A recent lawsuit against real estate brokerages questioned the value of buyer’s agents, stating that there is little need for these agents since buyers now can find their own houses on Zillow.
The claim betrayed a lack of understanding of real estate but particularly a knowledge of what buyer’s agents actually do.
If the job of a buyer’s agent was only to locate a house that is being sold, then the value of an agent indeed would plummet the minute a buyer drove by a “For Sale” sign.
But it’s not.
There is a long list of tasks to be completed by the buyer’s agent other than curating properties for a buyer to consider. The easy ones are hiring inspectors, ordering title searches and coordinating with the buyer’s loan officer.
But tasks are not the sole value of a buyer’s agent, either. After all, if a buyer watches a few YouTube videos, he or she could probably figure these things out.
So what is the value of a buyer’s rep? Expertise.
A seasoned buyer’s agent has bought dozens, even hundreds of properties. Brand new construction, vintage farmhouses, vineyard and hazelnut acreage – in short, she knows things the buyer doesn’t know.
At the very least, the actual value of the property the buyer is considering.
One of the first questions an unrepresented buyer asks is what the property is worth and what would be a good offer. Evaluating property is what a buyer’s agent does for you. Advising you on an offer based on that evaluation coupled with current market forces is also what a buyer’s agent does for you. What to do if there is competition for the house? If there isn’t? How can I show interest in the house without weakening my bargaining position? All of these things are in the purview and expertise of a buyer’s agent.
Outside of the initial offering and negotiating process, there’s the troublesome mid-section of the transaction. What inspections should the buyer get? When the inspector says there’s water in the crawlspace, is that a big deal? How is that usually repaired and what does it usually cost? What’s a Federal Pacific electrical panel? If the seller won’t pay to fix the roof, do you walk away? What’s reasonable to ask for?
There are always the questions the buyer does not think to ask but that the agent knows to research, such as whether zoning allows the use that the buyer is contemplating, whether agricultural property tax deferral can help or cause problems, whether the vacant land next door is destined for a race track or whether the HOA has no reserve funds and the shared roof looks like it needs repair. If the well isn’t pumping more than a gallon per minute, does it mean a new well should be drilled or can the existing one be renovated? What does it mean to renovate a well?
A buyer’s agent knows where flood zones are and where wells are going dry or testing high in arsenic.
A buyer’s agent knows what it means if the preliminary title report shows a deed restriction or an unpaid lien and what to do about it. Whether the condo I intend to rent out to others is subject to a cap or not.
A buyer who has finance issues will need the agent’s referral to a rescue lender. One contemplating a fixer house will need to know the pros and cons of a rehab loan.
A buyer’s agent can tell you how to handle a multiple offer situation without unnecessary risk. How to ensure that the HOA of a condo is solvent or know if an expensive assessment could be coming. Where to find a neighborhood that doesn’t have an HOA. What to do to protect yourself financially if there’s a shared driveway or amenity that needs repair.
Then there’s the end of the transaction. What if the seller doesn’t do the repairs he said he would do or didn’t do them correctly? What if your loan is delayed and the closing date is tomorrow? What if the seller says he can’t move out for another month and you paid a large deposit on a moving truck?
A real estate transaction is similar to Sherlock Holmes’ description of horses: “Dangerous at both ends and crafty in the middle.” It is also possible that exactly none of these issues arises for you and you get through your transaction without a blip.
It’s also possible that you can drive to work today and not get in an accident. But just in case, you have insurance, right?
