Why Hire a Buyer’s Agent?

When people plan to sell a home, they hire a local expert to help them.

Why don't buyers do much the same?

Buyers often begin their search alone, and don’t fully plan out how they will be represented when the time comes to write an offer on a home.

That’s too bad. Failing to research and make choices about your representation early can lead to less-than-optimal results later.

We encourage you, as a potential buyer, to think about who will be on your side, dedicated to representing your interests, when it’s time to write an offer and close on a house. Interview one or more agents to find the right fit. Be intentional with your process, and make a choice before you get too deep into your home search.

At Edge Real Estate Agency, we specialize in buyer representation. We believe that the market works better, and buyers get better results, when buyers have their own experienced, professional representation. We would be honored to earn your business. 

Below, we offer a comprehensive look at the job of a good buyer’s agent, and how and why local home buyers should take seriously the idea of enlisting their own agent early. 

Sellers Typically Pay Buyers’ Agents

Buyers first need to know that the most common way for a buyer’s agent to be paid is out of the seller’s proceeds when the sale closes. The buyer does not need to pay extra on top of the purchase price, or an hourly rate, or any other fees, to have their own representation.

The seller decides before publicly listing the house how much they will offer to a buyer’s agent. Typically it’s a small percentage of the sale price. That figure is listed in the MLS as the fee due to any agent representing a buyer, and also appears on some public websites. (Technically, in most cases today, the fee is paid by the seller to the listing broker and apportioned to the buyer’s broker.)

Critically, the seller is offering to pay someone who exclusively represents the buyer and the buyer’s interests, potentially against some of the seller’s interests. Of course, that compensation comes out of money paid by the buyer for the house, but it is generally the seller who directs it to the agent.

This is a newer arrangement. Until the 1990s, home buyers in California did not have the same options. Agents who worked with buyers in a transaction were often, technically, also agents of the seller (or “sub-agents” of the listing broker). Expectations were lower. The advent of true, separate buyer agency was a pro-consumer development in the real estate market. Many other countries still do not have buyer's agents.

We have a very buyer-friendly system, but buyers must understand it, and do a little work on their own, to take full advantage. Buyers who don't hire an agent, or who try to “go it alone,” lose out on the specific advantages that a buyer’s agent could bring to them.

What Buyers’ Agents Offer

A buyer’s agent may not have inventory to sell like a listing broker. They are “selling” their time and expertise. Savvy buyers appreciate what that can mean for their purchase.

A qualified buyer’s agent is going to have local expertise and relationships, negotiating skills and transaction experience that truly can make a difference. Most importantly, a buyer's agent works for you.

Every transaction is different, so expectations of the agent and performance by the agent will be different, too, case-by-case. A buyer’s agent will earn their commission by combination of factors, including: 

  • finding the right property, 
  • educating buyers about the market,
  • advising about the proper value for a home, 
  • drafting important terms of their buyer’s offer to make the best deal, 
  • working with the buyers and their lender, 
  • steering the inspection process and any further negotiations,
  • helping buyers understand potential renovations by working with city agencies and/or trusted contractors, and
  • keeping things on track throughout the often-stressful escrow process. 

If you want to know the full scope of work for a buyer’s agent, we’ve provided much, much more detail in "10 Things Good Buyers' Agents Do."

The best buyers’ agents know their clients’ wants and needs, and can make the right match when learning about new properties coming to market. In an offer or transaction, they are able to leverage the information they possess and which they find through additional research. That's how they help shape a great offer. Good buyer's agents know what to do in fluid, high-stress situations, to save their buyer clients money and time, and to make sure they get the home that they want.

Hiring an experienced local agent to direct the purchase process increases buyers' confidence, and helps them to focus on work and family, as well as the details of their loan and escrow process. The agent is there for you to handle questions and issues as they come up throughout the process. Knowing that your own buyer’s agent is there to represent only your interests adds peace of mind to a multi-million-dollar transaction.


How Buyers’ Agents Are Engaged, and Paid

Real estate agents are paid only for performance. That is, no one earns a fee until a sale is closed. 

Listing agents seem to have an easier job, in some ways. Once they sign a listing agreement and start marketing a home, they are most of the way along the road to a paycheck. 

By contrast, a buyer’s agent first must find buyer clients. A buyer’s agent needs to be patient, and work to become a part of the buyer’s process. The whole buying process can take weeks, months or even years. 

Quite often, a buyer’s agent works, at least for a while, without a formal contract. The agent seeks to earn a buyer’s business by demonstrating expertise, and just by showing that they are someone worthy of the buyer’s time and trust. 

As they say, time is money, and we all only have so much time to give. When a buyer’s agent invests time with a buyer, they are investing money in the hope and expectation that this will later result in compensation.

Over time, buyers and a buyer’s agent may develop a relationship, and some mutual loyalty. This is a time when both sides should discuss a formal agreement to commit to working together until the buyers close on a home purchase. Such an agreement cements that loyalty and helps the buyer’s agent to continue to invest time in assisting the buyer clients.

The form of buyer representation agreements in California is evolving now, as we speak. The paperwork required is becoming more flexible, and also requiring more disclosures.

The idea is to ensure that buyers are fully informed about the process, what an agent's duties are, how compensation works and what options they have as buyers. 


The Perils of Buying Without Your Own Agent

In California, it is legal for a seller’s agent to also represent the buyer of a home listed for sale. (So-called “dual agency” is not legal in all states or countries.) In such cases, the seller’s agent stands to receive a great deal more in compensation upon closing of the sale – sometimes double their commission.

Before hiring a listing agent to work for you as a buyer, it's reasonable to ask: Why double this agent's pay? What's in it for me?

Buyers sometimes choose to work with the seller’s agent for specific reasons. Other times, buyers simply default to working with the seller’s agent, or someone from the same office, because they have not chosen their own agent before seeing a home that they like. 

Let’s take a look at all of these reasons. As we do, don’t forget a fundamental point: The listing agent was hired by the seller first. That will always be the listing agent’s first loyalty.

Why do some buyers choose to hire the seller’s agent? 

Positioning for a Property

In a rising, or competitive, market, some buyers feel that they must hire the listing agent simply to give themselves a chance to get a home that they love, or to acquire an off-market property. They assume that doubling the listing agent’s pay will give that agent incentive to put the buyers’ offer in first position, to give the buyers inside information, and to argue on behalf of the buyers with the seller. 

While this can work as a strategy when the situation calls for it, it does not always succeed. 

You can’t beat a better offer merely because you have the same agent as the seller. Also, if there are multiple offers, competing buyers' agents will be extra cautious not to reveal their final offers to the listing agent, to try to deny an advantage to any buyer represented by the seller's agent. (Listing agents should disclose to other buyers’ agents if they represent a buyer for the property.)

Lastly, sellers may be wary of a buyer who comes in without their own representation. Hiring the listing agent can look like a manipulation meant to compensate for other weaknesses.

Financial Terms

Some buyers may also assume that they will get a better deal, financially, by hiring the listing agent. Maybe, but there are no guarantees. 

If the listing broker doesn’t choose to reduce their own fees, the only financial advantage to the buyer may come from having the listing agent drive the seller harder to accept a lower price. 

Remember who was first to hire the listing broker? The seller is still the broker’s first loyalty, and it is a relationship that the listing broker won’t want to disrupt by pushing too hard if the seller doesn’t like the buyer’s offer. 

Unfortunately, the buyer will never really know what goes on in such a private discussion over price, and whether or not they did, in fact, get the best price possible out of the seller. 

Commissions are negotiable. But if buyers do not explicitly ask the listing agent upfront to reduce their commission to save the buyers some money, the agent probably won’t. (Even if a buyer does ask, the listing agent may find it easy to say "no" to a buyer who is seeking advantage by enlisting them.) The seller might later ask the listing agent for a fee reduction in a case of dual agency, but that’s much less common than you might expect. 

It seems that few buyers are even aware of the possibility of asking the agent for concessions as they slip into a relationship where the listing agent will also represent them. The agent happily pockets a double commission for roughly the same amount of work.

By Default

A common reason for buyers to hire the listing agent is that they have not done enough research, or interviews, with buyers’ agents to secure their own representation. 

It’s clear to see how buyers end up in that position, even though it's preventable. These days, it’s easier to find properties, to see them in person and even to do some rudimentary analysis of value, without ever engaging an agent. That’s a definite plus for buyers at the early stages of a home search. 

But this flexibility and freedom of movement puts more buyers nearer and nearer to the point of writing an offer without their own agent. 

When they go to hire the listing agent, it’s because the buyers like the house and don’t have any other relationships. They don’t necessarily interview the listing agent to find out if they’d do a good job for them, or even ask how a listing broker practicing dual agency might protect them and fight equally for them. 

Very often, hiring the listing agent starts with a pleasant conversation at an open house, and evolves quickly to a legal agency relationship, without much pause to consider.

Agents in the Same Office Are Dual Agents, Too

There are two ways that buyers can end up in a "dual agency" situation even when they think they have "their own agent."

First, if you have a buyer's agent and that agent happens to work under the same broker with whom a home is listed, you will be in a dual-agency transaction if your offer is accepted. That's because under California law, the listing belongs to the broker - the single, responsible person in charge of the office - and all agents work for the broker.

This kind of dual agency is relatively common, especially in a large office, and does not raise the exact same set of concerns as having the individual listing agent represent the buyers. There will be higher-level disclosures included in the purchase process, and the agents do need to be extra careful.

A second kind of dual agency may raiser bigger issues of concern. A listing agent might have a larger team of agents working alongside or under them. If a buyer meets one of those agents at an open house, or for any reason hires one of these team members to write an offer on the team leader's listing, that agent may have much the same kind of relationship to the seller as the listing agent does. First loyalty goes to the seller who listed the property with the team. And while representing the buyer, the agent may still be in a "junior" position to the listing agent, on whom the agent depends for future business opportunities. 

It's easy to see how the team-member agent may not be able to fight quite as strongly on behalf of the buyer when there are other, longer-term relationships at stake. 


Transactions Often Involve Conflicts

We want to say that buying a home is a joyous process. It can be, but not always.

Conflict is almost guaranteed in the home purchase or sale process, starting with the offer and continuing through closing. This is another reason buyers should have their own advocate.

First of all, home sales are an emotional process for both sides. While many home buyers and sellers are sophisticated people, the process of selling a home or buying a new home often involves a lot of personal issues and feelings for everyone. If a disagreement emerges, it can take on a life of its own and create emotional reactions. 

Real estate agents play a role as buffers between the principal parties, the buyer and seller. If one agent is representing both buyer and seller, both can begin to question whether they are really being heard. How can the agent be “neutral” or fairly represent two conflicting perspectives? One or the other of the parties may feel that the agent has neglected them, or even has become disloyal.

Financial conflicts over items such as repairs are common. Buyers may want $10,000 in repairs, and the sellers may only agree to $2,500. How strongly can one agent argue for both conflicting positions? How can the agent steer the parties toward a resolution without appearing to take sides? 

Lastly, there can be issues that develop that are so significant that buyers are ready to drop out, or sellers want to consider selling to different buyers. In these cases, buyers or sellers may find themselves in a strange position, where their own agent now seems to have a conflict. The listing broker stands to earn a great deal more money if the active transaction closes. This means that everything that the listing agent might say to try to keep the deal together could appear to be tainted, rather than the best advice for either party. 

When buyers bring their own agent to a transaction, they’re less likely to worry later about how any conflicts were resolved, and whether they weren’t treated fairly during the sale process. 


All Buyers' Agents Are Not Equal

It's safe to say that almost every buyer is better off with their own representation in a home purchase.

But not every buyer's agent is experienced, and not every experienced agent wants to work with buyers.

It is a perplexing reality of the real estate business: Buyer representation is often seen as an "entry-level" job for new agents and trainees to take on.

Some offices literally build team structures in which the least-experienced agents are directed to work with buyers, since they are unlikely to be able to win any listings early in their career.

As a result, buyers may be directed to relatively inexperienced, junior agents just to have someone on their side.

More senior, experienced agents tend to prefer working with sellers and listings. Such agents may not relish the longer-term process of building relationships with buyers that might take a long time to result in a sale.

Indeed, there is some cynicism among veteran agents regarding working with buyers. They have seen some buyers switch gears, adjust their timing, change their wants and needs, and even move on from working with one agent to working with a different agent.

"Buyers are liars," they'll say. They'd rather not invest any time in working with buyers, because some of that time might be wasted.


Edge Focuses on Buyer Advocacy

At Edge Real Estate Agency, we're neither cynical nor naive about the process of working with buyers. This remains a core of our real estate practice.

We believe that buyers in Manhattan Beach and the South Bay deserve top-tier representation. It frustrates us to see buyers poorly represented or un-represented, never sure of what could have been different if those buyers had their own agent.

Our aim is to raise the bar of professionalism and treat our buyer clients like they have every right to expect. We bring a high level of care and responsibility to match the high stakes of a local real estate purchase.

We have earned many of our dozens of 5-star reviews from our work with buyers.

When you're in the market locally, consult with Dave Fratello and Edge. Find out how well things can go when you have your own quality representation for your home purchase.


Work with Dave Fratello

Looking for help with your home search or sale? MB Confidential producer Dave Fratello is an active local broker with Edge Real Estate Agency. He and the team would be honored to help!

Edge is a full-service, boutique real estate agency representing buyers and sellers. We are experts in residential real estate in Manhattan Beach and nearby South Bay real estate markets.

We’re different because we uniquely blend online savvy, tech proficiency, marketing expertise, local knowledge and experience with negotiations and transactions in this area. For any question or a free consultation, reach out to Dave today!

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