Real Estate Insight

10 Things to Ask When Selecting a Buyer’s Agent

What’s a Buyer’s Agent?

You’d be surprised how common that question is. Most people barely understand the process involved in buying real estate. Few know what agency representation and fiduciary duty is. When it comes to buying real estate, most buyers spend more time deciding what to eat for dinner than they do thinking about choosing a real estate agent to represent their best interests in the transaction. It’s sad but true; they’ll spend more time deciding on Chinese or Mexican food, than who’s going to look out for them when they spend half a million dollars. Question: Who does the agent at an open house represent?

Why Do You Need Representation?

Did you know that if you walked into an open house, fell in love with it, and told the agent you wanted to buy it, that agent represents the seller. That agent has NO fiduciary duty to represent you or your interests. While it’s true both state laws and the National Association of Realtors’ Code of Ethics requires that all Realtors treat all parties fairly, there’s a big difference between fair treatment and fiduciary duty. That big difference can be subtle and could cost you tens of thousands of dollars.

How? Let’s go back to that home you fell in love with at the open house. You have the agent at the home write an offer for you. The same agent that represents the seller. As that agent completes the purchase contract, he comes to a section regarding assessments and who pays it if there are any. You aren’t aware that there’s a $20,000 assessment for every house on that street for upgrading the sewer lines. That agent representing the seller will naturally select the buyer pay this assessment. While that agent treated you fairly, his fiduciary duty was to his seller. On the other hand, if you had an agent representing you, your agent would automatically stipulate that the seller pay this assessment. That subtle difference of not having representation just cost you $20,000. That’s just one example. Every real estate transaction is different and you never know what to expect. In fact, I always prepare my clients to "expect the unexpected."

How To Select An Agent To Represent You

Hopefully you now understand the importance of being represented in all real estate transactions. It also makes no sense not to have representation since your agent usually costs you nothing. In most residential real estate transactions, the buyer’s agent is paid from the commissions paid by the seller. They work for you, but paid by the seller. While it’s important to have representation, it’s more important to select the right agent. So what do you ask?

10 Questions To Ask

1. How much experience do they have? How long have they been in the business? While not true 100% of the time, competence usually comes through experience. Experience and knowledge is everything when it comes to representation. Question: What do you call a med school student that graduates dead last in his class? Answer: A doctor. Assuming there’s no difference between all real estate agents is the same as saying all doctors are equal.

2. Do they work alone or do they have a team? Lone agents are stretched for time, hard to reach and are a "jack of all trades, master of none". An agent that has carefully assembled a team of experts for each phase of the transaction, is the one you want working for you. There are so many facets to every real estate transaction, having a team comprised of specialists for each phase will reduce your anxiety and save you time and money. On top of that, having more people looking out for you means you get to the great deals before other buyers. That lone agent barely has time to return your calls, let alone be on top of the great deals when they come available.

3. How many homes do they sell each year? This goes hand in hand with their experience. Would you rather have an agent that sold 4 houses last year (the national average) or one that does 30 or more a year? Don’t worry about an agent selling 30+ homes a year being too busy for you. If they answered question 2 correctly, they’re set up to handle the volume without sacrificing the service.

4. Is real estate their ONLY occupation? Unlike doctors, lawyers and accountants, there are a lot of part time real estate agents. Would you go to a doctor that had a full time job doing something else? Why would you have someone that "dabbles in selling real estate" represent you in buying a home that could cost you a million dollars?

5. Are they a real estate agent or a Realtor? They are not the same. A real estate agent is someone who satisfied the licensing requirements of their state and passed a licensing exam. A Realtor has done that and are members of both local and national associations of real estate agents. Realtors are required to complete professional standards courses on a continuing basis. Membership in these associations also require the member to adhere to stringent ethics and duties to their clients. The public can file complaints against Realtors through local associations for Code of Ethics violations while in the practice of real estate. Violators are sanctioned and membership can be revoked. Without membership, the agent has no access to the local MLS. Without MLS access, the agent is useless to you.

6. Has the agent had any disciplinary actions against them? You can check this through the state’s regulatory agency and the local Realtor association. Complaints usually are on record for life.

7. What technology do they use? Having access to timely information can be the difference in getting the "hot deal" or not getting it. Also, what technology do they use to coordinate the entire team and ensure each member is completely up-to-date with your transaction? Missing just one contingency on a purchase contract could cost you thousands. One of the reasons a well-oiled team is so efficient is due to the technology they employ.

8. What is their best strategy to meet your needs? How do they plan to find you the perfect home at the lowest possible price? What sources for available homes do they know of and have access to? How strong are their negotiating skills? Do they have trusted professionals in related fields that they can refer you to if needed?

9. Can they provide references? Look at the list. Ask if any are related to the agent. You’d be surprised that many agents only get business from family. Those same agents are usually the part time agents. Can you call these references?

10. What are the top 3 things that separate them from the competition? A good agent won’t hesitate for a second to tell you. The two biggest complaints consumers have about Realtors are 1) Poor communication and 2) Doesn’t fight hard enough for them. Other standards you want to look for include honesty and trustworthiness, assertiveness, excellent negotiators, available by phone and email, good communicator, friendly, analytical and able to maintain a good sense of humor under trying circumstances.

If you want to maximize your chances of finding your dream home at the lowest possible price all while maintaining your sanity, do a little homework in the beginning. Most buyers spend the time finding the perfect home on their own. Instead, spend the time finding the perfect agent and let them find you the perfect home.

Hope this helps. Happy house hunting!

Elliot Lau