September 5, 2019
Table of Contents:
How Do You Find a Buyer’s Agent?
What Does a Buyer’s Agent Do?
Do You Really Need a Buyer’s Agent?
Who Pays the Buyer’s Agent?
The Difference Between a Buyer’s Agent and Seller’s Agent
How Do You Get Out of a Buyer’s Agent Agreement?
The best way to find a buyer's agent, by far, is to ask for a recommendation. If your friend or family member had a good experience, chances are you will too. The agent will be experienced and make sure to take especially good care of a referral.
You can also find a buyer's agent online but you will have to be vigilant with your research. Look for things like a web presence, reviews, deal experience and anything else that gives you comfort they'll get the job done.
Whatever you do, don't simply respond to an ad. While plenty of good buyer's agents advertise, you still need to do your homework.
To actually hire an agent, you simply start working with them. There shouldn't be any paperwork or payment required to kick things off. See the last section of this post if you are asked to sign something.
A buyer agent's job is to make your transaction easy and protect you throughout the process. They will know what should be done at each step and help you avoid mistakes often made by inexperienced buyers.
They will also educate you about the neighborhood, housing stock, current market conditions and any other questions you may have. When the time comes to make an offer, they'll perform a valuation of the property, let you know approximately how much it's worth and negotiate on your behalf. If you're able to reach an accepted offer, they'll make sure things go smoothly from the signed contract to the closing table.
It's also important to know what a buyer's agent does not do. They are not there to give legal advice or look for construction defects. That is where your attorney and inspector take over.
With so much information online these days, it's easy to wonder if you actually need a buyer's agent. You can find, view and submit offers on apartments all on your own. Why complicate things with a buyer's agent?
We should separate buyers into two camps.
First time buyers should always use an agent as they have not been through the process before. It's not always clear what's best to do or even necessary to do and having someone guide you at each step is incredibly valuable.
Repeat buyers who are knowledgable and independent might feel like they can handle everything themselves. But even then, with an agent free (or better), simply having someone to make the transaction smoother and easier is helpful. Want to see an apartment? They'll schedule it. What are the comps? They'll put them together. What's the status of the contract? They'll find out. They'll also manage one of the most annoying parts of the process - the co-op or condo application.
If you do your homework, you'll also find using a buyer's agent can save you money. It sounds a bit counterintuitive - how can hiring someone save you money? Because of the way listing agreements are structured, all buyers can benefit from getting a commission rebate. In NYC, most buyers save 2% of the purchase price.
A buyer's agent is paid by the seller. The amount of compensation ("co-broke") is listed in the broker portal so your agent knows how much they would be paid on any listing before you see it. As long as your agent is a member of the same industry organization as the listing agent (REBNY in NYC), they will be paid. A commission offered is essentially a contract - the seller cannot refuse to pay your agent.
It's very important to realize that if you go direct to the listing agent (that is you do not use a buyer's agent), they keep the co-broke. The seller does not save money if you go direct.
You could make the argument that as the buyer, you're really paying everyone since you're the only one showing up to the closing table with cash. However technically you pay the seller who then turns around and pays their agent and your agent.
If you're interested in diving into the weeds, we have a dedicated post about how a buyer's agent gets paid.
Just like a buyer's agent's job is to look out for the best interests of the buyer, the seller's agent (or "listing agent") looks out for the seller. Each client has the undivided loyalty of their agent.
The responsibilities of the listing agent are just different. Their goal is to get the highest and best offer for the seller. To achieve that, they'll make sure the property is seen by as many prospective buyers as possible, both online and in person via open houses and private showings. They'll make sure it shows well and answer any questions buyers have. And just like the buyer's agent, they'll negotiate on behalf of the seller.
These are not distinct populations. All agents work with both buyers and sellers.
It is very hard to get out of a buyer agent agreement (also called an "exclusive buyer broker agreement"). It's a contract between you and the agent and unless both parties agree to cancel it, it will remain in effect. However there are some things you can try.
The best and likely only way to get out of a buyer agent agreement is simply to ask your agent to cancel it. If you say you will not buy with them for the duration of the agreement, it has no value to them and therefore they may cancel it. You may also be able to get out on a technicality if you were never presented with an agency disclosure form.
If all else fails, assuming you are not in a rush to buy, you can simply wait until the agreement expires.
Unless you're in some unique situation, Yoreevo does not recommend signing a buyer agent agreement or exclusive agreement. The reasoning is very simple - what kind of agent is going to do a good job but also require you sign one? Shouldn't their good service be enough for you to stick around? In NYC specifically, it is very rare for buyers to sign an exclusive agreement.
There are exceptions. For example, say you told your agent you want to see 50 properties before buying. It might be reasonable for them to make sure they'll get paid after all that work. They don't want to show you 50 houses only to have you fall in love with the 51st which happens to be listed by the owner and without a commission offered. Even this is rare though.