This section focuses on the practices and services that a conscientious buyer’s agent would follow or provide when working with a buyer up to the point in time when an offer to purchase is prepared for the buyer.
Educate the prospective buyer as necessary about the process of buying a home and the current real estate market. This is especially important with first-time homebuyers. The less experienced the homebuyer, the greater the buyer’s agent’s responsibility to inform them about what is involved in buying a home. All buyers need to be informed about current market conditions.
It is important to learn as much as possible about the buyer’s needs and desires. Many questions must be asked to ascertain this information. What size house is needed? Size and type of lot? Design? Geographic area? Aesthetic desires? Amenities? Price range? And so on. Not only does obtaining such information enable the agent to better serve the buyer by identifying appropriate possible choices, it also will save the agent many wasted hours showing inappropriate properties.
It is especially critical to “qualify the buyer” — i.e., determine the maximum price the buyer is able and willing to pay for a residence. Procedures for financially qualifying a buyer can be discussed with your assigned loan originator. Even if the agent refers the prospective buyer to a loan officer for formal advance loan qualifying (i.e., “loan prequalifying”), which is an excellent practice, the agent still needs to understand the qualification requirements and procedures for major types of loans. Properly qualifying a buyer will help the agent avoid wasting the time of the buyer, the agent working with the buyer, the listing agent and owners of listed properties.
Select from listed property information (such as the MLS) appropriate possible choices of homes for the buyer to view based on the information gathered about the buyer’s needs, desires and financial qualifications. Do not limit the properties selected to those listed by the buyer’s agent’s firm. Remember, a buyer’s agent is primarily obligated to serve the best interest of the buyer, and arbitrarily limiting selected properties to “in-house” listings may not necessarily be in the buyer’s best interest. Similarly, do not routinely exclude any listed property because it is listed with a limited service listing broker. This is an inappropriate approach which also may very well not be in a buyer’s best interest.
Once potential properties are selected, if they include properties listed with other firms, and those other firms and the firm of the buyer’s agent are not both members of an MLS or similar listing service, the buyer’s agent should contact the listing agent and obtain an agreement on cooperation and fee-sharing. It is important that this be done prior to scheduling a showing appointment and showing a property.
Contact the listing firm or MLS appointment service to schedule showing appointments, honoring any restrictions requested by the seller. Show the selected homes to the buyer. Always strive to adhere as closely as possible to the showing schedule and keep the listing firm advised if there is any problem. Remember common courtesies you would like for selling agents to demonstrate when showing your listings.
Remember to take appropriate safety precautions before and during any showings and securely lock all doors when you leave!
At the point that the buyer indicates an interest in possibly making an offer on a property (or narrows his/her choices to two or three properties), perform a thorough “walk-through” inspection of each property looking for any obvious property defects or inconsistencies in the property information provided by the listing agent. Remember that agents basically have the same duty to discover and disclose material facts to a buyer under the Real Estate License Law regardless of whether they are acting as a buyer’s agent or seller’s agent; however, a buyer’s agent is much more likely to be aware of a buyer’s special interests or concerns and, therefore, is more likely to encounter situations where he or she needs to make a special effort to check into the matters of special interest or concern to the buyer.
Perform a comparative market analysis for the property. This will assist the buyer in determining an appropriate offer amount by identifying the approximate value of the property. This is one of the single most important services a buyer’s agent can provide to a buyer-client. Note: A seller’s agent may, upon request of the buyer, provide the buyer with information on the sales prices of comparable sales; however, the seller’s agent should be careful not to provide the buyer with advice as to an appropriate offering price, as this might well be found to be acting against the best interest of his or her seller-client.
An agent must make certain that any representations he or she makes regarding the property’s use are accurate. A conscientious buyer’s agent will routinely make certain his or her buyer-client knows to check into land use restrictions and will assist the buyer in doing so when circumstances exist that should lead a reasonably prudent agent to think there may be an issue about which the buyer should be aware.
Protective Covenants. Determine if the property is subject to protective covenants, homeowners association bylaws and/or homeowners association dues. Any house located in a subdivision is highly likely to be subject to protective covenants and may also have homeowners association and homeowner dues. If any of these are applicable, advise the buyer that he/she should obtain copies of and review the relevant information as this may very well affect the buyer’s decision about a property. If requested by the buyer, obtain such information for the buyer. The best source for accurate information of this nature is the subdivision’s homeowners association, if such an association exists.
Zoning. The agent should verify the zoning of the property under consideration anytime the buyer is planning to use the property for a purpose different than its current use, anytime the prospective buyer raises a question about a permitted use that might be affected by zoning, or anytime there is any reason (“red flag”) to suspect there might be a zoning problem. An example of a “red flag” situation might be a house located in an older neighborhood where there are mixed uses (for example, single-family residential, multi-family residential, office and retail uses all in the immediate vicinity). Another example might be a property located close to a city limit. Such property might be within the city’s “extraterritorial jurisdiction” for land use regulation purposes. Zoning may be verified through the office of the city or county planning department (or building inspector).
Flood Hazard Area. Anytime a property under consideration is located in an area the agent knows to be flood-prone, the agent should advise the buyer of this fact and assist the buyer in verifying whether the property is located in a designated flood hazard area (check with local planning office) and in determining the cost of flood insurance. The same is true when the property is located near any body of water or river or creek. Agents who work in areas likely to have special environmental regulations (such as coastal areas) should be aware of where such regulations apply and advise buyers accordingly. When a particular type of property is generally known to possibly have an environmental issue (such as a property used for a service station which likely has underground fuel storage tanks), then the agent should advise the buyer to inquire about such matter.