Insider Advice On the Buyer's Agreement
Buying a home is something most people will do only a handful of times in their lives, so often (and understandably) they aren't familiar with the home buying process's numerous intricacies. That's why it's important to work with a buyer's agent. Not only do they have access to insider perks like the Greater Alabama MLS, or Multiple Listing Service, they're an invaluable resource to have during your search for a new home. Homebuyers unfamiliar with the process might be thrown off when or if a realtor asks them to sign a buyer's agreement.
A buyer's agreement solidifies the arrangement between a homebuyer and the realtor by outlining their relationship for a specific time frame--usually either a set number of months or until the buyers purchase a home--as well as the realtor's commission rate. This last point is key: because realtors work on the commission of the properties they sell, a buyer's agreement is important because it allows the realtor to invest lots of time showing homebuyers properties without the risk of the buyer closing with a different agent.
However, it's the question of commission that makes some buyers wary of entering into a buyer's agreement, as they believe that the guarantee of a certain commission will decrease an agent's incentive to negotiate a lower price for the buyer. After all, the higher the sale price, the higher the agent's commission, right?
Not exactly. It's actually not in the agent's best interest to do this. The difference in their commission is likely to be negligible: for example, a commission of 3.5% comes to $8,750 on a sale of $250,000 and $9,100 on a sale of $260,000. That's a difference of just $350, which is then taxed and subject to brokerage fees before it goes to the agent. Meanwhile, the effects of a badly negotiated deal would cost their career far more than that, as realtors rely heavily on their reputation with their clients for word-of-mouth marketing.
But why even work with a buyer's agent? You might think that a well-informed homebuyer can do the majority of a buyer's agent's job, as the internet makes it easier than ever to connect with potential properties. However, that outlook doesn't consider the buyer's agent's most crucial role: your personal negotiator during closing. Having a buyer's agent, especially a member of the Greater Alabama MLS, at the negotiation table means that your interests are represented as equally as the seller's. Suppose you choose not to work with a buyer's agent. In that case, you're left largely alone to navigate the negotiations, and even if you're a farmer's market bargaining champ, the stakes of buying a home are much higher than scoring three tomatoes for the price of two. And while you have the option of working with the seller's agent for the closing, it's important to remember that they have a contract with the seller. So, while realtors are professionals and aren't actively trying to work against you, they are working for their clients, and your interests and the seller's might not always align.
The amount of paperwork involved in the homebuying process can seem daunting, but the buyer's agreement is one of the most important to sign. Working with a buyer's agent gives you access to all of the homes in the Greater Alabama MLS, as well as complete confidence in closing, and the buyer's agreement guarantees your agent can invest time in your home search without taking a hit financially. Help your realtor help you!