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buyer's
agent
Another change in the real estate
industry in the past several years has been the growth of the buyer’s
agents. Many consumers initially resist when presented with the option
of retaining a buyer’s agent and signing yet another contract. This
resistance has more to do with a lack of understanding of the role of a
buyer’s agent than it does with an actual dislike of the buyer’s
agent concept.
Before the advent of the buyer’s agent, all real estate agents owed
their fiduciary responsibilities to the seller. The agent was
responsible to the seller since the seller paid the final commission and
had signed a listing contract designating an agent to represent them in
exchange for the commission. As a result of this logic, real estate
agents involved in a transaction could only be devoted to the one side
of the transaction – the seller’s side! This was true even when an
agent had only been working with the buyer, and was responsible for
writing and presenting the offer to purchase!
What did that mean to the buyer? It meant that if their agent knew
proprietary information about the seller that could help the buyer in
formulating their offer, the agent was not allowed to share it with the
buyer. For example, let’s assume that the agent who brings the buyer
knows that the seller is under great pressure to sell due to 1) a
relocation, or 2) a difficult divorce or, 3) financial pressures.
Although this information could be useful to the buyer in deciding what
to offer, none of this information can be shared under the traditional
definition of agency. Likewise, if the buyer has confided with his agent
a willingness to go higher than his original offer then in the
traditional agency situation the real estate agent would be obligated to
share this information with his actual client, the seller.
It wasn’t until real estate buyers began to demand fair and equal
representation of their interests that the concept of buyer’s agency
took hold. Today you will find real estate agents who specialize in
representing buyers in most major metropolitan markets and in the
outlying areas as well.
Hiring a buyer’s agent does require
that you sign a contract. The contract is signed prior to services being
rendered. It usually identifies a time period during which the agent
will work with you to find a house.
Service a buyers
agent should provide:
- Providing detailed information on
current market activity and current listings
- Keeping you informed of new listings
that hit the market
- Coordinating property showings and
either accompanying you on the showings or previewing properties on
your behalf
- Reviewing and explaining all pertinent
legal forms and contracts with you
- Researching the seller and their
property to discern any problems or unique issues that might
influence your decision to make a particular offer
- Advising you on how to write an offer
and what to include in that offer
- Negotiating for you with a commitment
to protect your best interests
- Assisting you with arranging financing
- Representing you by keeping your
personal and financial position confidential and being willing to
offer you anonymity if requested
The contract will also spell out how the
buyer’s agent will be paid commission and/or fee. Some agents will
require that a small retainer be paid up front with the balance of the
fee being paid as a commission upon the close of the sale. This
formalizes your business relationship with the agent and also commits
the agent to servicing your real estate needs. Other buyer’s agents
will request they be paid a full commission out of the proceeds of the
sale. The commission usually amounts to half of the total fee that the
seller has agreed to pay their listing agent upon the close of the
transaction.
Skills a buyer’s agent should
possess include:
- A strong familiarity with the local
marketplace, including recent sales, pricing trends, and current
inventory.
- An enthusiasm towards the negotiation
process. If you are paying to be represented during the sale, then
make sure you hire someone who is aggressive, persuasive, and excels
at the role of negotiation.
- A willingness to keep you constantly
updated as to properties that might suit your needs.
- A commitment to show you those
properties or preview them for you on your behalf.
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