B is for Buyer's Agent

Simply put, a buyer's agent is the agent that works for the buyer in a real estate transaction.

More importantly (for now anyway) let's talk about what a buyer's agent is not:

• The nice agent a buyer works with from the new home community.
• The helpful agent that has listed the property (unless there is a dual agency agreement).

In both of the above instances, the agent may be a great person, but they are working specifically for the seller. Their job is to protect the best interests of the seller. They are required to be deal honestly with the customer (that would be the buyer), but they aren't looking out for the buyer's best interests.

In order for an agent to be "The Buyer's Agent," they need to be working under a Buyer's Agency Agreement. The BAA outlines the specifics of the relationship between the buyer and the agent. It will include a few different things.

• Scope of the agreement. Locales. I have one investor client in particular that uses different agents for different areas and specialties. The agreement can include to where it shall be limited.
  
• Payment. Most agreement state how much the agent will be compensated. Mine say that I will receive 3%. I have yet to have a problem, since almost every listing pays 3% or more in this area. I have had one buyer interested in a property that paid less. We talked about it, and we figured out an arrangement, but the sellers couldn't come to an agreement with the buyer on price.
  
• Time frame. I generally work with buyers on a six month contract, but there is always...
• A way out of the contract. I usually include one for both the buyer and for me. Either of us can fire the other with some sort of cause. I might fire the buyer because they aren't pursuing financing pre-qualification, or actively trying to buy the properties they are seeing. They can fire me if I am not able to find them... or pretty much anything else. They just need some sort of reason that doesn't start with "I found this great house for sale by owner..."
• An explanation of duties. What should the agent do, and what should the client do?

I always give folks a "free look" period where we will go out and see some properties. They can get to know me, and I can get to know them. We can each see if there is a fit. When working with buyers, the fit is very important. I might spend a lot of time with them looking for properties, as well as negotiating the property, and other tasks required to get from looking to contract to closing... and sometimes after closing.

The bottom line is that in order to make sure that you are protected as a buyer, you need to have someone working specifically for you. The listing agent or the community agent isn't that person. And, since there is seldom a cost to the buyer to have representation, there is no reason to not retain a buyer's agent.