A buyer’s agent works for YOU when you buy a home.
When we say ‘works for YOU‘ we mean that it is YOUR interests that are the primary focus. While all agents are supposed to be on their best behavior when it comes to no lying, cheating or stealing, the difference between a BUYER’S Agent and a SELLER’S Agent is whose pocketbook is being looked after.
A BUYER’S Agent’s sworn goal is to help you pay as little for a home as possible. A SELLER’S Agent is trying to get you to pay as much for the home as possible (to the benefit of the seller, obviously.)
But how can this be so? A house is worth what a house is worth, correct?
It really depends.
The comparable sales that are shown to buyers and/or interpreted for them can be made to illustrate vastly different values. Comparing a home to others which have varying degrees of applicability can yield radically different (yet TOTALLY believable) results and it is the job of your advocate to understand this.
I would rather save the commission…
Doesn’t really work that way. The listing agreement is between the seller and their agent, not between you and the agent. Odds are, you are getting no representation and the agent is getting the entire commission. They would LOVE to help you, obviously.
I don’t want to tie myself to any one agent…
Then in essence you are tying yourself to every other agent you meet. If the LISTING Agent thinks you are not working with a BUYER’S Agent, then you will get their full force sales pitch on both why their home is best and why you should use them as the agent. Once they know you have chosen a BUYER’S Agent, the dynamic changes as they know they are dealing with an informed consumer that has an advocate. Facts are forthcoming and the constant sales pitch ends.
Don’t Trulia and Zillow show sales?
Trulia and Zillow can be described as ‘helpful’ at best and ‘wrong’ at worst. In effect, a computer located in San Francisco and/or Seattle is telling you the value of property in Richmond.
Would I use them IN my analysis? Sure.
Would I use them AS my analysis? No.
By their own admission, only 90% of the value estimates fall with 10% of the actual value. Stated differently, only about 90% of the time, these sites can tell you that a $400,000 home is worth between $360,000 and $440,000…and 10% of the time, they cannot even get that close. And it sure would be nice if they told you which ones were the really bad estimates…
But I get an appraisal, right?
Sure, but the appraiser knows the sales price going in and in most cases, the goal is simply to justify the sales price to the lender. If the appraiser had no idea as to the contract price prior to the appraisal, it would have more value and thanks to the Dodd-Frank legislation, lenders have little control over who is doing the appraisal. Do you really think it is a good practice to have a Goochland Appraiser valuing properties in Church Hill? It happens all of the time.
So you are telling me that Realtors determine price?
Far from it.
Realtors, much in the same way as appraisers, look to the comparable sales to help EVALUATE the price of a potential home, but ultimately, the market sets the price and it is the agents job to help you interpret all of the data. Where an appraiser is trying to justify the value of a home at a specific point in time, they have no obligation to communicate to you the factors at work that can impact values in the future. Understand that your agent has seen the same inventory and seen your reaction to it. They understand your motivations (or at least they should) and they know your goals. Most importantly, a good agent will help you to understand the things that drive value in your marketplace.
So how do we find a good Buyer’s Agent?
The key to understanding a GOOD Buyer’s Agent is to interview them. Ask about their background and how they help interpret values. Find out how they see the world and if their style matches yours.
- Can they compute an absorption rate?
- Can they band $/SF?
- Do they recognize different builder’s signature styles?
- Do they understand development momentum?
- Do they know inventory levels?
- Can they communicate the underlying market dynamics?
Invest a few minutes in an interview and see just how capable your agent is. Compare them to others and see if the advocate you have is the right one for you.