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Key Takeaways from this Article
- Real estate agents provide a critical service, helping homebuyers find suitable properties, navigate the purchasing process, and negotiate a fair deal.
- Hiring an agent reduces the risk of overpaying for a home and overlooking red flags that would indicate a poor investment.
- Buyer’s agent fees are negotiable. You might even find a seller willing to cover the cost to close the deal.
An estimated 89% of homebuyers hired a real estate agent to represent them in their home purchase last year.[1] This article will explain what real estate professionals do for homebuyers and help you decide if you need a real estate agent for an upcoming home purchase.
What Is a Real Estate Agent?
A real estate agent is a licensed professional who represents buyers, sellers, renters, and landlords in real estate transactions.
There are several types of real estate agents, including:
- REALTORS®. REALTORS are agents who are members of the National Association of REALTORS (NAR). REALTORS pride themselves on adhering to the NAR’s strict Code of Ethics.
- Real Estate Brokers. The definition of a real estate broker varies by state. In some states, all licensed agents are called brokers. In other states, the term broker is reserved for agents who have completed additional training and are authorized to supervise the work of other agents.
- Leasing Agents. Leasing agents specialize in matching qualified renters with available rental properties.
- Listing Agents. Listing agents (also called seller’s agents) represent home sellers.
- Buyer’s Agents. Buyer’s agents represent homebuyers.
It’s worth noting that any licensed agent is qualified to serve buyers, sellers, and renters. Agents are not required to become REALTORS or to choose between being a leasing agent, listing agent, and buyer’s agent.
However, as a homebuyer, you may prefer to work with an agent who specializes in serving buyers. Some agents take the extra step to get certified as an Accredited Buyer's Representative (ABR®) (https://www.nar.realtor/education/designations-and-certifications/accredited-buyers-representative-abr). An agent with this designation has received advanced training in representing homebuyers.
What Does a Real Estate Agent Do For Homebuyers?
Real estate agents perform many tasks on behalf of homebuyers, including:[2]
- Finding suitable homes for the buyer.
- Scheduling and conducting property tours.
- Guiding buyers on how much to offer and under what terms.
- Drafting purchase offers and advising on any counteroffers.
- Handling the paperwork for the buyer’s side of the transaction.
- Coordinating home inspections, appraisals, title searches, and surveys as appropriate.
- Navigating any issues that arise from inspections or appraisals.
- Confirming that the condition of the property remains stable through the contract period.
- Providing referrals to movers, contractors, and utility providers as needed.
The Benefits of Working With a Real Estate Agent
Hiring an agent to assist you with the home-buying process has several advantages.
1. Access to a Wider Range of Properties
In today's digital age, it’s easy to think anyone can view all available homes online without the benefit of a real estate agent. However, it’s surprisingly common for properties to sell even before they are officially listed for sale on the open market. Real estate experts estimate that up to 10% of listings in some markets are sold before they are listed on the MLS (Multiple Listing Service) as being available for sale.[3]
In many cases, the seller’s agent alerts other agents of the “coming soon” listing, giving those agents an opportunity to notify their buyers before the listing goes public. Having a buyer’s agent could give you a heads-up on new listings. This can give you a serious advantage in a market with heavy buyer competition.
2. Local Market Knowledge to Inform Buyer Decisions
An experienced agent knows the market inside and out. They have insider information that can help you make good decisions in real estate. For example, your agent may know:
- How long the average home in the market takes to sell.
- Which price points and home styles see the heaviest buyer competition.
- When you can realistically get an offer accepted below the listing price.
- Which school districts command higher property values.
- Whether there are new developments planned that could affect property values or quiet enjoyment of your new home.
This kind of knowledge comes from years of hands-on, day-to-day experience.
3. Industry Expertise to Reduce Risk for Buyers
While many Americans only buy or sell property a few times in their lives, real estate agents can facilitate dozens or even hundreds of sales, giving them unique insights into the process of real estate purchases and sales.
Consider all the required documents needed for a property transfer as an example of industry expertise. A licensed agent knows which forms are required and how to complete them. Agents are also trained in real estate law, both at the national and state levels. This legal education can protect buyers from inadvertently making costly legal mistakes.
4. Negotiation Skills
Real estate agents are trained negotiators. They know when to push and when to concede. This skill can help you get the best possible price and terms on a home purchase.
It’s important to understand that negotiation isn’t just about the price. There are many other terms to be negotiated as well. For example, you may want to negotiate:
- A closing date that suits you.
- Furnishings to include in the purchase.
- Repairs to be made before the sale is final.
- Financial assistance with closing costs.
- Rental/occupancy of the property before the deal officially closes.
A skilled agent can help you get what you want out of the purchase.
5. Industry Connections
A professional real estate agent has access to a network of other industry professionals who can help make your purchase a success. Many buyers are surprised by how many different parties are involved in a property transfer, such as:
- Mortgage lenders.
- Home inspectors.
- Appraisers.
- Escrow officers.
- Title researchers.
Making these connections on your own is time-consuming. An agent's existing relationships with these industry players save you time and reduce the risk of getting poor service from an unknown provider.
Risks Involved in Buying a House Without a Real Estate Agent
Choosing to buy a home without a real estate agent can expose you to multiple risks, such as:
1. Overpaying for a Home
Without an agent to review comparable sales to determine an appropriate offer price, it’s easy to pay too much for a home. Remember, most sellers are represented by a seller’s agent, who is also a trained negotiator, and it’s easy for that agent to take advantage of buyers without professional representation of their own.
2. Missing Red Flags That a Professional Would Likely Recognize
Having toured so many properties, agents often have a keen eye for potential dealbreakers. While no agent is infallible, an unrepresented buyer is more likely to miss red flags that can indicate defects like leaks, mold, or foundation issues. These hypothetical defects may be uncovered by a home inspector, but getting to that point would cost you time and money.
3. Missing Critical Paperwork or Completing Paperwork Incorrectly
Incomplete or incorrect paperwork can delay the closing process. Or worse, these errors could result in terms you did not intend to include in the deal.
Do You Need a Real Estate Agent?
Here are a few questions to help determine if hiring a real estate agent is the right move for you.
- How much do you know about the local real estate market?
- Do you understand the process of buying a home?
- Are you familiar with the contracts and disclosures required?
- How much do you know about real estate law?
- Are you a strong negotiator?
- Do you have industry connections?
If you are confident in each of these areas, buying a house without a real estate agent may be an option. Otherwise, hiring professional representation may lead to a better home-buying experience.
Start Your Home-Buying Journey Today
For the many buyers who plan to use a mortgage to finance the purchase of a home, the first step in the buying process is getting pre-approved for a home loan. In fact, real estate agents often ask for a pre-approval letter from a lender before they will begin working with a buyer.
Pre-approval is the process of having personal finances reviewed by a lender to determine how much the lender can loan. This critical first step can inform the home-buying budget, assure an agent that you qualify for a home loan, and strengthen an eventual purchase offer by showing sellers that you are a qualified buyer.
With PNC Bank’s Preliminary Pre-Approval, you can apply for a simplified version of a pre-approval without a “hard credit pull.” This means your credit score won’t be impacted by the inquiry (as is often the case with traditional pre-approvals).[4]
Start your online pre-approval application with PNC Bank today.