Picking a Real Estate Agent to Help You Buy Your Home

As noted in the section on How Are Agents Paid?, you cannot expect to save money by working directly with the seller, listing agent or home builder rather than enlisting the assistance of a real estate broker to help you through the home buying process. In the sections entitled Agency Law in Real Estate and Our Commitment, I hope I've convinced you that if you do work with a real estate agent you should do so under a buyer agency agreement so that your broker assumes the responsibility to represent your interests. If you're at the point now that you are thinking about looking for a buyer agent to help you through the process, my goal in this section is to give you some guidelines to think through that decision. There are two major issues we'll address here:

• Should you commit to a single agent?
• How should you go about selecting an agent?

Reasons Many First Time Buyers Hesitate to Work with An Agent

First, many first time buyers don't appreciate the potential complexity of the home buying process or the importance of easy access to good information in making things tick. As I've said elsewhere (see our Local Real Estate Stats), you will not see the better properties in a market like ours if you don't have instant access to new listings. But the importance of information access runs deeper than this. When you are making an offer, you need to be able to review the prices of recent sales in the neighborhood. You may want to know what the seller paid for the property and when. You may also want to know when the property came on the market and if there have been recent price reductions. If you have questions about building permits, unpaid taxes or mine sites, you need to know where to find the information. And if you want contact the owners in an attractive neighborhood or subdivision to find out if they're interested in selling, you need to know how to get their names and addresses. Good brokers can access this information quickly and easily.

In contrast, we run into many first time home buyers who are so overwhelmed by the complexity of the home buying process that they are nervous about placing their trust in a real estate broker who knows so much more about the process than they do. This is a concern I can sympathize with. The fact is that there is such a knowledge disparity between the average first time home buyer and an experienced broker that the broker can mislead and manipulate the buyer if they want to. What you need to recognize, however, is that you probably don't have the option of not working with real estate brokers when you buy a home. If you buy through a builder or if you buy a listed property, you will still be dependent on a real estate broker to help you through the process. But rather than a broker that you've chosen and who has a legal obligation to protect your interests, you will be working with a broker chosen by the seller to represent theirs.

Other buyers try to avoid real estate agents because their experiences at open houses and other common points of contact have convinced them that real estate brokers are all obnoxious, pushy, huckster, sales jerks. Two comments. First, the social context of the open house probably exacerbates the hucksterism in any human being. Given that this context provides the broker with just 5-10 minutes to try to get you to buy the home, or to recruit you as a potential buyer customer, it's not hard to imagine how someone could get a bit pushy and obnoxious if their child's next semester in college depended on it. Second, it's just a fact that some real estate brokers are obnoxious, pushy, huckster, sales jerks. Real estate has traditionally been viewed as a sales profession. It attracts a certain number of these people. If you were selling a home in a slow market, you might even learn to appreciate some of them. However, if you can find a non-huckster, who will commit to representing you as a buyer, you won't have to deal directly with the huckster element through the rest of the process. Take control!

Some first time buyers, and a few fairly sophisticated buyers, take what I'd call a scattergun approach to working with real estate agents. There are two variants to this approach. In the first, the buyer tells every agent at every open house what they are looking for and asks them to call if something comes up. In the second, the buyer actively contacts three to ten agents, gives them the criteria of the target property, and tells them they are competing with each other to find the target property first. Both of these approaches are based on the premise that having 10 people working for you is better than having one. And I suppose this might be the case if all these brokers didn't have access to all the same listings. It also might be the case if each of these brokers put the same effort into researching properties for you as they do for clients who are committed to working with them. And what happens if one of these brokers does come up with a property that meets your criteria. If you're interested, but they think there are problems with the property, do you think they are as likely to let you know about those problems as they would be if you were committed to working with them? Don't kid yourself.

Finally, many buyers hesitate committing to a single broker because they have no idea how to go about finding someone they are comfortable working with. Next topic.

How Do I Find a Good Buyer Agent?

Here's a list of issues you need to consider before you decide which broker to work with.

• Company Type. Most people don't think must about the real estate company that a broker works for. However, if you've read the sections entitled Our Services and Agency Law in Real Estate, you know that there are two fundamentally different types of real estate companies. Traditional real estate companies represent both buyer and sellers, while exclusive buyer agency offices (EBOs) limit their real estate practice to representing buyers. In Colorado, brokers with either type of company can sign buyer agency agreements in which they assume responsibilities to represent the buyer's interest in the purchase of a property. However, if your broker works for a traditional office, he will not be able to represent you as a true buyer agent if you decide to make an offer on a home he's listed for an owner/seller client. Since this doesn't happen when you work with an exclusive buyer agent (EBA), there is no question that the EBA can promise you a level of consistent buyer agency representation that no agent with a traditional company can.
• Company Culture. As I explained in Agency Law in Real Estate, your buyer agency agreement is technically a contract between you and the real estate company, not you and the individual agent you're working with. In certain respects, this is merely a technical issue, since most of your contacts will be with a single broker. But what happens if your broker is out of town when you see a good property or when you're in the middle of inspection negotiations with the seller? What if your broker needs help with an issue someone else in the office knows more about? Will you and your broker have the support of the office? Try to pay attention to how your potential broker's office operates and how the brokers interact with each other and with staff.
• Access to Multiple Listing Systems (MLS). There are three major MLS systems in our area (see Search Local MLS). Many companies only subscribe to one system. If you are looking for a home along the Highway 36 corridor between Boulder and Denver, and your broker only has access to one of the two systems that cover that area, she cannot do a first rate job of covering that market for you. Neither agency relationship, experience, office structure, nor eagerness and attitude matter. She simply can't do it. Wherever you are, find out what MLS systems cover the areas where you're interested in buying. If your broker can't pull up listings from each of these systems while you are sitting in her office, you need to find a broker who can.
• Experience and Training. A broker with 20 years of experience who hasn't worked hard to keep their knowledge base current, or a broker who has a tendency to use what they know to manipulate you rather than protect you,- is not a good choice. In comparison, an agent with 3 months experience, who's willing to pull together the information required to protect your interests, is a godsend. Still, it is very difficult to do a good job in this business unless you have been in the business for at least a couple of years and worked your way through at least 20-30 closings. Further, while I don't think most of the educational designations that brokers earn in this business mean a great deal, designations such as the GRI, CRS, or ABA indicate that an agent has some interest in expanding their knowledge base.
• Working Style. In a market like ours, where the best properties can come and go in a matter of days, you need to be working with a full time broker who will work in a focused manner to help you find a home. The broker who says that they will pop your search criteria into the computer and call you if something comes up just isn't good enough. Ask the broker who you're thinking about working with to sit down with you for an hour or two. Outline what you are trying to accomplish and the time frame that you have to work with. If the agent doesn't outline a fairly coherent and concrete plan of attack, move on and find someone who is serious about helping you find a home.
• Flexibility with the Buyer Agency Agreement. If you want a broker to work for you as a buyer agent, you will have to sign a buyer agency contract with them. In this contract, you agree to work with the broker's company for a specified period of time and the broker will agree to work for you and represent your interests. If a broker says that they can work as "your buyer agent" in Colorado without such an agreement, they either don't know Colorado law or they are lying to you. In either case, move on. The Colorado Division of Real Estate has a form that is almost universally used as the basis for buyer agency agreements in Colorado (see Key Documents). You can modify this basic contract form to create an agreement you're comfortable with. I would strongly recommend that you insist on either the right to terminate the agreement if you're unsatisfied, and an initial term for the contract that is no more than a couple of weeks. You have a right to make sure you're comfortable with an agent and the work they do before you make a longer-term commitment.
• Referrals and References. Referrals from family and coworkers are a good place to start in looking for an agent, though I wouldn't rely entirely on them. Since most people buy homes infrequently, they may understand less about real estate brokers and what to expect of them than you do if you've scanned through substantial portions of this site. Whether or not you found an agent through a referral, ask for the names of 3 or 4 people that the agent has worked with in the past 3-6 months. Call these people to make sure that they had a good experience and that the agent's attitude and working style bridges the gap between intent and practice.

With these issues in mind, set up meetings with two or three brokers who have been recommended. Tell them what you know about your situation and what you are unsure about, even if you're unsure about whether or not you should buy a house. Watch and listen to what they say. If they seem to be trying to help you think through basic issues at this first meeting, if they seem organized, knowledgeable and focused, and if they seem to have a plan of action that is concrete and sensible, they can probably provide a lot of help to you in this process. Pick someone who has their act together and who you're comfortable with. Get a copy of their buyer agency agreement and review it carefully, with an attorney's help if you need it. And then sign a short- term agreement and get started.