The value of a buyer's agent

by Hugh Hardy

Available Articles

• Article Index
• Are you "signing your life away"?
• Buying new versus resale
• Choosing a Realtor - What does it take to sell your home?
• Don't push the river!
• Getting the most from your Realtor
• Home ownership is part of smart money management
• Knowing your strengths and weaknesses
• Let's talk about commissions
• Open vs Closed? Making the most of your mortgage
• Prepare your home to command a premium price
• Real estate trivia
• Recognizing the paper tiger
• The easy way to buy a custom home
• The importance of pricing right
• The value of a buyer's agent
• Two safe ways to trade up
• What does irrevocable really mean?
• What to expect from your agent when you buy
• What's a Chattel, What's a Fixture (and why should I care)

The other day, I was called by a potential Purchaser who wanted to view one of my listings. After arranging to meet him at the property, I realized that he had booked appointments on other properties as well - each one with the Listing Agent of that individual property. He had appointments with 5 different Agents to see 5 properties!

This started me thinking... "This guy is not acting in his own best interest. He isn't aware of how he can get the best representation. Maybe he doesn't know how the MLS system works." I tried to explain as best I could in the few short minutes that we had to talk, that he would be better off finding an Agent that he would be comfortable with and sticking with her/him.

It is this experience, and other similar ones, that triggered my interest in writing this column.

So let's start with a bit of background to bring the reader up to speed on this topic. Prior to 1995 in Ontario, all Realtors in a transaction typically represented the Seller. The Seller paid the commission, so it was logical that the Realtors owed their primary allegiance to the seller. This meant that if you were buying a house your Agent was actually not working for you. If you told him that you wanted to offer $175,000 but would pay up to $181,000, then the Agent was duty-bound to convey this statement to the Seller. Bad deal for the Purchaser? Absolutely! So there would be no legal advantage to a Buyer using one Agent. There might be a familiarity and convenience advantage - but the Agent would still owe primary allegiance to the Seller - end of story!

As a result of this unsatisfactory situation, the system was changed in 1995. It became necessary for the Agents involved in a transaction to disclose, in writing, to all parties, just who they worked for. From this requirement, it was not long before Purchasers said that they wanted their own representation. The legal experts then determined that Purchasers could have representation from the Agents they bought through, even though these Agents were still paid a commission by the Seller. Problem solved!

Therefore, as a buyer, if you could work exclusively through the Agent of your choice, you could develop a good working relationship - the Agent would know your needs and be able to look out for your best interests. This arrangement would dovetail nicely with the new legal relationship between the Buyer and his Agent.

Now, the whole thing also works very nicely because of the current state of the Multiple Listing Service (MLS). Today, 99.9% of the residential properties for sale are listed on the MLS and virtually all Agents have MLS membership. This means that Agents have the data and the ability to show any listed property - it's one stop shopping! You can sit down with your Agent (that's right, now your Agent is by contract your Agent) and see any property on the market - regardless of the Listing Real Estate Company. If you see an ad or a "for sale" sign you can simply call your Agent for information and a viewing. And your Agent can supply you with a catalogue of all the homes available in your area.

Let's outline some of the nitty-gritty advantages of working with one Agent:

• You can get a complete list of available properties from one Agent.
• Your Agent can set up multiple showings so that they "flow" and a minimum amount of time is wasted.
• Your Agent will get a feel for your needs and can suggest particular properties or he/she may know about suitable unlisted properties before they come on the market (this gives you 'the jump" on other Purchasers).
• Your Agent will get to know you and have your best interests at heart.
• Your Agent has experience with lenders and lawyers and can usually advise you when questions or problems crop up. For example, your Agent can calculate the approximate amount of the mortgage that the bank will qualify you for. Your Agent can suggest different types of mortgages and the relative advantages of each.
• Your Agent will keep you secrets! That's important when negotiating a deal.
• Your Agent will present an offer on your behalf to the Seller and his Agent. He will try to get the best deal for you!

I hope that this column has given you a bit of insight into the value of working with one Agent. There's more to it than we have room to discuss here. But what I have done, I believe, is to outline the basic principles. As with finding any professional - like picking a doctor or a lawyer - it may take some time to find an Agent you are confident in and comfortable with - but the long term benefits are usually substantial.

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