What should a buyer look for before choosing an agent to represent them?

What should a buyer look for before choosing an agent to represent them?

1. Ability to help a buyer evaluate homes
2. Skill in negotiation
3. Undivided Loyalty
4. Proof of savings and past client satisfaction.

An Exclusive Buyer Agent covers the negative aspects of a home as well as the positive - in a consultative role - versus a "sales" role. We give them the pros and cons of a property rather than trying to sell them one. I might show my buyer a number of homes in a given day - and it might be that I would not recommend any one of them (or unless the price came down to an acceptable level - as price fixes everything at some point.)

A couple of people who were referred to us - said that a past client (or past clients) - told them that we had told them when "not to buy a property" and that is what they were looking for.

An Exclusive Buyer Agent buyer agent is focused on:

1. Finding the best home for the buyer
2. Helping the buyer buy it at the best possible value (frequently aligning their compensation with the buyer's interests vs. adverse to their interests as is typical - ie - an agent representing the buyer getting paid more when the buyer's price goes up.)

3. Helping the buyer save money on a loan (shopping lenders) - vs. referring them to an "in-house" lender.


An Exclusive Buyer Agent's role is to consult and counsel and protect a buyer.

They typically have:

1. A higher level of experience serving buyers and better negotiation skills.

2. They also have unwavering/undivided loyalty to buyers - never having any "dual agency" conflicts of interest.

Questions to Ask Any Agent Before You Hire Them

As an Agent - Make Sure you ID a Short Sale Situation Up-front. Listing Agents Aren't Revealing it. Protect Buyer Clients Who Have a Timeline

Many homes that are for sale in various neighborhoods in the Chicago area, are not occupied anymore - and a number of them are pre-foreclosure or foreclosure properties. Others - will be short sale situations.

Homes that are currently occupied may be listed for a figure where the seller will come up short after paying off the principal balance of their loan(s).

If the seller can't cover the shortfall - it will be a short sale situation - meaning that the lender will have to pick up some of the shortfall.

It is important to note that many agents are not advertising that their listed property will be a short sale in the remarks section of the MLS sheet - because they don't want to dissuade a buyer from writing an offer on the property.

Short sale situations can drag on for quite some time - and many buyers have certain time-lines. Negotiations with the lender about how much of the deficiency the lender will pick up can take time.

If a buyer client wants to get into a home in the next 60 days - it might not happen if they are buying into a short sale situation.

So - it is important that the agent representing the buyer find out as soon as possible from the other side what the seller's equity is (which can sometimes be gleaned from the tax record) at the moment - and if there will be a short sale situation - and if so - how much -- so that the buyer isn't blindsided with delays.

As a rule of thumb - the larger the deficiency - the longer the negotiation can take with the lender.

With any short sale situation - we give the buyer "an out" in the contract - if the seller's short sale negotiations with the lender are not concluded within X days.

Our buyer client can then seek a deal elsewhere.

Buyer Agent Article - San Francisco Chronicle

Newspaper article in San Francisco on using a buyer agent. Too bad they didn't educate people more about the difference between a buyer agent and an exclusive buyer agent...

There is a nice valid point here about traditional agents:

"Buyers should keep in mind, however, that because the agent receives a commission only when the deal is done, there is an incentive to close a sale - possibly at a higher price to earn a bigger commission - even when it might not be in the buyer's best interest. To get around this conflict, some buyer's agents work for a flat fee."

The other way around this is via use of retainer agreements - where the retainer is reimbursed to the buyer at closing - but if the buyer doesn't buy anything - the agent still gets compensated for their time. In addition - this doesn't happen when an Exclusive Buyer Agent structures their compensation where they have a flat fee - plus perhaps the addition of an incentive plan. IE - make less when the buyer's price goes up - and a little more when the buyer's price goes down.

Some exclusive buyer agents structure their compensation to be aligned with the buyers interests. (We do for example - if our buyer client chooses that) When the buyer's price goes down - the agent can make a little more - and when the buyer's price goes up - the agent makes less.

The tendency of a traditional buyer agent can be to get the buyer to come up to get the deal done since it is easier and less time consuming than getting the seller to come down in price. Since many of them don't work on retainer - they only get paid if a deal gets done. The buyer is none-the-wiser that they could have perhaps gotten the house for 20k less if their agent had taken a few more days in negotiation and really worked over the seller - with everything they had. But time is money to the agent - it is easier to just "make a deal" - which really isn't in the buyer's best interests...

When an agent's incentives are aligned with the buyer's incentives - that is when you see them work their butt off to get the best possible price for the buyer. There is no substitute for an experienced, professional negotiator. Many traditional agents are poor negotiators unfortunately...

A good negotiator is worth their weight in gold.
Exclusive Buyer Agents are specialists - always working for the buyer - never on the seller's side.

A "buyer agent" may spend 95% of their time listing property for sale - and only calling themselves a buyer agent when they are working with the buyer. Their main priority is their seller clients - and they don't have much experience working with buyers. But of course - the buyer hears "buyer agent" and they think differently...

Unfortunately - the public is in the dark about the existence of Exclusive Buyer Agents. Only two states (Ohio and California) disclose their existence to the people in their State. The other state Real Estate Associations are too controlled by the mega-brokerages to be willing to disclose this consumer option...

CNN Money article about the benefits of using an Exclusive Buyer Agent

A new article on CNN Money talks about how people should use an Exclusive Buyer Agent.... Unfortunately - the terminology they used was "buyer agent" in this article at CNN Money

But the point is clear... use an agent that is on your side - and the only type of agent that you can be assured of that does that - is an agent that doesn't list properties - so they can give you unbiased home showing, no conflicts of interest, and always be on your side 100% of the time.

I think most people get confused - as there are so many terminologies in Real Estate that they don't understand... An agent that works at a company that lists property for sale calls themselves a "buyer agent" - that is what most people think they are getting - someone that will always be on their side 100% of the time.

It is too bad for the consumer - that that isn't the case. These agents can get into what is called "dual agency" situations where they are representing you and the seller equally. Unfortunately - there is only a 20% upfront disclosure rate by "buyer agents" about how they can get into such conflict of interest situations - even though the law says that they should always disclose that they could get into that - with the potential client (upon first meeting.)

Without "named differention" the consumer can get confused. Hmmm - buyer agent - sounds like they will be representing my interests 100% of the time...

That is what is so nice about the use of the term "Exclusive Buyer Agent" - because officially - it means that the agent and their company don't list property for sale - and so they can never get into a conflict of interest situation.

In any case - though they blew that terminology in the article -- that is what it is talking about...

And even more unfortunately - many traditional agents sometimes use the word "Exclusive Buyer Agent" - when they aren't - which confuses the public even more.
What is what? What kind of representation is someone giving me? What name can I trust? What does the name mean? etc.

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent in this March, 2007 article. (They have written many along the same lines in previous years..) Consumer Reports, Money Magazine, CNN Money, the Wall Street Journal, Medical Economics Magazine, the Consumer Federation of America, and many others have all done the same..

An Exclusive Buyer Agent is an agent that never lists company for sale - nor does their company. They never represent sellers - ever. On the other hand a "buyer's agent" works for a company that lists property for sale - and they themselves usually list property for sale. Whether they are practicing designated agency or dual agency - those are not good things for the buyer...

I like the fact that the article points out that "Agents are paid a cut of the selling price, so the higher the price, the better for them -- but not for their clients." As Exclusive Buyer Agents - we ensure that "the higher the price - the worse for us" - which puts us in alignment with out buyer client's interests.

The definition of insanity is hiring someone with financial interests that are in opposition with yours. When you purchase a used car - the used car saleman's interests are just that.

Like a dog - we "work hard for our scraps" - and we believe that everyone does in this world... So when consumers hire a so-called buyer agent that makes more when their price goes up - they are really doing themselves a dis-service....

When I bought a home when coming in for a position at Motorola in the 90's - the "company referred agent" (read relo company) I had - kept trying to work me over to come up in price - and it really teed me off. She was acting like she was representing the seller and not me. She also referred an awful home inspector - who glossed over many things that should have been found. Many agents refer inspectors that "won't blow the deal" which is really a disservice to the buyer.

I realized then that home buyers needed much better protection than what they were getting - which is why I started this company.... to provide the best possible protection and representation to home buyers... I feel great about what I do for a living - becuase it has the most integrity to buyers in the Real Estate industry....

Don't Visit New Construction / Builders Without Representation!

As a consumer - did you know that when you sign into a new construction community by yourself - that you lose your ability to be represented at a later date on that same property (without any cash out of your pocket)? It is a dirty little secret that the builders never tell you about. Of course - they don't. If you sign in on their sign-in sheet without an agent - they get to save 3-4% (what they would have paid out to the agent's brokerage.)

When you sign in to new construction - the builder has you by the yin yang. If you visit again later - with your preferred Real Estate representative - they won't get paid if you purchase in that community. If you have a buyer agency agreement with that rep - you'll have to pay your agent out of pocket - because the builder isn't paying out.

On the other hand - lets say you had a buyer agency agreement for 3% with your agent - and the builder pays out 4%. Guess who gets the extra 1% when you sign in as being represented by that agent? You do - the buyer! That is one great advantage of having a buyer agency agreement. (The other advantage is that it spells out your agent's responsibilities to you in writing. You know if dual agency is possible or not for example.)

Builders LOVE IT when buyers come in unrepresented. That means that they can charge their normal rate for the property - plus save paying out a 3-4% commission for example. They don't discount the property by that - to the unrepresented buyer. So - as a buyer - it is lose/lose proposition.

You also lose out on:

--knowing about extra incentives that you may not have known about - that could have been offered that the agent has seen offered in the past.

-- an agent ensuring that you are getting the best possible price vs. other properties in the community, and analyzing the re-sales there and in nearby areas - to make sure you don't over-pay.

-- an agent helping you through the home inspection phase (there should be at least two inspections for new construction... one before the drywall goes up, and one at the end.)

-- an agent helping you with the many other details that will ensure you get to closing smoothly.

-- If your agent helps you "loan shop" (not many of them do unfortunately) - that is another thing you miss....saving tens of thousands over the life of the loan - and perhaps having lower lender fees.