What Is a Buyer’s Agent, and Do You Need One?

published Dec 12, 2019
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Confession time: When I bought my house in Los Angeles this past summer, I didn’t totally understand who would be paying for my real estate agent. I thought it would be me (since I hired them), but it’s not so simple. 

While buyers don’t directly pay for their agent (the buyer and seller’s agent split a 5-6 percent commission fee, which is paid by the seller), that fee is generally factored into the selling price of the house.

Beatrice De Jong, Consumer Trends Expert at Opendoor, tells Apartment Therapy, “These funds come from the seller’s side of the paperwork which creates an illusion that they’re paying, but the buyer is the only one who actually brings money to the closing.”

I’m not alone in my confusion about buyer’s agents and who pays for them, though. Real estate platform Clever Real Estate recently conducted a survey asking 1,000 homeowners who sold their house in 2019 and found that 45.5 percent of sellers believed the buyers were the ones paying their agents.

The truth is that they don’t… but also they kind of do. In fact, there’s a lot about buyer’s agents even seasoned homeowners don’t know about. Let’s break it all down.

First: What’s the definition of a buyer’s agent?

A buyer’s agent is pretty much exactly what it sounds like: A real estate agent who is legally licensed to help a person find a home and represent them throughout the entire homebuying transaction

What exactly are buyer agent duties?

First off, a buyer’s agent will know exactly what their client is looking for in a property and compile that criteria before starting the search. Understanding the buyer’s budget, style, and what they want out of a neighborhood is crucial. A buyer’s agent will help buyers understand the housing market, and what they can expect from a property and its neighborhood with the finances they’re working with.

Once everyone is on the same page on where to start looking, it’s up to the buyer’s agent to find property listings for their client, set up tours, and compile information about those particular properties (the details about the houses, the area schools, crime rates—really, all the important stuff you need to know before investing any more time and energy on a place you could end up living in for a long, long time). If the buyer has any questions or concerns, they would direct those to their agent, who will do their best to answer everything and provide all necessary info.

After an offer is made—the buyer’s agent will handle every single transaction on behalf of the buyer—the agent will be the one who walks the purchaser through the entire process, which includes helping find a loan officer, making sure all paperwork is turned in, obtaining disclosures, and working with any kind of professional (like an inspector or appraiser) who’s evaluating the condition or value of the home. The buyer’s agent is also in charge of all negotiations, making the process as clean and seamless as possible.

The buyer’s agent is there from start to finish—they’ll even sit with you as you sign your closing documents. My buyer’s agent also served as the buffer between me and the previous homeowner after we moved in. There wasn’t much contact between us, but for example, when I received packages addressed to her, I reached out to my agent, and she reached out to the seller’s agent, who then told the previous owner she needed to pick up some mail from the house.

It’s sometimes a weirdly sterile communication process—I really wanted to just text the previous owner and tell her she got a box from Nordstrom!—but considering all the moving parts and the serious amount of money involved, perhaps it’s best to commission a middleperson to make sure the dialogue stays as hassle-free as possible.

However, the responsibilities (and how deep a buyer’s agent gets in the transaction) will depend on the buyer. Agent Allison Chiaramonte of Warburg Realty says, “It can be a team leader role—coordinating lawyers, bankers, movers, architects, etc.—or a wise friend who gives you the truth or whose taste you implicitly trust. Sometimes the greatest value-add is that a buyer’s broker can act as the unemotional voice of reason in a heated or emotional transaction.”

Credit: Jacob Lund/Shutterstock

What about the buyer’s agent fees and commission percentage?

Buyer’s agents get paid through commission when the sale of a house goes through. In most cases, the overall real estate commission is 5-6 percent of the home’s sale price. That’s how the buyer’s and seller’s agents get paid, and the amount is usually split right down the middle. In almost all marketplaces, the buyer’s agent will get between 2.5 and 3 percent in commission, as will the seller’s agent.

However, sometimes the commission is negotiable, especially if the agent is representing both the buyer and the seller, which is known as a dual agency.

What’s the difference between the buyer’s agent versus the seller’s agent?

Real estate terminology can be confusing. A buyer’s agent is the agent who represents the buyer, but this can also be called a selling agent. Buyer’s agent = selling agent. A listing agent is the agent who represents the seller, and this can also be called the seller’s agent. Listing agent = seller’s agent.

Do you *need* a buyer’s agent when looking for a home to purchase?

So, no. You don’t technically need a buyer’s agent when you’re buying a home. But especially if you’re a first-time homebuyer, it’s definitely advisable. But whether it’s your first house or 20th house, hiring a buyer’s agent makes the process less of a headache. When purchasing a house, most buyers will hire a buyer’s agent—in fact, according to The Balance, between 80-90 percent of buyers end up having a buyer’s agent.

Chiaramonte tells Apartment Therapy, “People like to think they can negotiate the best deal for themselves possible and save a broker’s fee, but a third party who is informed about what to ask for and what potential dangers lie ahead can save you money and time—often more of it than the savings from representing yourself.”

I don’t think I would have been able to survive without a buyer’s agent by my side. The amount of work even with an agent is exhausting, and I can’t imagine how many mistakes I would have made without a professional holding my hand and guiding me through the process.

The bottom line? A buyer’s agent is a buyer’s BFF. And even though the buyer does pay for their services at the end of the day, it’s well worth it.