Before you begin looking for a new home, be aware of the difference between seller, buyer and dual real estate agents. Using the wrong kind of agent could affect how much you pay for the home and have significant legal implications. Being aware of the differences can work to you advantage when buying a home.
There has been a fair amount of press over the past several years about buyer's agents and seller's agents. Real estate law now obligates an agent to indicate who they are representing. This is possibly done when you first meet with an agent through a formal disclosure document that you must sign that designates whether the agent is representing the purchaser or seller. A seller's agents negotiate the seller. Most real estate agents believe it or not are seller's agents. They may be friendly to you as a possible purchaser, escort you around town to show you multiple homes and help you through the offer process. However, the agent is typically aligned with the seller and looking out for the interests of the seller. On the other hand, buyer's agents ultimately effort for the buyer and have a fiduciary responsibility to look out for the interests of the purchaser. There are also dual agents, but we’ll come back to that in a moment.
More often than not, this has nothing to do with who ultimately pays the agent. Why is this important? If you are the purchaser, you want to use a buyer's agent because of the financial, legal and ethical implications. A seller's agent has a fiduciary alignment 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 example to help clarify. Suppose an agent realizes that the seller must relocate for a new job, has become highly motivated and is now willing to accept $15,000 under the listed price. If the agent is a purchaser's agent - representing you - he/she will be obligated and undoubtedly excited to tell you this essential fact. However, if the agent is the seller's agent representing the seller - he/she will not have to disclose this essential fact to you and may hold the message initially in an effort to get the greatest offer from you.
So then, what is a dual agent? On occasion your will find an agent that says they are practicing in a dual role; meaning they are functioning as a purchaser and seller agent. Be careful in this situation. As a purchaser you may want to stay clear of a dual agent. Realistically, the dual agent cannot fully represent the purchaser's interests without adversely affecting the seller and visa versa. There are some superb agents that can operate effectively in the dual role. However, as a buyer, you should appreciate the potential conflict. If you want the bottom price on a home, seek a promising purchaser's agent whose loyalties are aligned only with you.
You may be curious about who actually pays for a purchaser's agent. Normally the selling agent lists the property in the MLS ("multiple listing service") and agrees to split the commission with the agent who brings the purchaser. As an example, the seller's agent and the purchaser's agent divide the real estate commission with fifty percent for each agent. Accordingly, that although the purchaser's agent is working for you, the seller is actually paying for the buyer's agent. On occasion you may find a listing where the selling agent will not agree to split the commission with the agent who brings the purchaser and in that case you will have to settle on who will pay for the buyer's agent.
Understanding the financial, legal and ethical implications of purchaser, seller and dual agents is significant to you as a home purchaser. Before you start searching for a new home, find yourself a creditable purchaser's agent with at least 10 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 agree the minimum price for the home. |