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.
In most cases, the compensation for the buyer’s agent is paid out of the commission that the seller pays their listing agent, and is determined prior to the home going on the market. There is no standard rate, as it is a decision that the seller makes with their agent.
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.
Lastly, I’ll touch on the topic of exclusive buyer agency agreements. Exclusive contracts between agent and buyer haven’t been that common in Oregon in the past, but are going to be used more often going forward. These contracts ensure that if you purchase a home during the contract period (say, six months), compensation will be owed to your agent. Essentially, it protects them in the event you purchase through a different agent, or if the compensation being offered by the seller is insufficient. In that case, you’ll be the one asked to make up the difference out of pocket, so read the fine print.
Tip: Occasionally a buyer agency agreement will call for the client (i.e., you) to pay some sort of transaction fee. This is a fee that the Realtor pays their brokerage, and some less scrupulous ones will attempt to pass it on to their clients. Like everything else in a buyer agency agreement, it’s negotiable.