Blog Post - What Is a Buyer's Agent and How Do You Become One?
Buying a home can be an exciting, yet daunting experience, especially for first-time homebuyers. With so many details to consider, it's easy to feel overwhelmed and unsure of how to navigate the process. This is where a buyer's agent comes in.
But what exactly is a buyer’s agent and how do you become one?
In this blog, we'll explore the definition of a buyer's agent and how you can become one. If you're a real estate professional looking to expand your skill set, this blog will provide valuable insights and practical tips to help you succeed in this rewarding career path.
What Is a Buyer's Agent?
A buyer's agent is a licensed real estate professional who represents the interests of the buyer in a real estate transaction. A buyer’s agent’s job is to advocate for and protect the buyer's interests throughout the home buying process, from the initial search to closing.
The buyer's agent responsibilities include:
- Understanding the buyer's needs and preferences
- Finding suitable properties
- Negotiating the best possible price and terms
- Guiding the buyer through the closing process
Duties of a buyer's agent also include assisting buyers with tasks such as:
- Conducting property inspections
- Schedule showings
- Reviewing contracts
- Providing valuable market insights
- Navigating complex real estate laws and regulations
- Answering questions
- Pricing consultations
- Negotiating with the listing agent
In most cases, the buyer's agent is compensated by the seller, typically through a commission split with the seller's agent or broker.
What Is a Buyer's Agent Salary?
The salary of a buyer's agent can vary based on a variety of factors, including:
- Level of experience
- Number of transactions they close
Buyers' agents in the U.S. make an average salary of $59,175 per year or $28 per hour. The top 10% makes over $86,000 per year, while the bottom 10% makes under $40,000 per year.
Who Pays for a Buyer's Agent?
In most cases, the seller of the property pays for the buyer's agent. When a property is listed for sale, the seller typically agrees to pay a commission to both their listing agent and the buyer's agent. The commission is usually a percentage of the property’s sale price and is split between the two agents.
According to the balance, real estate commissions are paid like this:
- The seller pays the listing brokerage.
- The listing brokerage pays the listing agent.
- The listing brokerage pays the buyer's brokerage.
- The buyer's brokerage pays the buyer's agent.
- The seller effectively pays the buyer's agent to negotiate on the homebuyers behalf.
Real estate commission usually amounts to 5% to 6% of the home's sale price, with 2.5% to 3% allocated to the buyer's agent and the same percentage to the seller's agent in most regions. However, these figures can vary depending on the location and the individual agents involved.
For example, if a property sells for $500,000 and the commission rate is 5%, the total commission would be $25,000. This would be split between the seller's agent and the buyer's agent, with each receiving $12,500.
Remember, while the seller pays for the commission, the cost is usually factored into the sale price of the property. This means that the buyer indirectly pays for the commission through the purchase price.
How Does a Buyer's Agent Get Paid?
As mentioned above, a buyer's agent is typically paid through a commission, which is a percentage of the sale price of the property that they help the buyer purchase. The commission is usually paid by the seller's agent or broker, and it is split between the two agents.
The commission for the buyer's agent is predetermined by the seller and outlined in the listing agreement, with details usually listed in the MLS listings. The commission rate can vary, but the average commission for buyer's agents is typically between 2.5% to 3% of the sale price, depending on local customs and seller preferences.
For example, if a property sells for $500,000 and the commission rate is 2.5%, the total commission would be $12,500. This would be split between the buyer's agent and the seller's agent or broker.
However, the actual amount the agent receives is dependent on the compensation structure between the agent and their brokerage, with most agents operating on a commission split. This split can vary between 50% to 100% of the commission, with some agents receiving the entire commission.
It’s important to note that if not otherwise stated in a contract - which may be illegal in certain states – it is not obliged to compensate a buyer's agent unless they successfully complete the transaction. If the sale falls through or does not close for any reason, the buyer's agent may not receive a commission.
Buyer's Agent vs. Real Estate Agent
A buyer's agent differs from a real estate agent in that the former's objective is to secure the best possible outcome for their clients, while the latter's objective is to achieve the best possible outcome for the seller. The reason for this is that buyer's agents represent the buyer's interests, while real estate agents represent the seller's interests.
A real estate agent is a licensed professional who can work with both buyers and sellers in a real estate transaction, whereas a buyer's agent specifically represents the interests of the buyer in a transaction.
In other words, buyer’s agents represent buyers exclusively, while real estate agents can represent either buyers or sellers.
A buyer's agent is solely dedicated to representing the buyer's interests and helping them achieve their goals throughout the home-buying process.
While a real estate agent can assist buyers in finding properties and negotiating offers, they are not necessarily exclusively focused on the buyer's needs. They may also represent the interests of the seller in the same transaction. A buyer's agent may also have expertise and training in areas such as market analysis and contract law to better serve the needs of their clients.
Additionally, buyer’s agents offer comprehensive assistance throughout the entire home-buying process, including property search and negotiation with the seller. In contrast, real estate agents usually focus on marketing and selling properties.
What Does a Real Estate Agent Do for a Buyer?
When helping clients purchase their perfect home, the real estate agent should work within the buyer’s best interests. A real estate agent can assist a buyer in a variety of ways during the home-buying process.
Real estate agents can help buyers by:
- Identifying suitable properties based on their needs, preferences, and budget
- Providing access to MLS listings
- Arranging property viewings and answering any questions
- Providing the buyer with a market analysis
- Negotiating the purchase price and terms of the sale
- Navigating the closing process
- Avoiding potential pitfalls
- Making recommendations
Ultimately, the goal of a buyer’s agent is to safely guide their clients through the buying process until they find their dream home.
How to Find a Buyer's Agent
One of the best ways to find a buyer specialist is by asking for referrals. According to NAR’s 2021 Profile of Home Buyers and Sellers, 38% of buyers in 2022 used an agent who was referred to them.
Clients may ask friends, family, or colleagues who have recently purchased a home for recommendations, and they may refer a buyer's agent they had a positive experience with. This ensures that the buyer’s agent is experienced and will take good care of the referral.
Other methods used to find a buyer’s agent include:
- Researching online and looking for agents with positive reviews and high ratings
- Contacting local real estate brokerages and asking for recommendations
- Attending open houses and meeting with the listing agent who may be able to provide recommendations
Once a list of potential buyer's agents is established, homebuyers should schedule interviews to discuss their needs and expectations. Those looking for a buyer’s agent should ask questions about the buyer’s agent experience working with buyers, their knowledge of the local market, and their work availability.
How to Become a Buyer's Agent
To become a buyer's agent, you typically need to follow these steps:
1. Meet the Educational Requirements
To start, many real estate agencies require real estate agents to have a high school diploma or GED.
Additionally, to become a real estate agent, most states require completing a certain number of hours of pre-licensing education before taking the licensing exam. This means you’ll need to take pre-license courses from a state-approved real estate school before passing the real estate exam so you can start representing buyers and sellers.
The specific requirements can vary by state, so be sure to check the requirements in your state.
2. Pass the Licensing Exam
Once you have completed the required education, you will need to pass a licensing exam to obtain your real estate license. To work as a real estate agent, including as a buyer's agent, most states require that individuals must hold a valid real estate agent license. Therefore, once you complete your education, you will likely need to obtain a license if you wish to work as a buyer's agent.
Many aspiring agents enroll in a pre-licensing course to prepare for the real estate license exam and familiarize themselves with the types of questions that may appear on the exam.
3. Gain experience
Many agents begin by working for a real estate brokerage, where they can learn from experienced agents and gain exposure to the industry.
When starting out as a real estate agent, some positions you may want to consider are:
- Entry-level commercial real estate agent
- Entry-level realtor
- Real estate assistant
Besides fulfilling a requirement, gaining experience will also help you develop your professional skills and build a network in real estate.
4. Begin Your Career as a Buyer’s Agent
Look for job opportunities in companies that require the services of a buyer's agent. Real estate brokerages are often the most popular choice for employment as a real estate agent. Joining a brokerage can help you build your client base and connect with other buyer's agents as it provides access to resources such as client lists and databases.
To become a buyer’s agent and complete the required education, sign-up for our real estate pre-licensing courses to help you pass your licensing exam!
Written and Published by: VanEd