The inspiration for this topic actually comes from a situation one of my company’s agents recently experienced, and I thought it would be a fantastic educational opportunity for clients, investors, homeowners, and whoever else might appreciate the clarification.
What happened to my colleague was unfortunate and lucky at the same time, and also very avoidable. His good friends are moving back to the Evansville area and have begun looking at houses. They are first-time home buyers, so they were very excited to get started and find their new abode. He had been casually discussing plans with them to get out and tour some homes when they came to town. I think he just assumed they weren’t in contact with any other agents. Why would they be? These buyers particularly liked a home listed by another agent within our company. They called her and asked to set up an appointment to see it. When she asked if they had been working with any other agents, they mentioned her colleague had been sending properties and making plans to tour with them. The listing agent they called is a high producer in this area and truly a class act, so when she got off the phone with these clients, she called their agent friend and filled him in. He got to show them this property, and they eventually wrote an offer with him as their “official” agent.
Now, this scenario could have played out in a drastically different way if the listing agent decided she didn’t care about “taking” a client that hadn’t signed an agreement to work with anyone. The clients made an honest mistake and thought they needed to reach out to the listing agent specifically. I think it helped that both agents work in the same office, but we all know how competitive this business is, and she could have easily signed them when she showed them her listing.
Those of you who have moved in the past probably worked with the same agent when you were both selling and buying, but did you know they wear very different “hats” when they are working for you on each side of the transaction? If you haven’t moved in quite some time or are a first-time buyer, the logistics of who-does-what can be confusing. This article should help dissipate that fogginess!
I get a lot of questions about what an agent does throughout the transaction. First-time home buyers especially are interested in learning how each agent gets paid and what they can expect from their agent when they make the decision to buy or sell a home. There are some major differences between working as a Buyer’s Agent versus acting as a Seller’s Agent. It takes a great deal of skill to be successful in both these areas of real estate. Just to make a blanket statement: Even if an agent specializes in either buyers or sellers, all licensed, active agents can show any property in their MLS region. You do not have to work with the listing agent of a property you like.
To highlight these differences as easily as possible, I am going to take a look at each side of the transaction separately.
First, let’s talk about what an agent does when he or she is working as your Buyer’s Agent:
- Represent the buyer, obviously, and only the buyer’s best interests.
- Work with buyers to determine their wants and needs (within budget!) and then search, or even preview, available inventory for homes that meet buyer’s criteria.
- Coordinate home showings with the listing agents of houses buyers want to see.
- Once the buyers find a home they love, their Buyer’s Agent works with and educates them each step of the way through closing.
- Negotiate price of home, sales conditions, inspection details and repairs on behalf of the buyer.
- Paid by commission. This is settled by the sellers and their agent. Buyers do not pay for their representation unless their agent charges an up-front fee.
- Buyer’s Agent only gets paid when buyers find their new house.
- Agent may ask buyers to sign an agreement that states buyers will not switch to another agent when they find a home. This is simply a way to protect the agent so he or she does not put in many hours of work without payment.
Next, I am going to outline some ways the Seller’s Agent differs:
- Also called a Listing Agent
- Represent the sellers (homeowners).
- Advocate for the homeowners and represent their best interests.
- Inform and educate sellers throughout each step of the transaction to get to the closing.
- Complete a Comparative Market Analysis to determine market value of the home and work with sellers to settle on a competitive list price.
- Once listed, the agent will create a marketing plan to get the house noticed by as many agents and potential buyers as possible.
- Coordinate showings with buyer’s agents who have clients who want to see the home.
- Host open houses to showcase the home to potential buyers.
- Negotiate sale price, inspection details and repairs for the sellers.
- Negotiate the commission with the sellers for the listing.
- Split the commission with the Buyer’s Agent.
- Only get paid if they sell the listing.
As I mentioned, it takes a tremendous amount of skill to do all of these things well for clients. Some agents specialize if they only want to work with buyers or sellers, but most in my market do not specialize. It’s just not a big enough region. I would actually venture to claim that agents are happy to work with any qualified clients whether they want to buy or sell.
I hope this post has cleared up any confusion you may have about what your realtor does when he or she works with you. Remember, the most important part of your agent’s work is that he or she works to represent you and your best interest.