I love this coming from Rich at the Boston Real Estate Observer!

HUD Encourages Use Of Exclusive Buyer Agents

In its first revision to its home loan booklet in more than 10 years, the US Department of Housing and Urban Development (HUD) advises home buyers that it is their responsibility to search for a real estate agent that will represent their interests.

I love this because other consumer protection oriented organizations will probably follow suit.

It has always mystified me that more people don’t use Buyers Agents. I’ve gone back and forth with the question and I even wrote about it here Relocating To Boston, Why Dont More Buyers Use a Buyers Agent? It just doesn’t make sense.

I guess the list would go like this in order of probability:

• Laziness
• Desire for privacy
• Fear of being sold to or at
• Buyers Agency hasn’t been practiced long enough in Mass to be on buyer’s “Musts Have Lists”
• The population got so used to everyone representing the seller, they think Buyers Agency is a ruse anyway.
• They just don’t believe that a Buyers Agent would REALLY have their best interest at heart

Things have changed, Buyers Agency is being practiced in Massachusetts now and it is empowering buyers and saving them time and money. There is so much that a good Buyers Agent does for the consumer, I don’t know where to start.

I find myself using the term Buyers Advocate often. Because in its very purest essence there is detachment from a profitable outcome of the transaction. Its contrary to the actual definition of Buyers Agency to do something self serving like pushing a deal through and not disclosing certain deal breaking details.

In addition to making sure everything about a real estate transaction goes well, a Buyers Agent does a bang-up job of showing ALL the appropriate inventory. As difficult as that may be it is also in the definition! How could you not show  properties when you yourself would never buy without first seeing those properties. Sellers Agents won’t do that, they have their own inventory to market.

The next statistics really made my heart sing because I knew it was true but I didn’t know how to quantify it.

If you need ANOTHER reason to be working with a Buyers Agent, this should get your attention. Additionally, a survey conducted by the National Association of Exclusive Buyers Agents (NAEBA) found that among survey respondents, there were only 15 foreclosures out of 1,849 closings. That represents a foreclosure rate of just 0.8 percent, compared to the nationwide rate of 1.84 percent (more than double) in 2008.

This last bit of information I was expecting and waiting for as I think that other Buyers Agents like myself end up talking buyers down from spending too much. I am always urging people to underspend and buy as few square feet as possible especially in the city. And of course this leads to greater property appreciation. Working with an exclusive buyer agent offers more than a dedicated representative. Data validates that buyers actually get better results. An exclusive buyer agent promises to work toward a better price and terms for buyers. A study conducted by Chandler & Chandler confirms that property purchased through an alliance with an exclusive buyer agent shows a 67 percent greater appreciation in value.

Written by RE/MAX Destiny Accredited Buyers Agent Jeff Persons 617-512-3443

More articles by Jeff:

Buying Boston Real Estate Without a Buyers Agent is Like Going Into Court Without An Attorney
5 Best Reasons To Have a Buyers Agent Represent You
5 Worst Questions To Ask Your Buyers Agent
5 Clues That Your Boston Real Estate Buyers Agent is a Sellers Agent in a Brilliant Disguise.

Moving to Boston? Check out my Boston Relocation page

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First Thing to Do When You Start Your Boston Real Estate Search, Get An Exclusive Accredited Buyers Agent

Find a good Buyers Agent and you can save 10s of thousands on your Boston Home

Keep in mind that there are Buyers Agents and there are Buyers Agents. The Buyers Agents I’m talking about are not just a Listing Agent in a brilliant disguise. Part of the disguise may be that the Listing Agent has their ABR (Accredited Buyers Agent) certification. Don’t let that fool you. I have my ABR but in my hands that certification has helped my buyers save millions since I started in 2002.

You see the classic way to build a real estate business is to first get listings. After that if these listing agents have nothing else to do, they tell the buyers who come to their open houses that they are Buyers Agents and wouldn’t you just love to go out with me and look at properties. “You will get a good deal with me and I know about properties that are not on MLS etc.” They bill themselves as “Buyers Agents” maybe they even have their ABR but at the offer stage you will hear them start to echo the sales pitch of the Listing Agent anyway. So who needs 2 Listing Agents pulling at you to pay up the price the seller wants, basically trying to sell you some real estate.

I also think that the folks who say that a Buyers Agent isn’t needed are just being lazy. They want it to be as easy as paying what the Listing Agent suggests and be done with it. It would be so nice if all we had to do is find the properties on the internet and go directly to the pocket picking Listing Agent. This lacks rigor and these buyers will overpay. What they don’t understand is that this whole two-sidedness, this whole dichotomy has been built into the system to protect them from getting fleeced.

These commission rebates are another joke on the consumers. I wouldn’t be surprised if Massachusetts and other states outlaw the practice. I’m also not surprised to see this happening during a recession. Funny how desperation can get buyers to fall for that. Now people, work with me and think about it, you are not going to use a Buyers Agent, you want to be rebated his commission and yet you expect to get a good deal from the seller? Are we living on the same planet? You may get the rebate but you will get taken to the cleaners for the property. Penny wise, and dollar totally foolish. What kind of magnanimous seller is going to give you a good deal when you are not even bothering to be represented?

So What does a REAL Buyers Agent Do?

A Buyers Agent who is REALLY practicing Buyers Agency will keep you from getting burned. He or she will pull several sets of comparables. The first is done in preparation of the offer. After the offer is submitted another set coming from a different direction with the numbers can reinforce the offer, warn the buyer not to go higher or in some cases point out that the property is actually underpriced. (It happens but its always a mistake made by the people pulling the comparables.) Then when the counter offer comes in another set of metrics is pulled from yet another set of numbers. By this point a Buyers Agent worth his salt can nail down the fair market value of the property to within 3 to 5 percent. And more importantly YOU will know the value of the property. Hopefully you saw the inventory (A good Buyers Agent will make sure you see EVERYTHING viable in your price range and neighborhoods) so you know a bit about value there. Now in addition, thanks to your Buyers agent, you have looked at 3 sets of averages statistically nailing down fair market value for you.

Buyers Agency when done correctly is an alignment with truth.

That’s why a good Buyers Agent comes back to the statistics again and again. Numbers don’t lie and if the numbers are wrong the property is overpriced, period. You will find out if you have a real “Buyers Agent” if she starts to reconcile the seller’s numbers to bring the deal together (read, getting you to pay more). Thus the brilliantly disguised listing agent is along for the ride and the commission. She won’t pull another set of numbers to counter all the anecdotal hype that just streams out of the Listing Agents mouth. She is content to let the Listing Agent sell some real estate to her client. Bad form, absolutely dishonest.

The whole idea is to take out personal opinion and conjecture. Listing agents will go on with anecdotal evidence and actually search the MLS looking for overpriced sold units to justify the seller’s asking price.

So how can you tell if the Buyers Agent you are talking to is for real?

The best thing would be to find a buyers agent who NEVER represents a seller. I’ve been an ABR since 2004 and I don’t take listings at all because I want to keep my focus on buyers issues. This costs me about 30% of my income but its worth it. I can hold my head high and refuse to participate in the sham. Every buyer I work for gets my best.

Also, use your intuition, ask lots of questions and read their blog if they have one. Look into their philosophy because If you can find a Buyers Agent you trust it can save you 10s of thousands. Isn’t that worth doing the same rigorous interview you would have with anyone handling responsibility like your new lawyer? Have the same reservations you might have for a used car salesman. Unfortunately many Buyers Agents talk a good game so be prepared for him to talk the Listing Agent’s talk once that first offer is submitted. Tell him you want to see ALL the sold units, not just the sold units that agree with the asking price. Dishonest Buyers Agents will hand pick sold statistics to reinforce the seller’s ideas about the “value” of the property.

Written By RE/MAX Destiny Accredited Buyers Agent Jeff Persons 617.512.3443

Read more about Buyers Agency: Real Estate Cafe -  Smart Money -  Real Estate Snippets -  Szerlip -  Sold On Sunday

Your comments will be appreciated!

More Reading by Jeff PersonsABR:
5 Worst Questions To Ask Your Buyers Agent
A Buyers Agent List of 5 Mission Critical Items to Check Before Buying a Condo
5 Clues That Your Boston Real Estate Buyers Agent is a Sellers Agent in a Brilliant Disguise.
Dont Just Investigate Your Boston Condo, Investigate The Management Company Too

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Buying Boston Real Estate Without a Buyers Agent is Like Going Into Court Without An Attorney