What is Buyer Representation and Why is It so Important?

We couldn't think of a better way to describe Buyer's Representation than taking it directly from the most accredited source, the experts on Buyer Agency at Real Estate Buyer's Agent Council (REBAC):

Defined most simply, a buyer's representative (also buyer's rep, or buyer's agent) is an advocate for the buyer—not the seller—in a real estate transaction. Real estate laws and regulations vary from state to state, but buyer's representatives usually owe full fiduciary (legal) duties, including loyalty and confidentiality, to their buyer-clients and work in their clients' best interests throughout the entire transaction.

What Are Some Benefits of Using a Buyer Agent?

When a relationship is created between the purchaser and the real estate agent, the agent must work in the buyer client's best interest at all times, thereby providing purchasers with the same level of representation traditionally given only to the seller. Here are just a few of the benefits you will receive from having your own personal representative when seeking to purchase property:

Confidentiality. The agent you hire to represent you will not disclose confidential information regarding motivation, price and terms, or anything else of a personal nature to the seller or seller's agent without your permission to do so.
Loyalty. The buyer's agent must work in the buyer's best interest at all times, even if it is not in the agent's personal best interest to do so. This means that the agent will virtually do for you what they would do for themselves in the transaction.
Full Disclosure. The agent you hire to represent you will fully disclose any information gained from the seller or the seller's agent that could be used by you in the transaction. In addition, the buyer's agent will undertake a level of diligence and discovery that will give you the necessary information to make an informed decision as to the property you wish to purchase.
Property Search. The buyer's agent will search for all available properties for sale by owner, unlisted properties, new construction, foreclosures, and others and will not limit their showings to properties they have listed. A listing agent's job is to move the inventory of their seller clients. A buyer's agent's job is to locate satisfactory properties for their client, no matter who has them listed. Any limitations on this search will be documented in the buyer agency agreement.
Property Analysis. As the buyer's agent goes through the properties with you, they will assist you with analyzing the properties and determining their strengths and weaknesses, allowing you to make informed comparisons. A lifestyle analysis will be performed to determine whether or not the property would suit your particular needs.
Negotiate. The agent you hire to represent you in the transaction will do a market analysis on the chosen property and will provide you with an offering range for that particular property. They will then set a negotiating strategy to assist you in acquiring the property at the lowest price and best terms possible for your situation.
Offer. The buyer's agent will complete an offer to purchase that is "buyer friendly" and contains the contingencies and protective clauses you need.

These are just a few of the benefits received from having your own personal buyer agent when purchasing. Considering that the majority of buyer agents are paid through the transaction or by the seller's agent, doesn't it just make good sense that you have the representation you deserve?

What Services are Provided by a Buyer's Representative?

If you've established an agency relationship with a buyer's representative, common services include:

Helping you clarify your priorities.
Suggesting sources of financing and other service professionals, such as inspectors and exterminators.
Providing sources of accurate and lawful information on neighborhoods, schools, and communities.
Selecting and arranging property showings.
Evaluating particular properties.
Explaining forms and agreements.
Suggesting contract contingencies to protect you, rather than the seller.
Assisting in the negotiations for a favorable price and terms.
Keeping all information confidential that could weaken your bargaining position.
Monitoring the entire purchase process, assisting with issues that arise through closing

What is the Standard Compensation Structure for Real Estate Professionals?

For the most part, real estate professionals are compensated by commission, based on a home's selling price. Commission rates are not standardized, but vary, as does how the sales commission will be divided between the agents on the selling and buying side of the transaction. There is consistency, however, in how commissions are paid. When a seller signs a listing agreement, their contract is with a brokerage firm. All fees must pass through that brokerage firm. Typically, the seller's representative—and your buyer's rep—will be paid by the listing broker after the transaction closes.

What Services Can I Expect to Receive?

This depends on what level of service you have established as a homebuyer. If you have not formed an agency relationship, you are probably considered a customer, rather than a client, and you will likely receive a lower level of service. The terms vary from state to state, and each buyer's representative can set their own guidelines within their state parameters and their brokerage practices. So you should clarify, preferably in writing, the services you are entitled to receive before you start viewing properties.

It's also important to understand that if you do buy a home, your buyer's rep will probably receive compensation (through the listing broker), regardless of whether you are a customer or a client. So it is often in your best interest to formalize an agency/representation relationship, so you'll receive the highest level of service possible. (Learn more about agency relationships).

Will I Pay More to be Represented as a Buyer?

In the vast majority of cases, the answer is no. When a house is listed for sale, the seller's contract spells out the commission rate that will be awarded to a buyer's representative. This is known up front and typically covers all, or at least most, of your representative's compensation.

If it doesn't, the choice is yours. You can scratch this house off your list, or decide to view it, knowing that any remaining compensation will need to be addressed. But even if the seller's listing contract doesn't entirely cover your buyer's representative's compensation, and you must pay the difference, it's quite possible that these relatively small differences will be more than offset by other purchasing terms negotiated with the seller.

Can I Avoid Real Estate Commissions Altogether and Buy Directly from a Seller?

Yes, this is an option that some buyers explore. However, it's important to understand that nothing is truly free and this approach still carries a price. Unrepresented sellers (for-sale-by-owner properties) frequently lack adequate information about how to price their home, or attempt to inflate the price in lieu of paying a real estate commission.

As an unrepresented buyer, it will be much harder for you to know if you're overpaying. Real estate professionals have developed keen pricing insights that go well beyond simply evaluating data through the Multiple Listing Service (MLS). And if you are overpaying, it will create further complications in securing financing.

For these, and many other reasons, a high majority of consumer-to-consumer housing transactions never reach closing. Real estate professionals play a valuable role in keeping your home-purchase on track, starting with selecting and touring properties and continuing through negotiations, inspections, financing and closing. This is especially true in today's market, where alternative buying opportunities, including short sales, have added even more complexity to some real estate transactions.

What is an RSPS Certified Realtor®?

From vacation homes to investment properties, the resort and second-home market is filled with opportunities for Buyer's and Seller's alike. RSPS Certified Realtors® guide their clients through each transaction with confidence. They know how to market and fin the right property for the right audience, and proactively network with other qualified Realtors® to stay ahead of the curve and keep a pulse on the market.

Launched in 2006, the RSPS Certification was created by The National Association of Realtors® to better serve the growing second-home and resort real estate market and how has over 700 elite members. RSPS is recognized as an official NAR certification and allows Buyer's and Seller's to have confidence in the ability of a Realtor® who specialized in resort and second-homes to assist them with their search. Make sure your Durango Realtor® is RSPS Certified.

What is an e-PRO— and Why Should You Use One?
A short guide for the Internet consumer

When you're on the Internet, you don't have time to waste on endless searches for useful real estate information. You want to get things done quickly and without hassle. So chances are you'd like a real estate agent who

Answers e-mail promptly and professionally.
Respects your on-line privacy.
Offers home listings and other Internet tools to help you find or market a home.

Enter the e-PRO.

An e-PRO is a REALTOR® who has successfully completed the e-PRO training program for real estate professionals. Endorsed by the National Association of REALTORS®, the e-PRO course teaches professionals the nuts and bolts of working with real estate on-line: Web sites, e-mail, on-line tools, and most of all, what today's consumer really wants.

What does all this mean to you? There are several benefits of working with a certified Internet professional.

1. More Privacy

Are you reluctant to give out contact information through the Web for fear of being pestered or spammed? e-PROs understand. They've learned the Web isn't just a place to do business; you need information from someone you can trust.
That's why e-PROs respect your privacy. They respond quickly to your questions, but don't send you unwanted communication. And they protect your personal information.

2. Less Hassle

Tired of struggling to find information? e-PROs are more likely to have access to the latest Internet utilities, making your life easier. These tools may include:

On-line home tours
Instant access to comprehensive neighborhood data
Extensive property listings
Immediate e-mail notification of just-listed homes meeting your criteria
Referral networks and on-line forums, where e-PROs can quickly find information—even potential buyers—from other e-PROs
Newsletters on current real estate conditions in your area
Electronic faxes sent to you by e-mail
Advanced software, PDAs, and laptops to find you answers on the spot

The result: you get more information, more easily. With electronic files, you have less paperwork to deal with. And since your agent uses e-mail, you can even eliminate phone tag. The e-PRO streamlines your entire transaction, from showing to closing.

3. Less Expense

An e-PRO's access to advanced technology can save you considerable expense. You have more tools to find or market your home, so you're likely to get a better price. With on-line home tours, you reduce in-person showings—and the costs involved. And by using e-mail, you save money on long-distance calls and fax charges.

Relocating? An e-PRO is ideal for you. With the tools to do your research electronically, you can make a decision on a home the first day you're in town—or without traveling at all. You and your family save on travel costs. And after you've decided to buy, monitoring the sale by e-mail saves you even more.

Should you use an e-PRO? Yes—especially if you're an Internet user. In this fast-paced age, technology has become a necessity. An e-PRO is someone who has recognized and responded to the needs of the new consumer. If you choose an e-PRO, it's a safe bet you'll get the kind of service you want—and need.