Written by Andrew Goodman
Question: Why do I need a buyer’s agent, especially if I am purchasing new construction?
In today’s hot market and with the lack of inventory, many buyers are leaning toward purchasing in new construction developments. I’ve written about things you should know prior to purchasing a new construction property.
Obviously, as the owner of a real estate brokerage, I am a little biased. But here is why it’s a good idea to have a buyer’s agent, even when looking into a brand new property:
It’s Free – You don’t pay to have a buyer’s agent in a transaction. The seller pays the agents.
Now, some of you may say, ‘If I don’t have an agent, I can get a discount.’ Not true. The listing agreement between the seller and the listing agent is determined prior to a property being listed.
The misconception is that the seller pays both agents, so if there is only one agent, the seller could save some money.
But the listing agreement states that the seller pays the listing broker the full fee for the transaction. Then the listing broker would pay the buyer’s agent his or her portion according to the agreed upon brokerage fee.
If there were no other agents involved in the transaction, the listing broker would then be entitled to both sides of the brokerage fee, not saving the seller a dime.
Some brokerages charge what is called an “admin fee.” This can be anywhere from $250-$495 depending on the brokerage. However, there are some brokerages that do not charge this fee. My brokerage doesn’t charge it nor have I ever collected an admin fee from my clients.
Who’s Looking After Your Interest? – If you enter into a transaction without an agent, who is looking out for you? You may think you know everything, but a licensed agent should know everything about the transaction and the technical aspects of the contract and be able to give you sound advice so you know what to do, or what not to do.
Please choose your realtor wisely because realtors are not the same. A listing agent, much like a new construction salesperson, is hired and works for the seller. They are looking out for the best interests of the seller, NOT the buyer.
A buyer is free to uses the assistance of an attorney instead of a realtor. However, the fee for the attorney would have to come from the buyer. The listing broker does not have to split the brokerage fee with an unlicensed attorney.
Saves The Buyer Money – A realtor should be able to save his or her buyer some coin.
Those savings can come from the transaction itself, with the loan through the realtor’s lender connections, on settlement costs with settlement company connections, or with inspection costs through inspector connections.
Remember, realtors do this every day and work with many clients. They have built relationships that the average buyer wouldn’t have after only being involved in one or two real estate transactions in a lifetime. Take advantage of the connections your realtor has made over his or her career and save some money.
I have worked with both new construction communities (still do) and with the average buyer and seller. Yes, agents want to be compensated. This is what we do and how we put food on the table. But the “right” agent wants to protect the interests of his or her clients first and foremost, no matter what the compensation is or if there is compensation at all.
I guarantee that if you pick the right realtor, you won’t regret it!
On a side note, when going to a new construction community, please be sure to take your realtor along on your first visit. New construction communities have strict rules and most will not cooperate with agents if they do not accompany their client on their first visit.
Why would a new construction community have such a rule? Sounds like another way to avoid having a knowledgeable agent look after his or her buyers’ interests.