The Pros and Cons of Using a Buyer's Broker

A buyer’s broker, or buyer’s agent, is a real estate agent that works exclusively for the buyer. If you opt out of using a buyer’s agent, then you are depending solely on the seller’s agent as you go through the real estate purchasing process. A buyer’s agent looks out for your interests, while a listing agent will normally be looking out for the seller. So, what are the pros and cons to using a buyer’s broker? Here are a few points on both sides of the argument.

Pros

• Someone Will Be Working on Your Behalf – Unless you are buying a home from the owner directly, the seller of property will have their own real estate agent negotiating for them and helping them to get the best deal on their home. If you have a buyer’s broker on your side, you will have the peace of mind of knowing that a professional who knows the business is looking out for you and ensuring that you get the best deal as well. If you have never purchased real estate before, a buyer’s broker can also help to walk you through the process so that you don’t feel lost and overwhelmed.
• Pointing Out Potential Pitfalls – The listing agent has absolutely no motivation to point out to you where you may have issues with the property you are considering. Your buyer’s broker, however, is being paid to do just that. The buyer’s broker will ensure that the home is inspected and will warn you of any problems that might wind up costing you money in the future, like a leaky roof or a dying water heater.
• Good Brokers Know the Area – A buyer’s broker can let you know which neighborhoods and local schools are of a good quality, and the ones of which you may want to steer clear. Your broker can also let you know other facts only locals would know, such where to go shopping, how to get to the highway and if there is mass transit.
• Buyer’s Brokers Can Tell You How Much to Offer – Your broker will look at what other similar homes are selling for in the area and will analyze the current trends. He can then advise you as to how much you should offer for the home, and what is reasonable.
• Someone to Do the Legwork – Many people have experienced shopping for a new home and know how time consuming the search process is. Hours can be wasted on the Internet, looking for that perfect home. After a while, all the houses begin to look alike and you are no closer to your new home than you were three hours ago. If you hire a buyer’s broker, you can tell her exactly what you are looking for and allow her to do the legwork in identifying potential homes that match your criteria.

Cons

• Commission – If you have struck a deal with your broker to pay him a commission based on the purchase price of your new home, he may not have any motivation to negotiate you a better deal.
• Added Expense – While using a broker makes things easier; it costs you money to do so. If you are able to spend the time locating properties yourself and you have any experience with negotiations, you may be able to do the same things the buyer’s broker was going to do for you for much less. If you do use an agent that is supposed to represent both the seller and buyer, this agent makes double the commission and therefore may be willing to allow the house to go for a lower price.

Making the Big Decision

If you decide to use a buyer’s broker, the best way to find a good one is to ask around and look for online reviews. If you are unable to find people in the real world to give you recommendations, look online. On the Internet, you can find reviews on just about any real estate agent with enough searching.
Be sure to go with someone who has plenty of experience, and who knows the area where you're looking to purchase. You will also want to talk with the agent for a while, and get to know their personality before committing to use them. Remember, you are hiring them, not the other way around. Also, be sure to find someone who comes across as ethical and not too aggressive. While you want someone to be able to hold their own in negotiations, you don’t want someone who may try to push you into buying a home that you are not completely sure you want to purchase.

Once you find your agent, you’ll be asked to sign a contract called a Buyer’s Broker Agreement. This will lock you in with this broker for a set amount of time. Be sure there is a clause in there that will allow you to get out of this contract, should you need to, for your own protection.

Resources:
http://www.buyersadvisors.com/protect_yourself.htm
http://realestate.aol.com/blog/2010/08/09/should-you-use-a-buyers-agent/