Why is Buyer Representation Important

Learn about buyer representation in real estate; When it was established and why it's important today in this Mean Girls style video. 

Picture this: the year is 1975 and buyers' agents are a foreign concept. A time when only the seller had an agent representing their interests. It seems strange now, especially considering how vital buyers' agents have become in the real estate world. However, this was the norm until the 1990s.

Why the shift, you ask? Well, sellers grew rather fond of the idea of not being sued. Unrepresented buyers often didn't understand the contract, and dual agency instances, where the seller’s agent represented the buyer as well, resulted in a plethora of lawsuits. Buyers felt their interests were not fairly represented. Thus, the concept of cooperative compensation was introduced, creating a system where the listing agent would share a portion of the commission with the brokerage representing the buyer. Buyers quickly discovered the benefits of being in the know. 

Understanding their options, having an advocate, and fair representaton had the pleasant side effect of reducing litigation within the market.

According to Rayse, a data app aiming for transparency between agents and clients, agents spend between 80-100 hours assisting a buyer client. If the transaction fails to close, this time goes unpaid. The NWMLS, established as a non-profit, independent from the National Association of Realtors known as NAR, has existing rules that align with recent NAR settlement outcomes. No flashy lawsuits or national announcements, but the systems already in place facilitate fair transactions. We've all heard the adage in real estate, "everything is negotiable." From stuffed birds on wall mounts to agent compensation amounts, negotiability truly reigns supreme in this industry. However, remember the wise saying, "you get what you pay for."

The biggest question that arises, how will shifting buyer representation costs to buyers impact those struggling to get a foot on the property ladder? Many first-time home buyers already stretch to save up for the down payment, closing costs, and the unpredictable escalation and appraisal buffer. Following such a system could significantly narrow the buyer pool for sellers, and deny access to buyer representation for buyers utilizing FHA loans, the Down Payment Assistance Program, and VA buyers who are prohibited by the government from paying for their representation.

So, who really stands to benefit from a competent buyer's agent involved in a real estate transaction? The answer is simple: everyone. The presence of a skilled buyer's agent creates a fair, transparent, and successful real estate process, benefiting all parties involved. 

If you have questions about this topic or anything else, please call or email me. I am always willing to help!

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