Buyer’s Agent: What Do They Do and How Much Are The Fees

Are you wondering what a buyer’s agent is and why you should have one? You are probably thinking, do I need a buyer’s agent?

Many consumers wonder why they should have a representative when purchasing a home. They wonder whether there will be any value.

From my years of experience as a Realtor, I know that Hiring a buyer’s agent makes sense if you plan on buying a home.

There are multiple reasons to do so, many of which we will cover here. Buying a home is one of the most significant purchases you will likely make in your lifetime.

Having a real estate professional look out for your best interests is essential.

A buyer’s agent will help ensure that you get the best possible results—and will make it more likely that you can achieve the desired outcome.

The best agents do more than provide assistance. They provide representation and are your advocate throughout the entire real estate transaction. They will be your guide every step of the way.

Unfortunately, some uneducated buyers think that going directly to the listing agent gives them a leg up on a purchase. Wrong! purchase. Wrong!

The listing agent works for the seller. They have an allegiance to the seller throughout the transaction. Their goal is to get the seller the most money possible. A seller’s agent can give you ZERO advice.

We will cover 13 reasons why having a buyer’s agent in real estate is necessary.

Before doing that, however, let’s cover the definition.

Quick Facts and Figures

1. A buyer’s agent is a real estate professional representing the buyer’s interests in a real estate transaction.
2. They help buyers find properties and neighborhoods that match their preferences and budget.
3. Buyer’s representatives negotiate on behalf of the buyer to secure the best possible price and terms.
4. They guide and advise throughout the buying process, including arranging property inspections and coordinating with lenders.
5. The services of a buyer’s representative are typically paid for by the seller or through a commission split with the listing agent. Although this may be changing.
6. Over 90% of first-time homebuyers in the United States use a buyer’s agent to assist them in purchasing.
7. More than 80% of buyers who used an agent reported higher satisfaction with their home purchasing experience.
8. Studies show that buyers working with an agent could negotiate an average savings of $50,000 off the asking price.

What is Buyer’s Agency?

Buyer’s agency occurs when a real estate agent exclusively represents a buyer’s best interests. The agent’s allegiance is to the buyer in all parts of a real estate transaction.

Buyer’s agency was established in most of the United States in the 1990s. Before the advocacy of buyer’s agency, all real estate agents represented the seller.

The introduction of buyer’s agency was a significant turning point in real estate sales. Potential home buyers now could have a buying agent in their corner.

What is a Buyer’s Agent?

A buyer’s agent represents a buyer’s interests when buying a home. A buyer is considered a “client” of the real estate agent, not a customer. The agent becomes a fiducaciary to the buyer in all aspects of the transaction.

In a buyer’s agency relationship, the agent provides the client with undivided loyalty, reasonable care, obedience to lawful instruction, disclosure, confidentiality, and accountability.

A real estate agent must prioritize the buyer’s interest and negotiate the best possible terms for their client.

Understanding the Role of MLS in Your Home Search

The Multiple Listing Service (MLS) is a powerful tool your agent uses to find homes matching your specific criteria.

Access to the MLS database lets your agent quickly identify properties that fit your needs and budget, ensuring you don’t miss out on potential homes.

This access lets your agent provide detailed information about each listing, including things not always available to the public, such as seller disclosures and previous sales history.

Your buyer’s agent can leverage the MLS to streamline your home search process. The system makes it more efficient and tailored to your preferences.

For example, when working with a buyer client, I can email new listings from MLS.

What is an Exclusive Buyer Agency?

Some real estate companies choose only to represent buyers. They do not have any seller clients. Under an exclusive buyer agency, the company’s goal is only to serve the best interests of home buyers.

An exclusive buyer’s agent (EBA) only represents home buyers and does not “list” homes for sale.

What is a Buyer’s Agency Agreement?

A buyer's agent agreement is a contract between a buyer and a buyer’s agent for the exclusive use of their services. It spells out a working relationship between the parties. The buyer’s agency agreement will outline the duties to the buyer.

The critical aspects of a buyer’s agency agreement include agent exclusivity, the length of the contract, compensation procedures, and the type of home the buyer wants.

The contract will indicate that the buyer can only work with the specified agent. It will also state how long the agreement is enforceable and outline the compensation procedure if the seller pays a lower commission than the buyer’s agent desires.

A complete description of what the buyer is looking for will be outlined. In most buyer’s agent agreements, the contract typically obligates the buyer to purchase a home through the agent.

If a buyer purchases a home without their exclusive buyer’s agent, that agent is entitled to a commission.

Given that buyers are responsible for buyer’s agent fees regardless of whether they use them, it makes sense to be one hundred percent confident in the agent before signing an exclusive buyer’s agent agreement.

Much like you would when signing an exclusive right-to-sell agreement when selling. Under the Justice Department settlement, buyers will be required to sign a buyer agency contract.

What is a Buyer’s Agent Fee?

Do buyers pay commissions to real estate agents? Usually not.

The buyer’s agent fee is the commission they will earn when finding a home for a buyer and then subsequently closing on the sale. The seller typically pays for a buyers agent commission. This will be changing soon.

Usually, Real Estate Commisions are split 50/50 between the listing and selling agencies. The seller pays the buyer’s agent from the sale proceeds, so the buyer has no financial responsibility for payment.

If the buyer becomes interested in a FSBO, and the seller is not offering a commission, the buyer would be required to pay the buyer agent commission as spelled out in the buyer’s agency agreement.

Additionally, the buyer must make up the difference if the seller’s compensation is lower than the buying agent’s minimum acceptable commission.