Buyer Agency Defined
An important topic in the world of real estate is the issue of agency. Some people might have you believe that it really doesn’t affect you, the buyer, but they are wrong.
The topic of agency is important to buyers because it answers the most fundamental question that can be asked of any real estate professional: Who do you represent in this transaction?
Until that question is answered, you may be left with the impression that all agents who work with buyers actually represent those buyers, and that you have somebody going to bat for you in a transaction. Well, the issue of agency is important, because without it you can never be sure who represents who.
Here’s a scenario:
At an open house, you meet a great agent named Bonnie. Even though the house Bonnie is showing is not right for you, she tells you she has others to show you that fit your needs exactly. You spend an hour or so with Bonnie looking at a half dozen homes and talking about your needs and your wants. During the course of the conversation, you volunteer that you have $500,000 cash to spend and that you will not go over $500,000 purchase price no matter what. Then you find the perfect house. Asking price is $500,000 but you decide to offer $492,500 based on recent sales in the area. During negotiations, the seller asks Bonnie directly how much cash you have and how high will you go. What does Bonnie say?
Here’s the answer: Unless you have signed a “Buyer Agency Agreement” with Bonnie making her your buyer agent, she is most likely acting as a subagent to the listing agent who represents the seller. If that is the case, she has a fiduciary obligation to the seller to disclose to him any information she has that might “promote or protect his interest” in the transaction. Guess what? Bonnie has that information.
The seller, having talked to Bonnie now has knowledge of your financial position, counters at a full $500,000. He knows you can afford it and that this price falls within your desired range. He also knows that you have seen a number of other homes and that this is the one you want.
Regardless of what eventually happens in this scenario, it can hardly be called an even playing field. So, how can you protect yourself from a possible disclosure required of a seller’s agent?
Get a written “Buyer’s Agent” agreement. Make sure that the agent you are working with has agreed, in writing, to represent you as a “Buyer’s Agent.” This will mean signing a buyer brokerage agreement in which you promise to work only with that particular agent for a specific period of time, often 90 days. It also means that you promise not to buy from anybody else, even FSBOs, without involving your buyer’s agent. In almost every case, the commission will still come from the seller, but your agent must present the offer.
What a StoneCrest Real Estate REALTOR® Can Do for You
A real estate agent can help you understand everything you need to know about the home buying process.
Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the REALTOR ” ®” trademark on their business cards and other marketing and sales literature.
REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reported that 84% of home buyers would use the same REALTOR® again.
Real estate transactions involve one of the biggest financial investments of most people’s lifetime. Transactions today usually exceed $450,000. If you had a $450,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $450,000 legal question, would you deal with it without the help of an attorney? Considering the large downside risk, it would be wise to work with a professional StoneCrest Real Estate REALTOR® when you are buying a home.
The value of StoneCrest Real Estate REALTORS®:
We can help you determine your buying power – That is, your financial reserves plus your borrowing capacity. With some basic information about your available savings, income and current debt, we can refer you to lenders best qualified to help you. Most lenders – banks and mortgage companies – offer limited choices.
Privileged resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.
Provide assistance in the selection process with objective information about each property. StoneCrest Real Estate REALTORS® have access to a variety of informational resources and can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know: First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
Negotiations and inspections. There are many negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or appliances. The purchase agreement should allow time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. We can advise you as to which investigations and inspections are recommended or required.
Due diligence during the property evaluation period. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. We can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports.
You will also want to see a preliminary report on the property title. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. We can help you resolve issues that might cause problems at a later date.
Your StoneCrest Real Estate REALTOR® can guide you through the closing process and make sure everything flows together smoothly.