As a buyer, you may be looking at many properties -- those listed with an agent as well as those sold privately, by owner. Let's say you call a real estate agency regarding a listed property you have found in MLS (multiple listing service), the newspaper, or by driving by. Traditional agencies will offer you 'buyer assistance', meaning that they will show you properties, direct you to mortgage lenders, etc., all without a contract.
The agent you meet who shows you that property will be anxious to show you other properties, of course. You begin to feel that this agent is your agent. NOT TRUE. This agent works for the agency that listed the property, and most likely is working for the seller of the property, not you. Anything you say may be carried back to the seller at any time.
Agents may call themselves many things according to state regulations. In Massachusetts, for example, the listing agent is the agent who obtained the listing from the seller. The selling agent is the agent who actually makes the sale. In order to better understand this concept, bear in mind that a real estate agency makes the most money when one of their listed properties is sold by an agent in house.
Most properties are not shown or sold by the listing agent. Although the homesellers may have spent considerable time with the listing agent discussing the fine points of their home so that they will be knowledgeable when showing it, the property will most likely be shown by agents who are totally unfamiliar with their home. Remember, whether talking about a listing agent or a selling agent, unless you have signed a contract with a buyer's agent, their allegiance is always to the seller.
As if this isn't complicated enough. using Massachusetts regulations as an example, a broker can work for both the buyer and the seller on the same property provided the broker gets the consent of both parties and provides each with a written notice of the relationship. In this case, the broker is considered a disclosed dual agent. This broker owes both the seller and buyer a duty to deal with them fairly and honestly.
In this type of agency relationship, the broker does not represent either the seller or the buyer exclusively, and neither party can expect the broker?s undivided loyalty. Realistically, it's hard to imagine that properties are not discussed over lunch or between agents sitting at the next desk. Undisclosed dual agency by a broker is illegal. The agent must present the buyer with an agency disclosure form upon first meeting to discuss a particular property.
The use of an agent becomes further complicated when the subject of seeing properties offered by owner is brought up. Unless the agent that is showing you properties is a buyer's agent, the only way he/she can get paid is to get the private seller to list the property, something that is not likely to happen. You don't need an agent to see a for sale by owner property and some sellers prefer not to negotiate with anyone but the buyer directly. If you do feel that you need representation, the one agent that has loyalty to you, the buyer, is a buyer's agent.
A buyer's agent (ie. buyer broker) represents you, the buyer, and never the seller. Some buyer brokers are known as exclusive buyer brokers/agents. Exclusive buyer brokers do not list property - period, nor are they housed in an agency that does. The buyer broker's commission, typically 3%, is generally accommodated in the selling price of the property, paid at closing. The National Association of Exclusive Buyers Agents (NAEBA - www.naeba.org) is a good resource to locate buyer's agents in your area. Buyers, remember that a buyer broker is able to show you listed properties, foreclosures, new construction, and for sale by owner properties.
A word of caution....make sure you tell the agent that you want to see ALL available properties without regard to who pays the commission. We have often heard of overly aggressive buyer's agents who will not inform their buyers about a property unless the seller agrees up front to pay their commission. This behavior is unwarranted as the buyer has already agreed to pay any commission due.
NOTE: If you are currently working with a buyer broker and you are looking at a for sale by owner property, please let the seller know up front. Don't wait until the negotiations are underway to bring in representation. It could easily kill the deal. Most sellers are very open to showing their property to you and your buyer broker - just don't assume they'll pay your agent's fees.
Liz Provo, is the publisher of Picket Fence Preview For Sale By Owner Magazine, distributed throughout Western Massachusetts and online at www.MA4salebyowner.com
Website: www.MA4salebyowner.com Phone: 413-529-2971 Email: info@ma4salebyowner.com
Permission to use this article is granted as long as the author information and website link is included.
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