fool with everyone. The good ones determine if you are a good buyer and one that they want to represent.
5) I can't stress enough the importance of working with someone local, and again the more local the better. The best agent on the west side may be useless on the east side of town. If you haven't decided what area you want to live in, then work with different agents in different areas. All real estate is local. Specific knowledge of local market conditions, neighborhoods, schools, etc. is extremely important.

I'm sorry this is a little scatterbrained. I've had two walkins and 4 or 5 phone calls as I'm typing this. Hope it helps.
 

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