Understanding the importance of a buyer's agent

Both buyer's and seller's agents can set up house tours, build relationships between a potential buyer and seller, and help with the negotiation process; but only one has the buyer's interests in mind.

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When making any important decision or purchase, individuals often seek out an unbiased opinion to help guide the process, or look for an advocate to protect their interests in areas beyond their expertise.

In our court system, for example, the prosecutor does not also represent the defendant. So why should home buying be any different?

Bernice Ross, the CEO of and one of Inman's top 25 real estate coaches in the country, explained that the "majority of agents lack the skills" to represent both the buyer and the seller.

"The mindset is different and the representation is different for each type of work," Ross said. "You wouldn't ask a podiatrist to work on your heart anymore than you would ask a cardiologist to work on your feet. Having proper representation makes all the difference in the world."

How is a buyer's agent different from a seller’s agent?

Both buyer’s and seller's agents can set up house tours, build relationships between a potential buyer and seller, and help with the negotiation process.

The big difference between the two? According to Travis Everette, headmaster at Pan School of Real Estate in Raleigh, it's fairly straightforward: the seller's agent represents -- you guessed it -- the seller of the house.

That agent has in mind the interests of his or her clients, not yours.

On the other hand, a buyer's agent’s allegiance rests solely with you, the homebuyer. This agent will help you with negotiations and facilitate other steps of the buying process, like setting up a home inspection and assisting you through paperwork.

There are things that are legally required of both agents, but the law is designed only for the bare minimum to protect the legality of the deal.

"Counting on the seller’s agent to protect your interest is like trying to buy a used car and telling the dealer exactly how much money you have in your pocket at the time of purchase and hoping they don’t take advantage of that," Everette explained. "While neither agent will do anything illegal, they sure don’t have to protect your best interest if they don’t work for you."

Think of buying a home without a buyer’s agent like going to court without a lawyer. With important decisions like these, you want an expert representative in your corner.

Unbiased representation

According to Ross, until the last 15 years or so, most agents would act as both buyer’s and seller’s agents. Since this created a potential conflict of interest if an agent ever showed a house that he or she was also representing, many agents began to act only as seller’s or buyer’s agents.

These agents are referred to as "exclusive buyer’s agents." Ross pointed out the benefit of an exclusive agent, saying, "This agent solely represents you and avoids potential conflicts of interest with sellers."

If you decide to go with a buyer’s agent, ask around. Ross said most realtors and agents build their business through reputation, meaning they know they need to do good work each and every day.

"When hiring an agent, be sure to ask them specifically if they are representing you or the sellers and if they are exclusive," Everette explained. "In the state of North Carolina, all agents default to representing the sellers until you personally tell them that you want them to represent you and you only. If there is a conflict of representation, they are required to tell you and get your written permission for representation."


One aspect that you may not realize is that buyer’s agents do not typically cost the buyers any additional money in most real estate transactions. Most buyer’s agents are paid from the proceeds of the sale of the home and are paid by the sellers, even if they work for the buyer.

When there is an agent involved, the fees are generally paid to one agent or split between the buyer’s agent and seller’s agent; but the sellers pay those fees, which means the buyers won’t have to come up with any money to hire someone to represent them.

Now, there are circumstances where this is not true and you should be aware when it is actually costing you money.

In a real estate transaction where the sellers are represented, that seller has already agreed to a commission up front with their agent. That commission gets paid regardless of who sells the home, so if the seller’s agent sells the home, then they get to keep the entire commission.

If another agent brings a buyer, the total commission is split between the two agents. However, the age of limited representation and for sale by owner has made lots of information greatly available to potential consumers who wish to represent themselves.

If the sellers do not have a fully contracted agent, they may be forced to pay your agent a commission and may limit your negotiation abilities on price. Or if a seller is selling their home without any agent, it is likely that a buyer’s agent would then have to be paid by the buyer.

When going for new construction homes, the price is unlikely to be greatly affected, no matter how many agents are involved.

Builders of new construction areas are typically very price sensitive because it sets a precedent for all other homes. If a builder discounts a home by 3 percent because there is no buyer’s agent, that builder has just affected the price of all home sales in that entire area, even when there is an agent involved.

The selling price of a home is often determined by the similar homes in that area, and agent participation is not a factor the market considers. So if you are going to go get a new construction, chances are that your price will not be affected if you have an agent or not.

You may be able to negotiate better amenities and some extra bonuses, but you will most likely not get a better price.


The only real "con" of working with a buyer’s agent is limiting your available options.

When an agent lists a home for sale, they represent the seller for that transaction. When that agent is helping someone buy a home, they represent the buyer.

The problem comes in when you, as the buyer, want to see a home that your agent may be representing as a seller’s agent. If you have an exclusive buyer’s agreement with that agent, that agent cannot legally show you any homes that they are representing as the seller’s agent.

This may limit your ability to look at homes if that agent has a lot of listings. This is why it is extremely important to ask your agents if they are exclusively representing you, or if they are also representing other sellers.

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