Open House Visitor Asks What Is Buyer Agency?
I want to share a story from a recent open house. I was engaged in a big conversation about what is buyer agency in Colorado and why it is a value to first time home buyers just like you.
The story starts with this younger couple arriving. Okay, to be fair, everyone seems younger these days, but I digress.
So, I’m hosting an open house and get to chatting with this couple. The conversation moves from being about that house to saving money. The buyer tells me he plans on working directly with listing agent, to save money.
Buyer Agents Work For Home Buyers!
The home shopper has no idea what buyer agency is or why it might be important to him. He wants to save money and a lower commission seems like the only way to achieve that goal.
Notwithstanding a possible price reduction of a measly one percent, we engage in a big conversation about what is buyer agency in Colorado and why it is a value to first time home buyers just like you.
There Is No Dual Agency In Colorado
Understanding what buyer agency is, it helps to know what it is not.
Karen Highland points out in her blog, Frederick R.E. Online, that agents can’t be a dual agent to buyer and seller. Like Maryland, Colorado doesn’t offer dual agency.
The problem for a real estate professional is, “how can an agent “represent” the best interest of a buyer AND a seller, when they are negotiating? They both have opposing objectives.”
Think about it. The Seller has retained a Boulder real estate professional, usually with the goal of getting the highest and best price and terms.
And buyers usually have their own agenda, frequently involving:
- “getting a deal,”
- winning the bidding war
- not overpaying!
- getting the home in the best condition possible following the inspection.
One agent in the middle is a recipe for the Seller to have representation and the buyer to be a customer. We are customers when we go to the grocery store – but the about the most expensive item we ever by is Thanksgiving turkey.
Colorado Exclusive Right To Buy Agreement
Colorado Seller Agency agreements have three defining characteristics:
- Seeking the Sellers’ price and terms
- Advocating in Sellers best interests
- Alerting Seller to any defects in Buyer’s offer.
So, sure, the listing agent could help the buyer as a customer, but legally that agent the whole while is committed to getting a price the seller wanted, at her terms, regardless of what the buyer thinks. A one percent price reduction for a reduced commission might still have the Seller singing all the way to the bank.
Expert Guidance From Start To Real Estate Closing
Petra Norris, blogging in the Lakeland Florida market says, “Working with a real estate agent can save you from costly pitfalls that you might encounter during the process.”
Contrast this with a home buyer merely trying to save on the commission. That buyer is foregoing representation. He is not going to be getting any advice to his advantage. Only the home seller will be expertly represented.
And this is the risk I pointed out to the couple back at that open house. It must have resonated, because they decided to share their email and phone number with me. We kept talking about what is buyer agency in Colorado.
Boulder Buyer Agent Research
Sometimes, the perfect home might not be quite as perfect as it looks. Did the Seller pull every required permit in the remodeling phase?
Wendy Weir, fellow Berkshire Hathaway HomeServices blogger writes, “There are occasions however, where a seller has made updates and may have tried to cut costs and didn’t get a permit for the work.”
Having an agent specifically representing your best interests in this case is invaluable. As the new owner, you could be liable for any prior work. Or even get stuck with the bill to fix an issue.
Building Codes Can Impact Your Bottom Line
Here’s a horror story. You find the perfect Martin Acres starter home. The garage was previously converted into an adorable additional bedroom. Your dream is to pop the top and add a master suite. But, the original owner never pulled a permit for that garage conversion. Boulder has strong building codes and in order to make over your house, you first need to bring that garage back into code as a garage.
As a reputable Boulder Buyer’s Broker, my goal is to provide expert advice throughout your house hunting and transaction all the way to the closing table!
Simply having an agency relationship might be all it takes to protect yourself – both during and after a transaction. Waiving the right to representation could be costly.
The Dog Pee Incident
To illustrate, let me share another experience. A few years ago, I assisted Josh and Stephanie in the purchase of their dream home. I was in that house several times – for showings, the inspection, final walk through. We had a professional inspection and read all the Seller disclosures.
And yet, an issue snuck by us.
Subsequently, after the buyers took possession, they noticed a bad odor. Pulling back the carpets, we discovered dog pee stains. The owners had concealed a pre-existing condition. Hence the buyers were deceived.
A quick call to my real estate attorney (on speed dial) resolved this situation. The buyers had the crappy carpeting removed and installed pristine hardwood floors. The sellers covered the entire cost. Sorry about that pun. LOL. The moral here is, a good Buyer’s Agent is going to stick with you through the closing and after. Looking out for your best interests!
Having an agent represent you can be invaluable both during and after a transaction!
Ye Old Car Analogy
Abraham Walker, blogging for Keller Williams says, “You wouldn’t replace the engine in your car without a trusted mechanic.” No way you want to spend the median million dollars in Boulder without an agent representing your best interests!
Many people suppose you can save a few bucks with one agent. And its true, you might save some money. Just as often though, you really are not getting an expert advice. The Seller has all the advantages. Its hard to believe saving a percentage point outweighs what an expert brings to the table.
FAQ About What Is Buyer Agency and What It Is Not
Who Pays the Commission? Frequently, the Seller negotiates to pay the commission at the time of the listing. There are plenty of advantages to a Seller to offer compensation to agents bringing a home buyer. Ultimately though, home buyers are responsible for the commission. In my experience, about 95% of the time the commission is paid by the Seller.
Do you need a Buyer’s Broker for a New Construction home? Yes. Just because the house is new doesn’t mean you need any less professional representation or expert advice. I’ve saved my clients money, time and more advising them on new home builds.
Signed In Blood?
Do you have to make a blood pack? Just checking to see if you are reading all of this. No, its painless to have a Realtor represent you.
Will my agent just tell the Seller my bottom line? No. A buyer’s broker is going to seek your price and terms! Your agent will give you all the information to make an informed decision. Ultimately, your agent is sharing the information you direct to be released.
Is there any paperwork involved? Yep. In Colorado we have an Exclusive Right To Buy agreement. This spells out everything your real estate agent will do on your behalf. Just as important it gives you, the home buyer, some recourse in the event your transaction has issues.
Bottom Line On Buyer Agency
If still not convinced. Why should you hire an agent? In summary, its essential you have an expert to advise you and protect your best interests, on the single largest transaction you will ever engage upon.