You've decided to buy a home, and you've driven around or surfed the web and found a few homes you are interested in so what next? It's time to find a buyer's agent. Some buyers think the Realtor showing them homes is working for them, but in WI, the agent showing you homes is only representing your best interests if you are under a Buyers Agency Contract.
What is a buyer's agency contract? Buyer Agency is the contract a buyer enters into with a real estate agent that legally obligates the Realtor to put your interests as a buyer ahead of all others. This means they can help you negotiate price, inspection issues, title issues or any other concern that the transaction may have. In general, this comes at no additional cost to the buyer (read on).
In WI, all Realtors and real estate agents represent the seller unless under contract with the buyer. That means that unless you have a Buyer Agency contract, the agent you are working with is actually working for the best interests of the seller. It seems logical that a buyer would want a Realtor working for their best interests, but I think Buyers fear Buyer Agency Contracts for a few reasons.
First, buyers think it contractually obligates them to pay the agent out of their pocket. While technically this is true, I have yet to have a buyer pay me out of pocket. When showing a house listed on our MLS, there is a thing called "broker reciprocity", which means that by virtue of being on MLS, the listing agent is contractually offering out a percentage of his listing commmission to an agent that brings the buyer. Therefore, the seller is actually paying the buyers agent and the Buyer's Agency contract is actually written to accept that.
Second, I think that sometimes Buyer Agency contracts are forced on buyers too soon. I know Realtors who will not show a buyer a house unless they have buyer agency (or unless it's their listing). I personally don't work this way because I like to get to know the buyer first. There are reasons a buyer may not want to work with me and/or reasons I may not want to work with that buyer. Either way, I think we both need a "test drive" period to see how it works out. While sometimes buyers start out skeptical of me/Realtors at first, I have had no trouble inspiring buyer loyalty in the end. Of course, its a lot easier when you are referred by trusted family and friends to a good buyers' agent.
It's important to remember that ALL contracts are negotiable. You can add additional provisions, you can cross out verbage, you can add addendums. I have had my buyer agency contracts contingent on attorney approval (and approved, by the way), I have had them specific to a property, I've even had a buyer agency contract that was only good for 24 hours (which was then extended due to the great service they received). If you are leary of contracts, ask for it ahead of time. Read it over. Go to your Realtor with questions before you sign.
If you choose not to enter into buyer agency contract, you are considered an "unrepresented buyer". These can be buyers that drive around and simply call the name on the signs--i.e the listing agents, or buyers that choose not to sign a contract. These buyers are potentially entering the biggest financial decision of their lives without representation. Without representation, all the Realtors they work with are under contract with the seller (as listing agent or subagent of the seller) to work in the sellers best interests. This means those Realtors cannot help you negotiate price, contingencies, inspection issues, etc. You must rely on your own expertise to consider all possible caveats. And the Realtor gets paid just the same whether they are a subagent of the seller or a buyers agent, so you may as well have them working for you!
Whew! I hope this explanation has helped, but it's important to remember that each real estate transaction is different. I've made some generalizations just so I don't overwhelm, confuse buyers (especially first time buyers), or take up too much space.
The Bottom Line: Find a buyers agent you can trust for greater reassurance that all your questions specific to your transactions will be answered in your best interests!
