Prospective Homebuyers: Beware of Backing Into Arrangement to Hire Real Estate Agent

A friend of mine was complaining the other day that she lost out on a house that would have been perfect for her, because her agent hadn’t sent her word of its existence.

“How did you find this agent?” I asked.

“Oh, I met him at an open house, and he offered to send me listings that I might be interested in. I said okay, since I’m not sure I’m quite ready to buy yet anyway.”

Ack! Whoa! This is exactly the way that far too many homebuyers end up in contract to buy a house, with an agent at their side whom they never would have hired if they’d been making a conscious decision. Idly shopping for a house often results in FINDING the house of your dreams and deciding that your life will not be complete without it.

If you haven’t chosen the right agent, however, you could not only pay too much for that house, but end up losing it to another buyer. Why? Because:

  • Your agent plays a key negotiating role in the home sale process, helping you evaluate the local market and not only offer a competitive (but not too high) price, but later bargain with the seller’s agent over things like who pays for repair needs that the home inspection turns up. An agent who is a savvy negotiator (tough, but not so obnoxious as to kill the deal) can save you literally tens of thousands of dollars.
  • How well your agent is regarded in the real estate community can determine whether your offer is chosen over someone else’s. Ask any seller’s agent: Price is not the only concern. In a multiple-offer situation (which do happen, even today) sellers will reject, yes, reject an offer because they don’t want to deal with a difficult buyer’s agent who may end up preventing the sale from going through at the offer price (if at all).
  • An experienced real estate agent does much more than find you the house to buy. He or she will need to shepherd the deal to a conclusion over the many weeks that this will take. That requires both knowledge and a sense of responsibility. How do you know that this agent isn’t a flake? Or won’t do something unethical, like recommend that you hire an inspector who (unbeknownst to you) has a reputation for overlooking problems, thus ensuring that the sale goes through without a hitch . . . .

When you hire a real estate agent, you enter into an agreement that only that person will represent you, and will be entitled to receive a commission (paid by the seller) on your sale. The agent is supposed to sign a written contract with you, but will expect to be involved in any transaction that he or she sent you the listing for, or at least be paid the commission from the seller’s agent, regardless. (The commission is seen, in part, as a “finder’s fee,” even though a good agent does much more than find you a house.)

You can fire your agent at any time, however, subject to what you agreed to in the initial contract. (You may, for example, still need to pay a commission if you fire the agent in mid-sale transaction.) Be sure to do the firing in writing — your agent should have a form for this.

Then do your homework before hiring an agent that you have carefully chosen (and checked the references of) — even if you aren’t sure whether you want to buy a house. For tips on this, see “Choosing Your Real Estate Agent.”