With the everchanging landscape to real estate, it’s never been more important to have exclusive buyer representation.  You may have heard about the lawsuit against the National Association of Realtors and changes to buyer’s agency.   Here are the most important things to consider. 

Beginning August 1^st, Buyer Agent compensation will no longer be allowed to be shown on the NCRMLS (North Carolina Regional Multiple Listing Service).  

Beginning August 1^st, when you engage a Realtor as a Buyer’s Agent, you will be required to sign a Buyer’s Agency Agreement before you can see any homes.  

The media is trying to draw attention to sellers that they no longer have to offer compensation to the buyer's agent.  This is absolutely false as they have not been required to offer buyer's agent commission for a number of years now.  Commissions have always been negotiable and there has never been a "Standard or Set Commission percent" contrary to what the media is saying. 

We do believe that most sellers will still continue to offer compensation to Buyer’s Agents, but in the event that a seller doesn’t offer compensation, then the buyer will need to cover the Buyer’s Agent’s compensation.  This language has already been in our NC Buyer's Agency Agreements, but it's been rare that it's been necessary.  Moving forward, this won't be an item that is just glossed over and there will be conversation about how the Buyer's Agent will be compensated in the event that they choose a home in which there is no compensation being offered by the sellers.  You should expect your Buyer's Agent to ask you for a predetermined set amount of compensation for their services. You may be thinking, big deal, I’ll just work with the listing agent. 

Before you decide to work directly with the listing agents, you need to consider the following pitfalls to doing so.  First, that listing agent will be working exclusively for the sellers.  They will be negotiating and advocating for the best outcome for the seller.  They are required by law to disclose any material facts or defects with the home but will they?  Further, they certainly will not share with you other important information that could weaken the seller position, such as a divorce, looming foreclosure, job transfer etc.  And last and perhaps most importantly, they cannot give you any advice on what to offer or even how to structure your offer. 

Second, let’s say that you want to see eight homes in the area and you’ve chosen to go it alone, you literally will have to make contact with 8 different listing agents, and you’ll be tasked with trying to coordinate showings based on the schedule of 8 different agents…think about that…8!  You’ll also be trying to figure out the logistics to seeing the homes, in an area that you are likely not familiar with.   Sounds daunting…well, it will be!

 Why having an Exclusive Buyer’s Agent is important.  Your Buyer’s Agent will do the following :

• Search/Find the homes that meet your criteria (location, price range, bedrooms, etc)
• Your Buyer’s Agent will be one point of contact to schedule the homes, saving a lot of time not only trying to coordinate and schedule, but saving time with the logistics involved in going from house 1 to house 8 in an efficient manner.
• Your Buyer’s Agent will negotiate on your behalf, and they will use their resources and market knowledge to determine the best price to offer on the home.  The offer will be based on actual and accurate market data from recent comparable sales as well as other factors that won’t be shared by a listing agent. The offer will also be determined by conducting counter intelligence on the home such as how much did the seller pay when they purchased, what improvements have they made etc.
• Your Buyer’s Agent can assess the competitive situation with the home you’d like to purchase and determine the correct strategy based on that.  There are different strategies to apply based on the circumstances such a time on market, distress, foreclosure, divorce, multiple offers and more.
• Your Buyer’s Agent will coordinate with your lender, and get the proper prequalification documentation to support your offer, increasing your chancing of securing the deal.   If you are a cash buyer, they will be asking for a verification of assets.  This information demonstrates to the seller your ability to successfully navigate the transaction.
• Once under contract, your buyer’s agent will provide the contract to your lender as well as assist in selecting a real estate attorney to handle the closing.  (Yes in NC, Lawyers must handle the transaction)
• Your Buyer’s Agent will recommend qualified and competent professionals to conduct various inspections, such as home, termite, well water purity, septic, and survey.  
• Your Buyer’s Agent will negotiate repairs and/or credits for issues/defects discovered during the inspections.   Sellers typically push back and this negotiation is often tougher than the first negotiation to get the home under contract.
• If your purchase involves a mortgage loan, there will be an appraisal completed and if this number falls short of the offer price, your Buyer’s Agent is heading back into the ring to fight for a price concession.
• Your Buyer’s Agent will coordinate the closing (settlement) date with the listing agent, attorney, and the lender.  Your Buyer’s Agent will also do a final walkthrough of the property before you close.  This is an important part of the final process.   If the home has been damaged or things are missing such as Washer/Dryer, Refrigerator, then your agent goes back in to fight to remedy the situation so that you can move to closing.  In NC, it’s important to remember that our contracts are "As Is" and the moment the deed is recorded, it’s all yours…the good, the bad, and the ugly!
• Your Buyer’s Agent will also provide information and coordination with the various utility providers such as Internet, Electricity, Water, Sewer, and Gas.  Your Buyer’s Agent will also provide you with solid local sources for insurance.  This can potentially save you thousands, given we are in an area that typically requires Wind/Hail insurance, Flood, and Fire/General homeowners insurance.

In conclusion, having Exclusive Buyer Representation from your initial search to your closing is critical.  Your Buyer’s Agent could potentially save you tens of thousands of dollars through their discovery and disclosure during the entire process.  After 17 years in the Real Estate Industry, as the Farmer’s Insurance commercial says, “I know a thing or two because I have seen a thing or two!”

Happy House Hunting!

Dave