So far in this ongoing series - Long Island Homebuyers ~ Buyer Representation - it has been discussed that there is a difference between being a client and a customer, that there are distinct disadvantages to dealing directly with listing agents, and that homebuyers that have their own representation have more homes to choose from than those that are unrepresented. These are all very important aspects of buyer representation, but the most significant advantage of working with a buyer's agent has yet to be discussed.
So, how can having buyer representation help you find the right home for the right price? The answer is - by receiving professional guidance. As a buyer client you are entitled to counsel from your buyer agent, whereas buyer customers cannot receive this level of service. This is because agents working with buyer customers have a fiduciary responsibility to the sellers that they represent.
Many people have heard the term Comparative Market Analysis (also known as a CMA), but not usually in relation to homebuyers. This tool is customarily provided to homeowners during a listing appointment to help determine the listing price of a home. As a buyer client, you are entitled to have a full CMA done for you on any homes that you are interested in buying, which can be very helpful in determining an offer price. Buyer customers, however, cannot legally be given a full CMA because they are not entitled to receive counsel from a seller's agent.
Buyer customers may ask for comparable home sales, however, they will not receive the full market analysis - just the factual information. Because seller's agents are obligated to obtain the highest possible price for the sellers that they represent, they must provide customers with the highest comparable home sales available. As a buyer client, on the other hand, you have your own representation, and your agent must look out for your best interests, which means searching for the lowest comparable home sales to justify your offer price.
The other advantage to being a buyer client is that your agent can help you to decide which homes come closest to meeting your wants and needs. Although a home is a place to live, most homebuyers today are also interested in the potential resale value down the road. A seller's agent, working with a customer, cannot discuss the advantages and disadvantages of each potential home, because it would force them to work against one (or more) of the people that they actually represent.
Let's say that you are a homebuyer that has looked at a number of homes, and you are trying to decide between three of them. For the purpose of this example, let's say that each of the homes were similarly priced, and each was taxed at approximately the same rate. At this point, buyer customers are basically on their own in determining which home to choose, whereas buyer clients can receive guidance from their agent to help in the decision-making process.
There are a number of factors that go into making a decision between homes beyond the CMA. Since each situation is unique, it is not possible to give a list of home characteristics that are either positive or negative in this post. However, a buyer's agent can provide this guidance on case-by-case basis.
SUMMARY:
If you are a homebuyer that is interested in receiving a detailed comparative market analysis to help determine offer prices on homes, you should consider having your own representation. If you are a homebuyer that is looking for assistance in deciding which homes best fit your needs, you should also consider having your own representation.
The decision to buy a home is one of the most important decisions that most people make in their lifetime. It makes sense to take advantage of all available resources to help make the right decision...doesn't it?
The comparative market analysis is a practical tool to guide purchase offers, as is the counsel of a buyer's agent. In the next part of this series, you'll learn how information gathered for buyer clients can be a very powerful tool to help purchase a home for the lowest possible price.
Adam Waldman is a Long Island Residential Real Estate Professional that can assist you with the purchase and/or sale of real estate on Long Island, from bank owned homes to new construction to waterfront property, and everything in between. Adam is a Relocation Specialist that has created a network of real estate professionals throughout the country in an effort to assist relocating Long Islanders in their transition to new areas. These professionals are experts in the field of relocation and can serve many purposes beyond a simple home search. In addition to being a Relocation Specialist, Adam also holds the designations of Certified Buyer Representative (CBR), Senior Residential Specialist (SRES) and e-PRO.
Please visit www.TheLIReloGuy.com for your relocation needs and www.AdamWaldman.com for your local needs.
Adam Waldman - RE/MAX Best - 631-357-2036 - adam@AdamWaldman.com
Long Islanders are relocating out of NY. The LI Relo Guy will help you sell your home with my special relocation program and refer you to a local expert in your destination of choice.
Long Island New Construction Homes ~ New on the Market ~ Week of 6/27/08
Long Island Bank Owned Homes ~ New on the Market ~ Week of 6/27/08
Buyer Representation ~ Addressing Buyer Concerns
Long Island Homes - Market Trends - May (2008)
Long Island Waterfront Homes ~ New on the Market ~ Week of 6/20/08
Long Island New Construction Homes ~ New on the Market ~ Week of 6/20/08
Long Island Bank Owned Homes ~ New on the Market ~ Week of 6/20/08
Buyer Representation ~ Research & Disclosure
Three Village School District Homes ~ Market Trend Report ~ May 2008
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Adam, an excellent post about the justification for hiring a buyer rep and also the distinction between customer and client. Many people don't realize the significance of the CMA to the buyer but you made it abundantly clear.
Adam, great post, thanks for laying it out so nicely. The more buyers who understand this, the more happy buyers we will have.
Adam,
Buyers should take advantage of a knowledgeable Realtor(R) like your self who can point them in the right direction. ......there are many go deals out there and you can be their information Hub with everything they need as far as the data or history of the properties they are looking at.
GARY: I'm not sure that many Long Island buyers even know about buyer brokerage, since it is not the norm here. I'm hoping that this series will serve to educate buyers on their options, and allow them to take advantage of the services that many buyers around the country, and even upstate NY, enjoy. At the very least, any home sellers that are familiar with the CMA should understand how helpful it could be if they used it to purchase a home. Thank you for your comment, Gary.
PETER: Thanks for the feedback. It's good to know that agents appreciate this information being laid out this way, so hopefully the buyers will also. Thanks for commenting, Peter.
Adam, glad ypu pointed out that a buyer's agent is expected to rend a market opinon for their client, even if not prompted? That's my strategy anyways.
NEAL: Thanks for the vote of confidence. I really appreciate it. My goal is to be the information hub that you mentioned, particularly when it comes to buyer brokerage, because it is just starting to get some traction on Long Island. I hope that it becomes the norm at some point, but I know that it will take time. Truth be told, it would be great if other Long Island agents were reading this too, so they could better understand the advantages of buyer brokerage. Thanks for the comment, Neal.
ANDREW: It definitely adds to the workload, especially if a buyer is looking to compare a number of homes, but in my mind, it is well worth the extra time if it means getting the job done for my buyer clients. Fortunately for me, I actually enjoy doing research and crunching numbers, so it works out well. Thanks for commenting, Andrew.
Adam- Can't wait 'til you educate those New York buyers. In Connecticut, a signed buyer's agent agreement is required, before we can show them listings of another brokerage. I've often had New Yorkers say "we never had to do that, before." I usually put a printed copy, stating the CT statute, in my NY buyer's packages, just for those occasions.
MARILYN: I hope that we get to that point some day. It would be great, and it would actually make practicing on Long Island more enjoyable. It's good to know that if this doesn't become popular, that I can move across the sound and do things the way that they should be done. Thanks for sharing how things work in CT, Marilyn, and for your comment.
Another "right on" post! I hope that as many buyers as possible see this and learn the importance of what you're saying!
Bob Mitchell
ValueList Real Estate Services, Inc.
BOB: Thanks for the support. I really appreciate it. I'm planning on being proactive in bringing this series of posts to the attention of Long Island homebuyers. I've created a coinciding PowerPoint presentation to be used in seminars to educate buyers about the advantages of buyer representation. This series will essentially be the notes from the seminars that I can provide to attendees. Thanks again for commenting, Bob.
Adam-nicely presented. Most consumers will benefit from learning what we do and how we do it. There is a lot of confusion out there. Your post does a nice job in clarifying the benefits and defining the role we play and the service we provide well. Good job!
ALLISON: Thanks for the compliment. I'm glad that you and other agents are finding this series helpful. I've done my best to try and make this as user-friendly to the consumer as possible to alleviate any confusion that they may have. Thanks for commenting, Allison.
Adam Great stuff...I always tell people hire a buyers rep in our market... We deal with many non locals and our market is very different...you need someone here locally to represent you!
JEREMY: The funny part is that it is probably easier to convince people that are relocating that this is a good idea for a few reasons. They may already come from a market where buyer agency is common, but more importantly, people relocating to a new area feel more of a need to have their own advocate. Thanks for commenting, Jeremy.
Hi Adam,
Very well thought out and well writeen post on the benefits of buyer representation.
Hi Adam: Wonderful post..... it great to know that the buyer is also respresnted during the process, but I believe in NY not alot of buyers are aware of that.... We have to get the word out......
Very well written series of posts. Do you know why it says you posted this on 6/5/08? This was originally posted on the 4th right? Did you make a change and does that effect the post date? I've just noticed this on your post and on another blog as well. Sorry to go off topic, but this is one of those things that make me go hmmm.
Nice post on Buyer representation! How is the real estate market in Long Island holding up in this environment?
great post, and great points for why buyer representation is a great way to purchase a home.
Well, of course. Unfortunately, our real estate brokerages, listing services and MLSs are structured to send the buyers to the listing agents. Also, the listing agents are hired by sellers to bring a buyer either through a co-op, direct advertising, sign calls, open house, etc.
Our system is not structured for the consumer. It's structured for the listing brokerages. I respect and appreciate what the listing brokers and agents do to bring properties to market so I can help my buyers find a home.
However, we still have a broken system. As long as seller's agents can work with customers or through dual agency, the consumer will not realize the full benefit of buyer representation.
I have always believed that we should have two licenses, one for seller's agents and one for buyers agents. That is the only way the buyer will be fully represented.
I should live so long.
TRACY: Thanks for your comment and your compliment.
DONNA: It is actually fairly common in New York, but not on Long Island. If you go upstate, buyers use buyer agents regularly. Hopefully, we can get Long Islanders to start thinking the way that upstate New Yorkers think. Thanks for commenting, Donna. I'll talk to you during the week.
MATT: Thanks for the compliment on the series. The reason that the post jumped up is because it got featured. I'm not sure if it has always been this way, but I've noticed this recently. Hope this clears things up a bit.
ANONYMOUS (in So Cal): When you made your comment, you probably hadn't logged in yet. I'm glad that you've found this helpful. Hopefully, you can use this information to guide your potential clients. I realize that you're new at this, so I wanted to let you know that you should put your own information into your blog, and refrain from reposting material that is already out there, on Active Rain or otherwise. However, please feel free to forward a link to this post to anyone that you'd like. Thank you for your comment, and welcome to Active Rain.
JOE: Thanks for your comment. The real estate market is holding up fairly well on Long Island, although the activity level seems to have slowed down a bit in recent weeks. How's things in your area?
TEAM CARROLL: Thank you for the compliment, and for your enthusiasm about buyer brokerage. I agree that it is the best way for homebuyers to purchase a home.
LENN: Hopefully, this series, and the work that I plan on doing to coincide with the series, will start to alert buyers about their options. The best way to fix the system is for agents to embrace buyer brokerage, instead of resisting it. It's a smarter way to operate for liability reasons as well. Thanks for your input, Lenn.
ALL buyers should have representation!
Hi Adam,
Great explanation of how a good buyer broker works.
All the best!
Adam,
As a team leader of a group of Buyer's Agents in Washington, I've stated these benefits over and over to agents to use with clients, but I'm printing this out and using it as a sales tool with our team.
I would happily take every cent of my Local Dues and put it towards a commercial campaign that explains this concept to everyone in the country.
The sports agent/Jerry McGuire analogy works with most clients, but then you're that guy who uses movies to explain life. Trying to leave that one behind, really.
Thanks for what you're doing, your clarity and ability to be concise are appreciated. Ii can only hope you're not a Yankees fan.
You are so right. It is better to have a buyers agent than the listing agent when buying a home
Adam -- BRAVO! You did a great job. And one of the most important things is that the buyer has someone to advocate for they buyer!
Well written Adam! Buyers need someone in their corner to look out for them.
Well, if any Long Island buyers are reading this, you just made it abundantly clear why they need the services of a buyers rep. A good many buyers think all agents do is open doors, when there's so much more that goes into protecting and promoting their best interests. Excellent post buddy.
Adam, before we write any offers for our buyers we always comp the neighborhood. Then offer based on the lowest two sales. (as a starting point)
When I am listing a home, I point those same properties out to my sellers so they know that we will see offers come in lower than the 2 lowest sales as a starting point.
Good post !
Some buyers agents...especially newly licensed ones...make the mistake of deciding that to truly represent their client they have to "fight" the seller at every turn,...price, closing date, inclusions, inspection....we had that happen about a year ago. I spoke with the Rookie agent at some length after our seller would not even look at the offer. The object, using objective statistics like a CMA is still to have the deal go together...and very often that means a compromise on BOTH sides.
I always, always do a CMA for my buyers and counsel them on all aspects of buying. I want them to get the best house for them. After all, I want them as my clients for life, and eventually I will be selling that very same house! :)
Great buyer education here!
SUSAN: In a perfect world, they would.
KEVIN: Thanks for the compliment.
CHRIS: I'm glad that you found this helpful enough to show to your team members. There is still more to come in this series of posts. I really appreciate the compliment and the feedback. Don't worry, I'm a Dodgers fan.
RUSS: Hopefully, this message will reach the buyers on Long Island, and they will realize that they have options to have their interests protected. Thank you for commenting, Russ.
JOAN: Thanks for your enthusiasm. I am also very passionate about helping buyers to understand their options.
WAYNE: Agreed. I'm doing my part to look out for the Long Island homebuyers that I work with. Hopefully, others will join me.
JESSE: Thank you for the support. I know that buyers have a lot of information to process when starting their home search. My goal is to educate them before we even start opening doors, so that they know exactly what they are doing. Thanks for commenting, Jesse.
MISSY: I like your approach. It's a great way to prepare both buyers and sellers. Thank you for sharing that helpful tip.
SALLY & DAVID: I guess that there is a possiblity that some buyer agents will get overzealous. I've seen it happen a lot with attorneys around here. Since we don't write our own contracts, we do have some limitations in the process. My goal is to get buyer clients the best possible price and conditions, but both must be reasonable. No one's interests are served by doing things that will bog down negotiations.
KELLY: Thanks for the compliment, and for sharing your approach. You're right about creating clients for life, and also very smart to realize that you may very well be the listing agent for the home in the future. Thanks again for commenting, Kelly.
Great post and information. Thanks so much for sharing. This just provides another script for getting the buyers rep agreement signed.
Adam, great post for educating buyers. This should be a "must read" for first time home buyers. I bet Sellers could use some of this information too.