If you and your family are considering buying a home, you may find this information very informative. If you are a first time homebuyer or a military transferee, you will find this information invaluable. Before you can understand how Buyer Representation works and the importance of it, you need to know a little bit about how the different Real Estate Offices and their Agents work. In every office you have a Real Estate Broker.   The Broker usually owns the Real Estate Company and hires Agents to work under him or her. Even though the Agents are considered self employed, they speak for the Broker. If an Agent obtains a listing (house) to sell, the listing actually belongs to the Broker. If the Agent has a client or customer that wants to buy a house, the client or customer belongs to the Broker. These sellers and buyers may never meet the Brokers, however the Agent is speaking in his or her place. Knowing that, you will understand the importance of Buyer Representation and how it affects you, the homebuyer. There are different levels of Buyer Representation. The level of representation the buyer gets depends on what type of Agent he chooses to work with.

 

1.   Traditional Real Estate Agents: these agents like to list homes for sale.   When the agents/broker list a home for sale, the agents/broker represents the seller. They are legally obligated to represent the seller’s best interest and get the highest price possible for the seller. They also work with buyers. In fact, they are hoping to find a buyer that will buy their listing. If they sell their listing themselves, they get paid a higher percentage of the total commission. Agents generally split their commission with their broker. So, if the agent sells their own listing, they will probably get 50% of the total commission. If an Agent from another company sells the listing, the commission is usually split between the companies (brokers). In this scenario the listing agent will only get 25% of the total commission. There is huge incentive for the listing agent to sell their own listings……money!   So, if you see a house that is listed for sale and you call the company or agent whose name is on the sign, you are talking to the seller’s agent. Remember the goal of the listing agent: get the highest price and best terms for the seller. Because they work for the seller they are limited to what they can tell you about the property. So, if the listing agent shows you the house, and you decide to purchase this house, who will be representing you? Who is looking after your best interest?

 

Traditional Real Estate Agents can also represent Buyers. The agent/broker can enter into a Buyer’s Representation Agreement with the buyer. This agreement legally obligates the agent/broker to work in the buyer’s best interest, getting the buyer the lowest price and best terms on the property.    If you decide to buy one of the agent’s/broker’s listings your representation will change. Remember that both buyer and seller have a legally binding contract with the broker. How does the agent/broker represent both parties in the same transaction? Honestly, they can’t. At this point, the relationship between buyer, seller, and broker, changes. The broker will become an “intermediary” between buyer and seller. What does this mean? It means that neither the buyer nor seller has any representation. The agent/broker acts as a messenger between buyer and seller, without advice or counsel. In the beginning, when the buyer and seller sign their agreements with the agent/broker, they both agree to this arrangement if it comes into play. In an “intermediary” relationship there is greater potential for a conflict of interest to arise. It is my belief that buyers and sellers do not fully understand what they are signing when they sign these agreements (contracts). Also, when your representation is changed to “intermediary”, the agent/broker is suppose to inform you of this in writing. It is also my opinion that this rarely happens.

2…Exclusive Buyer’s Agents: these agents do not list properties for sale and never represent sellers. They represent buyers, exclusively. They can show a buyer any house listed for sale, even searching “for sale by owners” and new construction. Thru this agency the buyer has access to the entire market. Exclusive Buyer’s Agencies are popping up all over the country and today’s homebuyers are becoming more and more educated about buyer agency. These agencies are totally focused on the buyer, negotiating lowest price and best terms for the buyer. They research every property and counsel the buyer on what would be a good price to offer on the property. They can give the buyer information on schools and neighborhoods and even tell the buyer about houses that have sold in the neighborhood. They can also disclose everything they know about the property, pointing out the good and bad. They help with every aspect of the transaction. There is never a chance of “intermediary”. The Texas Real Estate Commission advises buyers to get their own agent when purchasing a home. Exclusive Buyer’s Agents provide the highest level of service available to the homebuyer. Since they do not list properties for sale, they do not have any particular property to try and sell the buyer. Best of all, there is usually no charge to the buyer for their services.

 

So, what should a homebuyer do? The answer is simple. When you get ready to buy a home, find yourself an agent that will represent you. And if you want the highest level of service available to homebuyers, find yourself an Exclusive Buyer’s Agent.

 

Jeannie Brown is the Broker/Owner of BUYER’S SOURCE, REALTORS

278 S Pioneer #107 Abilene, Tx 79605

325-698-9900 local