Choosing a Realtor to Represent You

Many 1st time home buyers are often confused about how a Real Estate Agent helps to represent them and how that Real Estate Agent is paid.  I hope to clear up these questions in this blog and help you to understand the benefits of choosing the right agent.

1.     Working With Real Estate Agents

The first thing I would like to bring your attention to is a document called Working With Real Estate Agents, which was produced by the North Carolina Real Estate Commission and is designed to give you a description of all of the different types of Agency and the differences between them.  I recommend you click on the link above and read that form.  Your Agent will ask you to sign a copy of that form to acknowledge that you have received a copy.  The NC Real Estate commission requires agents to have a signed copy with every client they work with, buying or selling.

2.     Buyer’s Agent

The most common type of agent for a buyer to have is what is known as a Buyer’s Agent.  In the buyer’s agent relationship the agent works in the sole interest of the buyer.  Here is the information from the document above about Buyer’s Agents:

Duties to Buyer:

If the real estate firm and its agents represent you, they must

·         promote your best interests

·         be loyal to you

·         follow your lawful instructions

·         provide you with all material facts that could influence your decisions

·         use reasonable skill, care and diligence, and

·         account for all monies they handle for you.

Once you have agreed (either orally or in writing) for the firm and its agents to be your buyer's agent, they may not give any confidential information about you to sellers or their agents without your permission so long as they represent you. But until you make this agreement with your buyer's agent, you should avoid telling the agent anything you would not want a seller to know.

3.     How a Buyer’s Agent is Paid

When a buyer’s agent helps to represent you in the purchase of your new home they are compensated by the listing company.  The listing company has a listing agreement with the seller that states a specified commission that will be paid to the listing company.  The listing company then advertised the property in the MLS system and agrees to pay a buyer’s agent a certain portion of the commission they are receiving. 

Frequently Asked Questions:

Question: Will I get a better deal if I go directly to the Listing Agent?

Answer: Many times a buyer thinks they will get a better deal if they deal directly with the listing agent.  But in reality the listing agent will just end up getting the entire commission and will not be paying any portion of the commission to a buyer’s agent.  In the end the same amount of commission is paid by the seller.

Question: How do I know an agent has the experience to represent me and help me avoid potential pitfalls?

Answer: Real Estate Agents in the last several years have increased in numbers dramatically.  Almost everyone knows a friend, family member, or friend of a friend who is a Real Estate Agent.  In the last year though, there have been a large reduction in the number of agents in the business do to the current economic situation and the increase in education that is now required to be an Active agent.  When choosing an agent to help you I would recommend picking someone who has been steady in the business for many years and they do real estate as a full-time profession.  There are many agents who do real estate part-time and try to help there friends and family when their real estate needs arise.  This is OK if you feel confident that they stay on top of the real estate industry and are very knowledgeable of the latest forms, contracts, and potential problems that are arising in today’s market.  The market today is changing on almost a daily basis and you need an agent that is dedicated to the profession.  Would you have a doctor perform surgery who did not have the past experience, is up to date on the latest techniques, or only occasionally performed surgeries? I don’t think you would want to make the same mistake with the most likely largest purchase you ever make.  Find someone with experience......and by the way – even you couldn’t guess, I highly recommend the Alice Ray Team with RE/MAX Hometown! 

4.     Dual Agency

Dual Agency comes about when the agent representing you as your buyer’s agent shows you one of their own listings or one of the listings their company has listed.  Sometimes Dual Agency is not the best option for a buyer.  If you are working with a reputable agent who has been in business  for a while you probably do not have anything to worry about as that agent will be able to represent both sides the correct way and will not risk their reputation and credibility at the sake of one side or the other.   Even though your agent is showing you a listing that is listed by their company there is a good chance that they are unfamiliar with the seller or any of the details of the listings.  You can have the agent represent you as a designated agent in this case and you pretty much have the same relationship as you would with a buyer’s agent.

Here is an excerpt from the Working With Real Estate Agents brochure on Dual Agency:

Dual Agent

You may permit an agent or firm to represent you and the seller at the same time. This "dual agency relationship" is most likely to happen if you become interested in a property listed with your buyer's agent or the agent's firm. If this occurs and you have not already agreed to a dual agency relationship in your (written or oral) buyer agency agreement, your buyer's agent will ask you to sign a separate agreement or document permitting him or her to act as agent for both you and the seller. It may be difficult for a dual agent to advance the interests of both the buyer and seller. Nevertheless, a dual agent must treat buyers and sellers fairly and equally. Although the dual agent owes them the same duties, buyers and sellers can prohibit dual agents from divulging certain confidential information about them to the other party.

Some firms also offer a form of dual agency called "designated agency" where one agent in the firm represents the seller and another agent represents the buyer. This option (when available) may allow each "designated agent" to more fully represent each party.

If you choose the "dual agency" option, remember that since a dual agent's loyalty is divided between parties with competing interests, it is especially important that you have a clear understanding of

·         what your relationship is with the dual agent and

·         what the agent will be doing for you in the transaction.

This can best be accomplished by putting the agreement in writing at the earliest possible time.

Conclusion

Find an agent with experience, good reputation, and is full time.  They can end up saving you money in negotiations, delays, choosing the right loan, repairs, etc.

Click here to go to the next topic – Searching for Homes

OR

Click here to go back to the main Blog.