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buyers agent
02.5.2021

Hamilton Real Estate Market: Use a Buyers Agent!

Buying

Working with both buyers and sellers, and working as a buyer agent, we witness the experience of navigating the Hamilton real estate market from both sides.

It goes without saying that it’s way harder to be a buyer these days than it is to be a seller!  Many buyers are chronically disappointed, or even angry.

First-time buyers are often young people who rely on their parents for advice.  Normally, this would be a really good thing – unless their parents’ last experience was many years ago.

 

RULES IN A NORMAL MARKET – The one your parents remember

Back in the before times, when negotiations were normal, and not so intensely one-sided in favour of sellers, there were steps a buyer could take to improve their outcome.

For example, they could try to find out what a seller paid for their home.  Based on this information, they could negotiate a reasonable purchase price, typically a little bit under the asking price.

Buyers also used to be able to have a home inspection that might reveal issues with the home.  The findings could sometimes be used to negotiate some money off the agreed purchase price if the issues were big enough.

Most often, in a normal market, a buyer would wisely ask for a period of time – five days or so – to secure a mortgage and make sure their financing was in order.

If you are a first-time buyer whose parents are helping out, you may hear another piece of advice from way back when:  Try to work with the listing agent to get a better deal.

 

Why you should have your own agent.

It sounds so logical.  If you don’t bring your own agent, the seller won’t have to pay extra commission, and you can pay less for the house.

There was a time when this might have worked.

But remember, back then, you could also have a home inspection and a condition on financing.

To really understand why this strategy is all but obsolete in the current market, it’s important to explain what agents do for buyers.

A buyer’s agent starts by “qualifying” you.  This involves making sure that you have spoken to a mortgage broker or bank, provided all the necessary paperwork, and established your highest purchase price.

A quick visit to a bank website or a phone chat with someone who just takes a few notes is not enough.  You must provide documentation, including Notices of Assessment, tax returns, pay stubs, and your credit report.

Since it is (nearly) impossible to win a bidding war in the Hamilton real estate market these days without a firm offer, this step is doubly important.  The last thing you want is to put in a firm offer that you cannot close on!

Next, they take information about what you want and need in a house.

Your agent will check listings that you want to see to eliminate any that will not meet your criteria.

In this age of COVID screening, we are all trying to be as responsible as possible to avoid unnecessary in-person visits.

Agents see a version of listings that includes some additional information that you will not see on realtor.ca or other marketing websites.

This may allow them to see details that you might not be able to work with.  For example, if you need a house in the next 60 days, but a seller is not going to move out for 90-120 days, there may be no point in viewing that property.

 

They represent you – and only you- in a transaction.

Our professional rules of conduct also require that we explain to potential clients what options they have for representation.  Your buyer agent will explain what they can do for you if you choose to allow them to represent you.

There are important differences between “clients” and “customers,” and you should be aware of these before you give up your right to have an agent work for you alone in a transaction.

Perhaps most importantly, a buyer agent works for your interests, and yours alone.

When you’re making offers without the protection of a home inspection, this becomes even more important.  This agent will ask questions to try to assess whether there is anything about the house, the property, the location, or any other factor that would affect your buying decision that you should know.

They will research matters that you have told them are important to you and work to protect you from costly mistakes.

For example, say you tell your agent that your favourite part of the house you want to buy is that there are no backyard neighbours.

Your buyer agent will do the research to make sure there are no plans to develop your beloved green space into a subdivision.

Or if you want to put a pool in the backyard, they will ensure that there are no utility easements back there that make that impossible.

 

Why the listing agent is not your best choice.

We have recently listed several Hamilton homes for sale, and we have realized that it was best for us to ask some colleagues to serve the buyers who inquired of us directly, rather than try to bring buyers through our own listing.  Here’s why:

When a listing agent makes a deal with a seller to reduce the commission if they bring their own buyer, they must disclose this deal to other agents who bring clients through.

Once other agents know this is happening, it discourages them from making offers, since the competition is no longer level or fair.

For this reason, the vast majority of listing agents do not reduce their commission in a multiple offer situation.   Which is most of the time nowadays.  This removes any financial advantage there might have been to working with the listing agent.

The listing realtor is already under contract to represent the interests of the seller.

Their mandate is to negotiate a price and terms most favourable to their client.  As a buyer, this person is not the best one to help you through the process of buying in a hot market!

In addition to the actual negotiation, there is another reason to have a buyer agent.

The listing agent is fielding calls, texts, and emails from morning till night about the listing from interested agents and clients.  They likely will not have time to qualify you and find out enough information to properly serve you, or even get you an appointment.

The chances of getting a quick response are quite slim – and you risk being frustrated at the time it takes to get information about a property!

 

It’s tough enough to be a buyer right now, so our best advice is not to try to do it on your own!  There is no financial advantage to  not  having your own agent, so why not get a referral to someone who has the skills to help you through the process?

 

 

 

 

 

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