The Role of a Buyer's Agent

Recent media coverage about the NAR lawsuit has led to confusion about real estate commissions. Contrary to public perception, neither NAR nor real estate brokers have ever set commissions. It has been a common practice for listing agents and sellers to negotiate the commission in the listing agreement.

Real Estate Commissions

Commissions have varied between 5 and 6% and sometimes 10% for land sales. The listing agent promotes half of the commission to prospective buyer’s agents to attract them to the property. Even then, the actual commission is something that is negotiated within the purchase contract.

The practice of advertising the buyer’s agent compensation or commission is no longer allowed. However, it won’t change how the market will continue to determine commission amounts.

For several decades, realtors have been required to sign disclosures to both their buyers and sellers, explaining agency and to make it clear which party they represent. The buyer’s representation agreement is different and was not required. This document establishes a contractual working relationship between the agent and buyer.

It is not uncommon for buyers to view properties with many agents prior to getting into a contract. Agents can expend a lot of time and resources working with buyers who do not necessarily purchase a home through the agent. Another outcome of the NAR lawsuit will lead to buyer’s signing representation agreements prior to viewing properties.

Another common misconception is over whether the buyer or seller pays the commission. Since the listing price accommodates both sides of the commission, in a sense the seller receive less proceeds if the home sells at market price. On the other hand, because the commission is written into the purchase contract, the buyer pays it, but the fee is financed as part of the loan (or purchase price.)

While consumers can appreciate the efforts of the listing agent, they may not realize all that a buyer’s agent brings to the transaction. Below is a list of what buyer’s agents do for their clients:

Expertise and Guidance: Buyer's agents are seasoned professionals who understand the local market trends, pricing dynamics, and legal aspects of real estate transactions. They can provide valuable guidance throughout the buying process, helping buyers make informed decisions. Lake Tahoe has many environmental ordinances through the Tahoe Regional Planning Agency (TRPA) and agents can advise on other local nuances that affect purchasing in the Lake Tahoe market.

Access to Listings: Buyer's agents have access to a wide range of property listings, including those that may not be readily available to the general public. Many agents know of past clients who might be sellers. Homes are marketed in the best possible light on the internet, but the buyer’s agent will know the specifics of the home, the neighborhood and its market value. They also help buyers weed through the listings to find properties that match their specific criteria.

Negotiation Skills: Negotiating the terms of a real estate purchase can be complex and intimidating for buyers. Buyer's agents are skilled negotiators who can advocate for their clients' interests and help secure the best possible deal, whether it's regarding price, repairs, or other contingencies. This is especially true in a market like Lake Tahoe with higher demand than existing inventory. The feeder market for Lake Tahoe includes the entire Bay Area and many are choosing Lake Tahoe for their primary homes. Having an agent who can ensure your offer is accepted on your terms is important.

Market Insights: Buyer's agents can provide valuable insights into local market conditions, including factors that may affect property values or future resale potential. Knowing the benefits of local Home Owner Associations is also helpful. This information can help buyers make more informed decisions and avoid potential pitfalls.

Streamlined Process: Buying real estate involves a series of steps, from property search to closing. A buyer's agent can streamline this process by coordinating with other professionals involved, such as lenders, inspectors, and escrow officers, to ensure a smooth and efficient transaction. Buying a home is one of the most important decisions you will make, and having an advocate and guide can make the process stress free.

Protection of Interests: Buyer's agents have a fiduciary responsibility to their clients, meaning they are legally obligated to act in their clients' best interests. This protection can provide buyers with peace of mind knowing that they have someone looking out for them throughout the buying process. They will also ensure that all required seller disclosures are presented to the buyer along with other necessary disclosures, mitigating risks.

Overall, working with a buyer's agent can provide buyers with valuable expertise, resources, and support to help them navigate the complex process of purchasing real estate in Lake Tahoe.

I work closely with my buyers and sellers to demystify all of the steps that will lead to a smooth transaction. Contact me today for more information about available properties in Lake Tahoe and Truckee.