Coastal Newport Real Estate

Waterfront Real Estate Newport RI - Millionaire's Secret to Investing

Successful real estate investors, especially those with experience and a higher net worth, prefer to work with a buyer's agent.


Newport, RI -- (SBWIRE) -- 07/15/2014 -- One of the millionaire's secrets to successful real estate investing is that they work with a buyer’s agent. Whether you are a trade up buyer, looking for a second home, investment property or even if you are a first time home buyer, you too can take advantage of buyer’s agent representation services. Successful real estate investors, especially those with experience and a higher net worth, prefer to work with a buyer’s agent. This partnership decreases their chances of incurring unnecessary expenses due to “lemon” properties with excessive deferred maintenance, or other long term investment negatives like poor location and/or other undesirable future resale influences.

The prevailing logic for using a buyer’s agent is that most real estate transactions feature a 6% real estate commission which is paid out of the listed property seller’s proceeds. A typical co-brokered deal has the listing agency getting 3% and a “selling agency” getting the other 3%.

The problem with traditional seller’s agency is that agency law provides that both the listing and selling agent legally represent the interests of the seller and not those of the buyer.

With buyer’s agent representation, the typical 6% commission that is paid out is also the source of the buyer agent’s commission, with the listing agency still representing the seller and keeping 3%. However, in this example, if a buyer’s agent presents an offer to the selling agency they generally pay out 3% to that buyer’s agent, who has created a contractual, fiduciary relationship with the buyer to exclusively protect and defend their interests in the transaction. Successful investors know that the total 6% commission will generally get paid out no matter what, so why not have a buyer’s agent assist with all the details, time and effort and pro-active advocacy required to buy the house? As mentioned, agency law provides that a buyer’s agent must dissuade you from making a bad investment, while also spending considerable time and effort to research the market to find the best investment value. On the contrary, a selling agent, due to their requirement to work for the seller, is not necessarily motivated to say no to any given property or to work exhaustively to investigate all options.

A research article published by the U CONN Economics department on March 11, 2010, entitled “Caveat Procurator” revealed that:

”With increasing popularity of buyer brokerage, duties that buyer agents owe buyer clients are being more fully discussed and judicially defined. Sellers, seller agents, and buyer agents must all disclose known material facts to buyers based on state disclosure statutes and on common law theories of negligence and fraud. Recent court decisions have expanded those disclosure duties, finding that a buyer agent may also have a common law fiduciary duty to a buyer client to investigate for and discover unknown property defects”.

Real Estate Publications UConn

This research suggests that buyer’s agents are legally required and therefore motivated to assist in delivering a sound investment, while also offering other practical assistance like conducting all necessary research and analysis on which potential properties are the best fit for the exact needs of the buyer. This service feature is an idea arrangement if you are a buyer looking to purchase property in another state or geographic region that you are unfamiliar with, or if you are looking to save time and reduce travel expense.

Don’t get “sold” on your next house, buy it carefully, efficiently and professionally with the assistance of a buyer’s agent.

To summarize, if you are a buyer of real estate, your best choice is to have a buyer’s agent help you throughout your home buying experience. Our experienced team of buyer’s agents at Coastal Newport Real Estate can guide you through this process.