Who Does Your Real Estate Agent Really Work For?
If you are a potential home buyer, it is in your best interest to know the difference between seller, buyer and dual real estate agents. Using the wrong kind of agent could affect the financial terms of the deal and have significant legal implications. Understanding the differences between these type of agents is important when buying a new home.
There has been frequent discussions over the past number of years about buyer's agents and seller's agents. Real estate law has evolved to require that an agent list who they are representing. This is normally done early in the process through a legal disclosure document that you must sign that clarifies whether the agent is working for the buyer or seller. A seller's agents represent the seller. Most real estate agents believe it or not are seller's agents. They may be friendly to you as a potential buyer, escort you around town to show you multiple homes and help you prepare an offer on a home. However, they normally are working for the seller and looking out for the interests of the seller. On the other hand, buyer's agents actually work for the buyer and have an obligation to look out for the interests of the buyer. There are also dual agents, but we’ll come back to that in a moment.
Generally, this has nothing to do with who actually pays the agent. Does this really matter? If you are the buyer, it is important for you to use a buyer agent because of the financial, legal and ethical implications. A seller's agent has a fiduciary duty to the seller not to you as the buyer. This meansduring the negotiations a seller's agent will be negotiating for the seller. Here's a real life illustration to help clarify. Suppose an agent discovers that the seller must relocate for a new job, has become highly motivated and is now willing to accept $30,000 under the home's list price. If the agent is a buyer's agent - working for you - he/she will be obligated and very likely excited to tell you this data. However, if the agent is the seller's agent representing the seller - he/she does not have to reveal this data to you and may not give away the information initially in an effort to get the higher offer from you.
Now, back to dual agents. At various times your will find an agent that says they are performing in a dual role; meaning they are serving as a buyer and seller agent. Be careful in this situation. As a buyer you may want to avoid working with a dual agent. Realistically, the dual agent cannot fully support the buyer's interests without adversely affecting the seller and visa versa. There are some proficientagents that can operate effectively in the dual role. However, as a buyer, you should identify the possible conflict. If you want the bottom price on a home, seek a highly respectable buyer's agent whose loyalties are aligned wholly with you.
You may be bewildered about who really pays for a buyer's agent. Normally the selling agent lists the property in the MLS ("multiple listing service") and evenly divides the commission with the agent who brings the buyer. Frequently, the seller's agent and the buyer's agent share the real estate commission 50/50. This means that although the buyer's agent is working for you, the seller is actually paying for the buyer's agent. At various times you may find a home where the selling agent does not agree to split the commission with the agent who brings the buyer and in that case you would have to agree who will pay for the buyer's agent.
Understanding the financial, legal and ethical implications of buyer, seller and dual agents is material to you as a home purchaser. Before you start searching for a new home, find yourself a good buyer's agent with at least 7-8 years of expertise in your market. They will have a fiduciary responisibility to act in your best interest and have the experience to help you negotiate the lowest price for the home.
Kristi Cole is a real estate and home improvement expert at www.inhomeimprovements.com
Webmasters and publishers, please feel free to use this article provided this reference is included and all links remain active.
There has been frequent discussions over the past number of years about buyer's agents and seller's agents. Real estate law has evolved to require that an agent list who they are representing. This is normally done early in the process through a legal disclosure document that you must sign that clarifies whether the agent is working for the buyer or seller. A seller's agents represent the seller. Most real estate agents believe it or not are seller's agents. They may be friendly to you as a potential buyer, escort you around town to show you multiple homes and help you prepare an offer on a home. However, they normally are working for the seller and looking out for the interests of the seller. On the other hand, buyer's agents actually work for the buyer and have an obligation to look out for the interests of the buyer. There are also dual agents, but we’ll come back to that in a moment.
Generally, this has nothing to do with who actually pays the agent. Does this really matter? If you are the buyer, it is important for you to use a buyer agent because of the financial, legal and ethical implications. A seller's agent has a fiduciary duty to the seller not to you as the buyer. This meansduring the negotiations a seller's agent will be negotiating for the seller. Here's a real life illustration to help clarify. Suppose an agent discovers that the seller must relocate for a new job, has become highly motivated and is now willing to accept $30,000 under the home's list price. If the agent is a buyer's agent - working for you - he/she will be obligated and very likely excited to tell you this data. However, if the agent is the seller's agent representing the seller - he/she does not have to reveal this data to you and may not give away the information initially in an effort to get the higher offer from you.
Now, back to dual agents. At various times your will find an agent that says they are performing in a dual role; meaning they are serving as a buyer and seller agent. Be careful in this situation. As a buyer you may want to avoid working with a dual agent. Realistically, the dual agent cannot fully support the buyer's interests without adversely affecting the seller and visa versa. There are some proficientagents that can operate effectively in the dual role. However, as a buyer, you should identify the possible conflict. If you want the bottom price on a home, seek a highly respectable buyer's agent whose loyalties are aligned wholly with you.
You may be bewildered about who really pays for a buyer's agent. Normally the selling agent lists the property in the MLS ("multiple listing service") and evenly divides the commission with the agent who brings the buyer. Frequently, the seller's agent and the buyer's agent share the real estate commission 50/50. This means that although the buyer's agent is working for you, the seller is actually paying for the buyer's agent. At various times you may find a home where the selling agent does not agree to split the commission with the agent who brings the buyer and in that case you would have to agree who will pay for the buyer's agent.
Understanding the financial, legal and ethical implications of buyer, seller and dual agents is material to you as a home purchaser. Before you start searching for a new home, find yourself a good buyer's agent with at least 7-8 years of expertise in your market. They will have a fiduciary responisibility to act in your best interest and have the experience to help you negotiate the lowest price for the home.
Kristi Cole is a real estate and home improvement expert at www.inhomeimprovements.com
Webmasters and publishers, please feel free to use this article provided this reference is included and all links remain active.
This article is free for republishing
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