How to find a buyer's agent?

We're in a process of active preparation for buying a house. So after reading "subject literature", digging the forums, and browsing blogs on the topic I thought my findings can be useful for others too. Recently I published a detail Buy-vs-Rent calculator weighing the two options for your situation and today I want to share with you a questionnaire and some tips on finding a buyer's agent.

First off, a short foundation on the conclusion why you need an agent. Although I agree that for a buyer an agent doesn't come "free" even he doesn't pay for that (the agent's fees are already included in the house price) you hardly can request the buyer's share back if you come alone. The seller's agent  in a contract she signs with the seller usually takes already 5-6% for both agents. This money she either splits with a buyer's agent or leaves for herself. She doesn't have any incentives to give up 50% (or even less) of this money to you if you come alone. The only realistic scenario to get the agent's money is to offer the seller to wait until his contract expires and then to sell the house directly to you without both agents, getting the price automatically down 5-6%. It's a possible, logical, a win-win situation with only one unknown - how much time to wait until the contract ends and what the risks are that somebody else won't buy it before.

Secondly, since we see an agent is already included and pre-paid why not to use it? She has access to "private" information about a house that you can't get publically, knows the area, its statistics, trends, may give additional advice, and stear you through the process. I don't see a reason for solo house hunting taking into account the fact that the agent is practically speaking pre-paid already.

Now, after you decided to find an agent the tips.

• Never sign a locking contract! There are agents trying to oblige you to buy a house only through them for some period. Never agree. The only right thing to sign is to buy a house through the agent which he showed you. But even then the obligation should be limited by 3-6 months.
• You should be able to fire an agent any time without any penalties or advance notification.
• You pay no additional money. The agent gets commission he agrees upon with the seller or his agent. If you change your mind and don't want to buy a house anymore - the agent gets nothing from you.
• You don't pay anything for sell-by-owner houses where the seller is not "agent-friendly". You can compensate the agent as you want but then it's a tip and not a mandatory fee.
• You should work only with one agent at a time. It's fair for the agent and does make sense for you. If you have two agents simulteneously they'll be looking for a house in the same area, the same type of houses, the same price range - so why to expect different results? If you don't like your agent's quality simply change her but don't play a double game.
• Don't stop searching for houses on your own. If you find something let your agent know  about that and make him all necessary checks as he does for houses that he finds. Remember, you hired agent to use him.
• Find a realtor that works with sellers and buyers. I don't see an advantage in exclusive buyer's agents (those that never sell anything but only help buying). It's the same profession, the same market, the same patterns. Finding a good agent is not easy so why to do it twice? You need one pro that you can trust so when you sell your house you know who can help you (when you sell a house you can't fire an agent easy and must sign a locking contract for some period of time).
• Find a good agent. Your agent is your contractor that has to do the job well. Find a pro and don't go with a friend's sister that just got a license, a neighbor, a former classmate, etc. unless they can prove their experience. Spend time finding an agent, interview candidates carefully, ask questions, talk to reference customers, do it seriously.

Here is my questionnaire I use for interviewing agents.

1. Please explain me why I need an agent? What benefits am I supposed to get vs. a case when I represent myself? What agent do I need?
2. How do you get paid?  If you get paid by commission, then I know a higher priced house will result in more  payment to you---how can I be assured you will find the best deal for me regardless of the price?
3. Do you charge a retainer fee? Is it in addition to your commission or is it taken out of the commission at closing? Do I have any out of pocket payments besides the commission?
4. What's the length of an agreement? How do we terminate it if one of us is not satisfied?
5. What are my obligations to you during the agreement period?
6. Will I ever be put into a dual agency situation?
7. Will you try to sell me one of your listed properties before you show me listings from other real estate companies?
8. How do you relate to a buy-by-owner houses? How is it different for me? Should I prefer them or beware of them?
9. How do you provide your availability and what happens if you're not available? What communication means do you prefer? Do you have a backup or a partner?
10. Can you help me know whether I'd be pre-qualified for a loan, and then help me get the best loan? Do you advise on the mortgage-related questions on a general level?
11. How many homes have you bought in my price range in last 6 months?
12. How many customers do you have concurrently?
13. Can you provide me last 10 customers that you helped buying a house in that area?
14. What is your average sales price to listing price ratio for buy transaction?
15. Do you have any specific buyer's agent professional designations and what is your experience?
16. What kind of things/issues do you look out for when evaluating a home?
17. What clauses will you incorporate in our offer, to protect us as buyers?
18. Will there be a written contract between us?
19. How will you help me save money?
20. What are advantages of the buyer market and how we can utilize them for my benefits?
21. Specifically, how will you protect my interests and why should I hire you rather than another agent?

It takes about 30-45 minutes to go over the questionnaire in such a call. Some of the questions need to be asked to make the things clear others - to feel how the agent thinks, answers, clarifies her points, and expresses her vision. You need to feel if there is chemistry between you, if you may trust this person, if she seems to understand what you want. Make this job carefully and professionally.

In addition, I want to thank all the people and communities that helped me to shape my current opinion. Now you, my readers, are welcome to leave your comments here extending the bunch of tips or disagreeing with it and correcting me.

Technorati tags: real+estate, agent, buyer

Comments

[Roman's meandering]

Hire a lawyer instead.

[Roman's meandering]

Hi Roman,

Buyer's agents are piranha's. Get a RE attorney instead.

Happy holidays!