Buyer's Guide

A buyer’s representative (also buyer’s rep, or buyer’s agent) is an advocate for the buyer—not the seller—in a real estate transaction. Real estate laws and regulations vary from state to state, but buyer’s representatives usually owe full fiduciary (legal) duties, including loyalty and confidentiality, to their buyer-clients and work in their clients’ best interests throughout the entire transaction.

If you’ve established an agency relationship with a buyer’s representative, common services include:

  • Helping you clarify your priorities.
  • Suggesting sources of financing and other service professionals, such as inspectors and exterminators.
  • Providing sources of accurate and lawful information on neighborhoods, schools, and communities.
  • Selecting and arranging property showings.
  • Evaluating particular properties.
  • Explaining forms and agreements.
  • Suggesting contract contingencies to protect you, rather than the seller.
  • Assisting in the negotiations for a favorable price and terms.
  • Keeping all information confidential that could weaken your bargaining position.
  • Monitoring the entire purchase process, assisting with issues that arise through closing.

For the most part, real estate professionals are compensated by commission, based on a home’s selling price.Commission rates are not standardized, but vary, as does how the sales commission will be divided between the agents on the selling and buying side of the transaction. There is consistency, however, in how commissions are paid. When a seller signs a listing agreement, their contract is with a brokerage firm. All fees must pass through that brokerage firm. Typically, the seller’s representative—and your buyer’s rep—will be paid by the listing broker after the transaction closes.

This depends on what level of service you have established as a home buyer. If you have not formed an agency relationship, you are probably considered a customer, rather than a client, and you will likely receive a lower level of service. The terms vary from state to state, and each buyer’s representative can set their own guidelines within their state parameters and their brokerage practices. So you should clarify, preferably in writing, the services you are entitled to receive before you start viewing properties. It’s also important to understand that if you do buy a home, your buyer’s rep will probably receive compensation (through the listing broker), regardless of whether you are a customer or a client. So more times than not, it’s in your best interest to formalize an agency/representation relationship, so you’ll receive the highest level of service possible.

In the vast majority of cases, the answer is no. When a house is listed for sale, the seller’s contract spells out the commission rate that will be awarded to a buyer’s representative. This is known up front and typically covers all, or at least most, of your representative’s compensation. If it doesn’t, the choice is yours. You can scratch this house off your list, or decide to view it, knowing that any remaining compensation will need to be addressed. But even if the seller’s listing contract doesn’t entirely cover your buyer’s representative’s compensation, and you must pay the difference, it’s quite possible that these relatively small differences will be more than offset by other purchasing terms negotiated with the seller.

Yes, this is an option that some buyers explore. However, it’s important to understand that nothing is truly free and this approach still carries a price. Unrepresented sellers (for-sale-by-owner properties) frequently lack adequate information about how to price their home, or attempt to inflate the price in lieu of paying a real estate commission. As an unrepresented buyer, it will be much harder for you to know if you’re overpaying. Real estate professionals have developed keen pricing insights that go well beyond simply evaluating data through the Multiple Listing Service (MLS).

And if you are overpaying, it will create further complications in securing financing. For these, and many other reasons, a high majority of consumer-to-consumer housing transactions never reach closing. Real estate professionals play a valuable role in keeping your home-purchase on track, starting with selecting and touring properties and continuing through negotiations, inspections, financing and closing. This is especially true in today’s market, where alternative buying opportunities, including short sales, have added even more complexity to some real estate transactions.

The mortgage company and professional on this page have been selected because in our opinion, you cannot find a better person and company to assist you in your financing. We cannot guarantee that they are able to accept additional clients at this time, however, if they cannot help you, they may be able to refer you to someone they feels will do a good job. Should you choose to contact them, please be sure and mention that we sent you. They have historically taken special care of our clients.

When evaluating how much you can afford for your home and mortgage, lenders usually use two rules of thumb:

  1. Your maximum monthly mortgage payment should not exceed 28 percent of your gross (pre-tax) income.
  2. Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.

These ratios are typical of those required to secure a conventional mortgage. Lenders will be able to supply details about other types of mortgages, such as FHA or VA loans, which offer more flexible qualification standards. There are many types of mortgages and financial tools available that provide flexibility in interest rates, terms, and down payment requirements.

Typically you will first pre-qualify for a mortgage, then get pre-approved before you have found the specific home you wish to purchase.

What is the difference?
  • Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.
  • Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount.

There are two advantages of being pre-approved for a loan as early as possible in your home-buying process:

  1. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage.
  2. The length of time before closing can be shorter if you’ve completed the steps to securing mortgage approval prior to signing a contract on a property.

We have a select list of premier lenders from multiple lending institutes that we would be happy to recommend.

Feel free to contact us if you have a favorite Bank or Lending Institute and we will assist with recommending the outstanding  lenders in our area. If you are a lender and would like to be featured on our website, please feel free to give us a call.

IMPORTANT NOTICE:  FEDERAL LAW PROHIBITS THE PAYMENT OF REFERRAL FEES OR KICKBACKS BY MORTGAGE COMPANIES AND/OR PROFESSIONALS TO REAL ESTATE COMPANIES AND/OR PROFESSIONALS.  Section 8 of the Real Estate Settlement Procedures Act ("RESPA") and the federal regulations issued there under prohibit the payment of referral fees for residential loans to a person or entity that merely refers the loan to the actual lending institution.