Real estate markets have traditionally been oriented towards sellers creating the widely-held presumption that property agents only represent sellers in the market. Buyer agency is almost a myth. Listing or seller agents undertake to find buyers on the premise that they will receive a commission on the sale. Buyer agents, on the other hand, undertake to assist buyers to secure a property (also on commission) that fits the buyer’s requirements and to represent them in securing the best terms possible.
The Case For Buyer Agency
The primary reason for which a property buyer would seek the representation of an agent is that it is perhaps the most efficient path to take. The buyer’s agent would take the lead in negotiating terms, sorting through the myriad critical questions, preliminary matters, processes and documentation that need to be sorted before, during and prior to the conclusion of a transaction. Buyer agency should be understood from the point of the value that buyers agents can provide.
Buyer agency allows buyers to leverage the superior industry knowledge, connections and networks of property agents who are better placed to secure you the best deal possible. The best guide to the decision is an analysis of cost versus benefit of the decision. Either way, in the real estate market, the cost of making just one fatal mistake may justify the decision to go the buyer agency route. Not always in hard currency but most often in terms of time and nuisance value!
Who is a Property Agent & What Do They Do?
An agent is a person who, under contract, or presumed contract, has been granted authority by someone else called the principal, to undertake something specified – say searching for a property – for and on their behalf and that the thing that they have been authorized to undertake becomes binding on that other person as if s/he were themselves responsible for the decisions.
A buyer’s agent represents the buyer as their client in a real estate transaction. To do so, there must have been in place an agreement, called a Buyers Representation Agreement, between the agent and his/her client. In all matters in the transaction, the buyer’s agent acts in the interest and with fidelity to the buyer they represent. In contrast, the seller agent acts in the interest of the seller. Inevitably, in the course of the transaction, with full disclosure to and consent from the parties they represent, the agents’ role will then extend to working together to arrive at a consensus on the terms and conditions of the sale.
Fidelity is Key
Buyer agency shifts the fidelity of the property agent from sellers t buyers. Property agents only assign fidelity to their paymasters! Listing agents will only offer you property on which they can feasibly earn a commission, and not what fits your requirements. If there is a convergence between your requirements and what they are selling/leasing, then you’re in luck. But this is a rare occurrence. And even then, their interests will only be aligned to those of the seller negotiation on matters terms and price. Lower prices imply lower commissions. Lax terms imply delays in payment for the agent. This is more true for sales on properties for which instructions had been issued to their partner agents. Why then would they work with a buyer to drive down the price or improve terms?
The real estate agent tends to be a much-maligned breed in Kenya. There is little in the way of devotion to anything other than the endeavour to make a quick buck off unsuspecting clients. Often, there is even the deliberate effort at defrauding clients. It isn’t excusable that this happens but it would be instructive to attempt to understand why it happens and to then find, as a buyer, what works for you.
Real estate transactions can take an inordinately long period of time to close. There are many issues that buyers need to factor in the entire sale process. Consider the following:
- It can take anywhere from 30 to 180 days to search and identify a property that meets your requirements. This involves cost which neither party may be willing to pay upfront.
- The standard time it takes from the signing of a sale agreement to conclude a transaction is usually a standard 90-day period.
- Where a buyer is mortgaging the acquisition, delays will occur. Invariably, these can take anywhere between 60 to 180 days even assuming that the buyer had exhausted any preliminaries in advance of the acquisition.
This timeline doesn’t even account for the many possible delays that could result from delays in the litany of documentation, delays from having to dispense with encumbrances and disclosures from financiers and so on.
It is enough to make your head spin, right?
Not yet. Unscrupulous sellers often have more than listing agent under their instruction creating conflicts of interest in the market place between buyers and agents. If, for example, you viewed a property but contacted another agent who then shows you the same property, there will be a conflict should you decide to close on it, embroiling you in marketplace intrigues between the seller and his agents.
Leveraging Market Intelligence To Get You The Best Deal
Gathering, understanding and assimilating market information necessary to make the best-informed decision can be a tall order. The buyer’s agent is better-placed to do this; helping you to analyze offers on the basis of comparables and market trends; using their market intelligence built-up over time to find you bargain offers – not just the ones that may be in their repertoire of offers – that will save you money, using their intimate knowledge and networks to help reduce the hassles, stress and time between searches and the likely hurdles that will be encountered along the path to completion of registration of the transfers.
A Listening, Caring Partner
Real estate transactions are an emotional affair that can induce panic, fretfulness and exhilaration all at once. It is understandable that these emotions will show up because of the money involved. A sober, clear mind can be helpful. Your agent can provide the calming and focussed disposition you require. A keen listener interested in understanding your requirements and concerns, and who you feel comfortable with can be a God-send. They should be methodical and thorough and you, on the other hand, must give them the room to work through the processes necessary to secure your best interest. You will be tempted to jump the gun and get straight to it, but trust their instinct. They will help you find exactly what you’re looking for at a bargain price. Their intimate knowledge and expertise can give you the edge in sniffing out bargains and motivated sellers to secure you the best deals possible. It is important to work with an agent that is amenable to your schedule and is willing to escort you through the process of closing the sale.
Do it yourself or pay the plumber?
If you’ve ever had a leaking tap, you may be tempted to just go buy a new one and fix it. Right? Well, if you have negligible knowledge of plumbing, this may lead to some epic failures. You may even have misdiagnosed the problem and it may end up costing you more. How about a faulty car? Would you venture to fix that?
There is little if any congruence in the goals held by sellers and buyers. The relationship isn’t openly adversarial. But the goals are. And even for the seller’s agent, pushing for the highest possible price and the best possible terms in the interest of the seller is the goal. You need to understand this going in. The DIY fans among you will disagree. But allow me to make my point!
Real estate transactions often demand huge capital outlays. It would be unwise to make a lifelong project out of what can be done more efficiently by someone more informed than yourself. Or you can take the risk of tinkering with it and simply hoping for a good result. Their familiarity with the marketplace and the inner workings of real estate transactions gives buyer’s agents that hidden advantage. Listing agents will happily sell you whatever they are selling. Not what you require. This is the difference.
Buyer Agency: Creating Value
Buyers agents don’t just search for comparable offers that match your requirements, they seek to surpass your expectations, find bargain offer and offer you greater value than what you’re paying them for by ensuring the performance of due diligence and working with the buyer end-to-end to ensure completion of the transaction and finalization of transfers.
In addition, they will negotiate the most favourable price and terms and make sure that all pertinent documentation and disclosures are handled at the appropriate stages of the transaction. Their industry knowledge can be critical to the buyer for conveyancing advocates, financing (securing mortgages), property valuations, insurance, and all other relevant matters from acceptance to close. They would have foreknowledge on many of the properties you are likely to encounter in the market and may advise on even the most mundane of concerns that would have a bearing on whether you are getting a good deal or not.
Typically, because of the traditional orientation towards seller representation in the marketplace, most buyers are indisposed to hiring a buyer’s agent. The market consensus is that it is the sellers who pay agents. This aversion is fueled by the stereotype that “brokers” are all parasites out to leech on buyers. If you have limited market information, are unsure of fair market prices or how to negotiate a good bargain, don’t understand the registration and transfer processes well enough to get the best value possible, and are unprepared to deal with the hassles of closing (going through listings, showings, calls (incessant calls), more showings, driving, more driving, meetings with agents, documentation, intrigues, visiting the registry, applications, disappointments, meetings with lenders, meetings with lawyers, coordinating), then maybe getting yourself a buyer’s agent is a good alternative. Considering that you will have to interact with agents, wouldn’t it make sense to consider working under a buyer agency agreement?
Is this Informative and Engaging?
Get More Delivered Direct to Your Inbox
Join our mailing list to receive the latest news and updates from our team.
You have Successfully Subscribed!
Are you looking to acquire property and find yourself in need of assistance? We can offer you representation clearing any hurdles in your property search, just click here!