Ding! Ding! Ding!
The bell rings and you are suddenly thrown into the boxing ring to fight against an opponent.
Would you want to get boxing “tips” from your opponent’s coach, or would you rather have your own coach helping you avoid the punches?
When buying a house, the Listing Agent is the Seller’s coach
As a home buyer you have the option of making an offer through the Listing Agent – or you can get your own coach to help you avoid any financial punches during the transaction.
Your own coach is called a Buyer Agent
Let’s see some of the the differences between a Buyer Agent and a Listing Agent:
What is a Listing Agent?
The Listing Agent is a real estate agent who is working on behalf of the seller of a property to market and sell such property.
The job of a Listing Agent
The job of a Listing Agent is to sell a property for as much money and in the shortest amount of time.
His job includes learning as much as possible about a property, feature its good points and market it as widely as possible to attract a serious buyer.
… his job continues after finding a buyer
The Listing Agent’s job doesn’t end when he receives a good offer on the property. His job is also to negotiate the offer to obtain the best possible price and to ensure that the resulting purchase contract doesn’t fall through and that the transaction closes.
On the other side of the ring er… I mean… transaction is the Buyer Agent:
What is a Buyer Agent?
A Buyer Agent is a real estate agent who is working on behalf of the buyer to help him or her purchase a property.
The job of a Buyer Agent
The job of a Buyer Agent is to help a buyer find the right property, and to coach the buyer to buy it IF it is turns out to actually be the right property.
A Buyer Agent’s job includes:
- Helping you find the right home
- Coaching you through the buying process
Let’s look at these one by one:
a) A good Buyer Agent helps you find the right home
In this age of ubiquitous information, you could very well find your perfect house online – all by yourself.
But your Buyer Agent can also find you the right home
If you need a little more guidance on understanding the area, or you have specific requirements that a generic online search can’t fulfill, your Buyer Agent could help you find the right home much better than an online search widget.
The job of your Buyer Agent doesn’t end when you find the right home
This would be equivalent to your boxing coach finding you the right match – and then leaving you to fend for yourself DURING the match. That wouldn’t be good.
Actually, AFTER you find the home you want to buy is when you need most of the coaching:
b) A good Buyer Agent coaches you through the buying process by avoiding financial punches
Let’s look at 5 knock-out punches that you could avoid if you had the right home buying coach:
Avoiding Punch #1:
Your Buyer Agent determines a range of value for the home you want to buy
Determining a range of value helps you avoid wasting thousands of dollars over-paying for the house.
Avoiding Punch # 2:
Your Buyer Agent writes a contract that protects your deposit
You don’t want to lose your 5 or 10 grand because the contract didn’t allow you an out in case the house turns out to be a lemon…
Avoiding Punch # 3:
Your Buyer Agent knows how to avoid loopholes in the contract that benefit the seller (and hurt you).
An experienced Buyer Agent knows where the loopholes are in the contract and makes sure to plug them to prevent an unwanted outcome.
Avoiding Punch # 4:
Your Buyer Agent oversees your lender and title company costs
How would you like to buy your perfect house and find out later that you got taken to the cleaners because you over-paid for the loan? A good buyer agent keeps a casual eye on your provider’s charges to make sure that they are in-line with industry standards.
Avoiding Punch # 5:
Your Buyer Agent keeps a close eye on contract deadlines
Missing a deadline on the contract could be very costly. You could either be responsible for thousands of dollars in costs that you shouldn’t have to be, lose your $10k deposit, or even get the contract cancelled and miss out on the opportunity to buy the house you love!
In short, a Buyer Agent protects your hard-earned money through attention to detail, experience, and an obligation to look after your interests – in other words, a Buyer Agent coaches you to avoid the punches.
But certainly, a Buyer Agent can’t know all about the house you are going to buy
The downside of hiring a Buyer Agent vs. going directly through the Listing Agent
Due to the nature of the Buyer Agent’s role, it’s very difficult for her to know all there is to know about any specific house that you like. Most likely, the buyer agent doesn’t know the seller of that house, and unlike the Listing Agent, she hasn’t interviewed the seller to understand all the features of the home.
Luckily, not knowing the specifics of every house is easy to remedy
For the Buyer Agent, learning about the specifics of the house you like is easy to do. Once you think you like a house enough to make an offer, your Buyer Agent can do research to find out more about the history of the house, she can ask the Listing Agent questions about the particulars of the specific house, the neighborhood, etc.
In Virginia, there are no pre-listing inspections
And, most importantly, since Virginia is a Disclaimer State (where the seller doesn’t have to do a pre-inspection on the property and disclose its results) your Buyer Agent will recommend you get a professional home inspection which will give you a thorough understanding of the condition of the home.
The upside of hiring a Buyer Agent is that you get your own buying coach
Let’s look at an example
Let’s look at a concrete example of how a Buyer Agent can help you avoid Punch #1 (determining a range of value so that you don’t overpay for the house)
You visit a house listed for sale at $500,000 and love it. Based on other homes you’ve seen on your own, you decide to make an offer for $480,000 through the Listing Agent.
The Listing Agent asks for your letter of pre-qualification for a loan and learns that you are pre-approved for buying a house for up to $510,000 (That’s $30,000 more than what you want to offer).
The Listing Agent is obligated to have you pay as much as possible
Due to the Listing Agent’s obligation with the seller, he must convince you to pay as much as possible for the house. At least, the Listing Agent will do his best to get you to pay the asking price of $500,000 – and possibly go all the way up to your limit of $510,000.
A Buyer Agent helps you determine the right price
In contrast, a good Buyer Agent would provide you with a price analysis to determine the actual price range of what the house is worth so that you can make the right offer, regardless of what you can actually pay. In this case, it’s very possible that the Buyer Agent could have saved you at least $30,000 over having made an offer through the Listing Agent.
This is just one example of how working with a buyer agent can coach you to avoid a 20 or 30 thousand-dollar punch.
- In boxing, you want your own coach to help you avoid the punches. When buying a house, the Listing Agent is the seller’s coach; your own coach is the Buyer Agent.
- The job of a Listing Agent is to sell a property for as much money and in the shortest amount of time.
- The job of a Buyer Agent is to help you find and buy the right property (and not push you toward a specific one).
- A good Buyer Agent can help you avoid some serious financial punches by:
- Determining a range of value for the home you want to buy
- Writing a contract that protects your deposit
- Avoiding loopholes in the contract which benefit the seller
- Overseeing your lender and title company costs
- Keeping a close eye on contract deadlines to keep you protected
As you can see, buying a house without your own Buyer Agent is like going into a boxing match without a coach in your own corner – and that definitely puts you at risk of receiving some painful financial punches.
If you want to read about three more examples of how a Buyer Agent can help you, check out 3 Ways a Buyer Agent can save you from losing money