in Boston, the need for buyer representation is essential. I have been selling in Boston for 20 years and likely to negotiate the best deal for you. possibly save you thousands
After years of trepidation, home buyers are finally beginning to
wade back into the housing market. But as they do, many are making the
surprising choice to hunt alone, rejecting the assistance of what's known in
real estate as a buyer's agent.
For years,
house-hunters have had the option to work with a real estate agent who shows
them properties and may ultimately negotiate the price a counterbalance to the
agent who almost invariably represents the seller. But now fewer buyers are
taking it. Of the buyers who purchased a property through a real estate agent,
just 57% had buyer representation, according to a 2010 report by the National
Association of Realtors. That's down from 62% in 2009 and 64% in 2006, before
the housing bust. Also, fewer buyers are first learning about the home they
purchase from real estate agents: just 37% are reporting real estate agents as
their first source of information on the home they purchased, down from 50% a
decade ago, according to NAR.
If you're in the
market to buy a home, a slew of new smartphone apps aim to make the job easier
and save you time. MarketWatch's Amy Hoak reports.
Many experts think
this is a bad move worse, for example, than trying to sell a house without an
agent. For one thing, in most cases, a buyer doesn't pay an agent; the buyer's
agent splits the commission with the seller's agent, so the services are
essentially free to the buyer. Also, a buyer's agent can usually access historical
price data for home sales in the area, which means he can recommend a bidding
strategy that targets comparable properties that sold for less, rather than the
mid-range. John Vogel, adjunct professor of real estate at the Tuck School of
Business at Dartmouth College, calls going through this process alone "a
mistake."
There are lots of
reasons buyers may choose to represent themselves. The real estate listings and
detailed information that was once only available to real estate agents -- like
median sales prices in a neighborhood, the amount of days a home has been on
the market, and how many price cuts it has endured are now online. And because
most buyers' agents don't get paid until a home is purchased, they have a
strong incentive to see you buy something quickly, Vogel says: They may not
tell a client to wait for prices to fall further.
On the other hand,
some house-hunters may think they are working with a buyer's agent, when in
reality, they're actually dealing with a seller's agent. Many buyers contact
the agent listed with the property or walk into an open house thinking the
agent is working in their favor, says Paul Howard, a buyer's-only broker
licensed in New Jersey and Pennsylvania. Or some buyers may start working with
an agent who has their interest at hand, but the house they want to buy is
listed with the real estate company the agent works for; at that point, buyers
should have the option to find an agent not tied to the property. Some seller's
agents may also discourage prospective buyers at the beginning of their search
from seeking out a buyer's agent. Commissions are already lower due to
declining home values, and some would prefer not to split it, says Ginger
Wilcox, head of training for buyers' and sellers' agents at Trulia.com.
"Agents are fighting for their commissions."
Still, in many cases
buyers may be at an advantage when they work with a buyer's agent at least
compared to relying on a seller's agent for advice or guidance. A seller's
agent is contractually obligated to help make the sale happen in the seller's
favor, often as close to the asking price as possible. Buyers' agents can also
suggest home inspectors and financing companies they've worked with before,
says David Kent, president of the National Buyer's Agent Association; they're
not supposed to make money off the referrals.
When searching for a
buyer's agent, experts recommend putting a few through their paces first. The
most helpful agents won't just rely on what's listed online, says Vogel.
Instead, they might drive around a neighborhood looking for signs of properties
that are for sale by owners or mail letters to existing homeowners alerting
them to a buyer who's interested in a similar property to theirs. And by the
time a buyer enters into a contract, his agent should be there to look for red
flags.
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