ultimate first-time homebuyers guide
Part 2: Finding a Realtor
You can find a lender first or a Realtor first, it doesn’t matter very much. A lender can refer you to a Realtor and vice versa. Here are some tips on finding a Realtor to represent you, and what that person’s job entails.
Tip: The terms Realtor, real estate broker, real estate agent, and buyer’s agent are— for your purposes— largely synonymous. There are some differences but there’s no need to get into those weeds.
The buyer’s agent in a home search has a fiduciary duty owed to their client, which means that they advocate solely for you. Think of it like going into court with a lawyer by your side. Their job is to educate you on the process, provide market data, give professional advice, offer referrals to other professionals (like inspectors and contractors), and negotiate on your behalf with sellers and their representatives. Also, they see houses with you and use their set of eyes to point out things you might not be noticing for yourself. Ultimately, though, this representative works at your direction, and as long as they’re not being asked to do something illegal or unethical, they are bound to do it.
Tip: The fiduciary duty cited above has six specific components, which use the acronym OLD CAR to signify each one. Read more about those six components here.
As of August 2024, Realtors are required to enter into Buyer Representation Agreements with their clients prior to doing any substantive real estate work, like showing houses. These agreements outline the responsibilities of both parties, the duration of the working arrangement, and what compensation will be owed by the buyer to their agent for their services. The agreed-upon compensation may not have to come out of the buyer’s pocket though. Some or all of the fees may come from a seller contribution, or negotiated in a purchase agreement, or added to the financing of the home. Whichever way it happens, the buyer doesn’t have to get stuck with a bill they don’t want– they are in control of every decision made along the way.
Occasionally, a Buyer Representation Agreement will call for the client to pay some sort of transaction fee in addition to the standard payment. This is a fee that the agent pays to their brokerage for transaction management, and some agents will attempt to pass this along to their clients. Like everything else in the agreement, it’s negotiable, and not every agent will attempt to tack this fee on.
So how do you find a buyer’s agent that’s a good fit for you? Aside from a lender referral, here are a couple of good ways to go about this:
- Referrals from friends or family are a common way to find an agent. Talk to people in your circle who have bought or sold a house in the last few years, and see what their experience was like.
- Open houses. Here’s the truth about open houses: they’re not just trying to sell that particular house. The agent hosting (who often is not the listing agent for the house) is also trying to find new clients. Go ahead and use open houses as a way to audition potential agents. Ask detailed questions about the house, the location, and the real estate market (both macro and micro). If the agent proves to be knowledgeable and you have a decent rapport, consider following up.
If you have options— and you do; there are plenty of agents wanting to earn your business— interview them one at a time. Take a call or a meeting, or go for coffee. This person is going to be your trusted advisor for some time, and you want to make sure you’re on the same page.
Tip: Your Realtor should be prepared to do a lot of hand-holding, which is expected with first-time buyers. If it takes them explaining the same thing to you seven or eight times for it to sink in, a good one will explain it seven or eight times. With a smile.
You may also be tempted to press the “contact agent” or “schedule a tour” buttons on Zillow or Redfin. On Zillow, this connects you to an independent agent who is paying Zillow for the lead (you), and they’re paying a hefty chunk of their compensation for the privilege. Zillow does little to no vetting of this agent. Redfin operates a little differently in that it has its own agents, and you’ll be connected to an Associate Agent for whom showing houses is essentially gig work. If you have done the work to find your own well-qualified agent, they’ll be doing far more than just opening doors.
