Who Benefits from having a Buyer Agent?
You Do…In fact anyone buying property will benefit from having a Buyer Agent working for them. Why? Because it levels the playing field.
The Seller has an agent representing their interests.
Why shouldn’t you have an agent working just as hard for you?
And for some Buyers, a Buyer Agent is especially beneficial.
- Out-of-Town Buyers Long distance transactions can be complex. Different time zones and schedule conflicts can make decisions harder when you and the Seller are in different cities. Your Buyer Agent is your “man on the ground.”
- First-Time Buyers The home buying process can be a little overwhelming the first time around. First-time Buyers can often benefit greatly from having the advice and counsel of a trained agent. A Buyer Agent assists first-time Buyers by helping them identify and evaluate their choices. Also, with their agent’s experience and help, first-time Buyers can make more informed decisions about the price and terms in their offer to purchase.
- New Construction Buyers If you are considering new construction your buyer agent will be a valuable partner to help guide you along the process, and if necessary help resolve any questions between you and your builder.
- Anonymous Buyers If a Buyer chooses to remain anonymous in a transaction, they may do so by using a Buyer Agent.
Every Buyer deserves a level playing field. And that’s what Buyer Agency Representation is designed to do. Why “go it alone” when you can have an agent in your corner? I’m Jon Nelson and I would be very happy to serve you as your Buyer Agent.
Agency in Brief
In the state of Wisconsin, by default, the law requires real estate brokers and their agents to represent Sellers. This means unless you have a specific agreement otherwise, the agent you work with as a Buyer is, by law, actually working for the Seller as a sub-agent of the Listing Broker and the Seller.
Selling Agents owe both Sellers and Buyers certain duties including the duty to provide services honestly, fairly and in good faith. But, there are extra duties, called fiduciary duties, which the Selling Agent owes only to the Seller, but not to the Buyer. All the duties, including the fiduciary duties, are clearly explained in the Buyer Agency Agreement or the agency disclosure you will receive when you sit down with your agent.
From the moment a Buyer and an Agent enter into a Buyer Agency Agreement the Agent is working directly for the Buyer. Under Buyer Agency, the Agent owes the fiduciary duties only to the Buyer, but not to the Seller. With Buyer’s Agency, your Agent is working in your best interests. The Seller is already represented by the Listing Broker who is working in their best interests. If you believe in a level playing field, then a Buyer Agent will make perfect sense to you.
How is a Buyer Agent Paid?
That’s a good question, and I think you are going to like the answer. Buyer Agents earn their fee by performing professional services for their clients. In return, the client agrees to use no other real estate agent during the term of their agreement. Simple, but who pays the Buyer Agent?
Listing Brokers Normally Pay the Buyer Agent
The Buyer Agent fee can be paid in several different ways, but in almost every case, the listing broker has already agreed to pay the Buyer Agent as part of their listing contract with the Seller. This is a big advantage to the Buyer as they gain the services of a professional agent but do not typically bear the cost for this service.
But Does Someone Else Always Pay the Buyer Agent?
Under certain conditions the Buyer may have to or may choose to pay the Buyer Agent fee. However; you can typically avoid most of the scenarios in which you might have to pay your Buyer Agent yourself. For example:
- If the Buyer elects to negotiate on a FSBO property, rarely but sometimes the FSBO Seller refuses to pay the Buyer Agent’s fee. The commission the FSBO Seller is typically trying to avoid paying is the listing broker’s commission rather than the Buyer’s agent’s commission, so this doesn’t come up very often. At your direction your agent will try to negotiate the commission into the overall price of the property, or you may decide to pay the commission yourself to keep the purchase price lower. You can avoid this scenario entirely by directing your agent to only show you FSBO properties for which the FSBO Seller is willing to pay the commission. You may ask your agent to include additional language in your agreement defining how any exceptions will be handled or simply let the default language stand.
- Another exception could be the unusual situation where Listing Broker is offering to pay a buyer agency fee that is less than the success fee to which the Buyer and Buyer Agent have agreed. In that case the Buyer would be responsible for the difference between what the Listing Broker is offering and the agreement success fee. Again it is not common for a Listing Broker to not cover the entire Buyer Agent success fee, but you can completely eliminate this scenario by telling your agent you only want to look at listings for which the Listing Broker is at minimum paying the entire Buyer Agent’s success fee. Again, you may ask your agent to include additional language in your agreement defining how any exceptions will be handled or simply let the default language stand.
- Finally, you may be responsible to pay the Buyer Agent if you breach the underlying agreement. But most of us do not enter into agreements with the intention of breaking them… so that too is very rare.
So the long and the short of it is yes there are certain scenarios under which you may elect or have to pay all or part of your Buyer Agent’s success fee, but those scenarios are not common and you can eliminate most of them up front by giving your agent instructions to avoid them.
What does the Buyer Agent Get out of the Agreement?
Agents are independent business people who earn their livings by assisting Buyers and Sellers with real estate transactions. Because agents work on commission, they do not get compensated until a transaction closes. However; all of the Agent’s time and work is committed prior to the closing. Buyer Agency provides a measure of assurance to the Agent that in return for their best efforts in assisting the Buyer, they will be recognized as the Agent of record when the Buyer they’ve been assisting and a Seller close a transaction.
The Bottom Line is Good News for You!
Sellers pay a commission to the Listing Broker when the Listing Broker procures a Buyer for their property. Listing Brokers are expecting to pay a commission to the Agent that brings a qualified Buyer to the table. It is in both the Seller’s and the Listing Broker’s best interests not to differentiate between a Selling and a Buyer Agent. And it is definitely in the Buyer’s best interests to be represented in the sale by an Agent who is working directly for them rather than the Seller.
Nelson & Associates Realtors Provided Highly Rated Buyer Agent Services
When you are ready to start looking for a new home or property, you will want a Buyer Agent by your side to keep you informed and to look out for your best interests. Contact Jon Nelson, Principal Broker and Owner of Nelson & Associates for Buyer Agent services second to none.