If you have read my blog and are now looking for a REALTOR in your area consider asking the following questions when you start interviewing REALTORS to represent you in your next real estate transaction.
Q. What does it cost me to hire a REALTOR®?
As a Buyer it costs you nothing to hire a Realtor. Sellers pay Realtor commissions.
Q. Why would someone work for nothing?
Good question. Eventually your realtor wants to find a home for you. When that happens, the Realtor will be paid a commission by the Seller of the home. Most realtors ask you for a commitment to assign them as your Realtor (Buyer's Agent) so that they can make an investment of time (and time equals money to a realtor) searching for a home for you. They reward your loyalty with hard work and by trying to get you the best deal on your home.
Q. Can a REALTOR® show me any house or just ones listed by them? Even ones not listed with their company?Realtor can show you ANY home with a Real Estate sign in the yard or listed with any other realtor.
Q. Will a REALTOR® focus on just showing their own listings or those listed with their company?
A good Realtor will look at ALL the homes available and show you the ones that best fit your needs and desires at the best price, regardless of who they are listed with... A good Realtor will even look at the paper, drive around looking for signs and even call For Sale By Owner homes for you.
Q. What does Buyer Agency mean and what is a Buyer's Agency Agreement?
A buyer's agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith and loyalty. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer's agent must disclose to potential sellers all adverse material facts actually known by the buyer's agent including the buyers financial ability to perform the terms of the transaction and if a residential property, whether the buyer intends to occupy the property. A separate buyer agency agreement is required which sets forth the duties and the obligations of the broker and the buyer.
Q. What are the advantages of Buyer Agency to me?
Right off the bat, your will get a stronger commitment from your agent. Put yourself in a Realtor's shoes. If a Realtor meets you and you want a home and they are not sure how serious you are, or they get a feeling you will call another Realtor or go buy a For Sale by Owner at any moment, they might not feel that investing time in you is a commitment that they would be wise to make. But, if you make a commitment to an agent, it is basically saying you will use him/her as your exclusive real estate agent. That no matter whose name is on the sign or what open house you go to, or what For Sale By Owner sign you see, you will allow your agent to sell you the home. There are other benefits too: A Buyer's Agent will keep your financial confidences. They will also disclose anything they find out about the circumstances or situations of the Seller to help you get a better deal on the house. They will negotiate harder for you (because they are working for you). Regardless of whether your agent is a Buyer's Agent or a Transaction Broker, he/she will review all the paperwork and make sure that things are in order throughout the process.
Q. So, what if I don't sign a Buyer's Agency Agreement?
Without a Buyer's Agent, the Realtor becomes a Transaction-Broker. This means the agent will assist you and sometimes the Seller throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction, without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a Buyer's financial ability to perform the terms of a transaction and if a residential property, whether the Buyer intends to occupy the property. No written agreement is required.
Q. Does this Buyer's Agent put me under a financial commitment?
If you make an arrangement with a Realtor, you are obligated to buy from that Realtor. If (such as the case of a For Sale by Owner who will not pay) the Seller won't pay, you have to pay the commission. Also, you cannot buy from another realtor while under a Buyer's Agent contract. If you did this, and a commission IS paid to another agent, you are legally bound to pay commission to your agent. You cannot use another Realtor while under contract with a Realtor as a Buyer's Agent.
Q. What if I find a For Sale by Owner or go to an Open House?
If you are working with a Realtor, and that Realtor calls a For Sale By Owner for you and asks to set an appointment, they can inquire if the Seller is willing to pay a Realtor a commission for bringing them a Buyer. They are almost always willing to do so. If you attend an Open House, always be sure to let the host/hostess know right away that you are working with an agent and the name of your agent.
Q. What if the person selling "By Owner" doesn't want to pay a commission?
That is the one circumstance where it might cost you money to hire an agent. This is something that is discussed and decided upon with your agent when deciding if your agent will function as a Buyer's Agent or a Transaction-Broker. This will need to be discussed and decided upon prior to you even looking at any homes with the agent. The Buyer's Agency Agreement sets forth how an agent will be paid if a For Sale By Owner does not want to pay a commission. Even if that is the case, most of the time, the commission can be financed with your home mortgage.
Q. If I find the House, not my Agent... why should they get paid?
Many times an agent puts a lot of time and energy into finding you the right home. It often entails driving around looking and looking for the right home. Because of the time and energy commitment this Realtor has made to you, it is only fair that he or she get paid. Buying a home is a "partnership." You are hiring a Realtor for their expertise, not just to find the house. Besides, and this very important, every house you see is part of the education process on the road to making you recognize the home you eventually decide is the "right house." If your Realtor had not taken you to see every home you've seen before you see "the right one," you would have no idea of values , condition, prices, area, etc. Of course the Realtor should be compensated no matter who finds the home.
Q. Can I go look at homes at Open Houses, new home developments or talk with Builders?
Yes, you can do whatever you want as long as tell whomever you talk to that you have an agent.
Q. What if I have a Buyer's Agency Agreement with you and I find a home that I want to see and I cannot reach you?
First of all, you can usually reach me. If I am out of town or physically unavailable, you will know ahead of time and there will always be someone in my office available to show you the home and write up an offer.
Q. Buying a home is a big decision. How will I know if a Realtor is a good match for me?
Great question. The most important thing is to ask questions up front. Make sure your agent has a clear understanding of your goals, timeline and expectations. Most agents will let you out of your Buyer Agency contract if you can truly find something legitimately lacking in their service or if your plans for home ownership change. Finally, if you're uncomfortable with the Buyer Agency agreement at the start, most Realtors will start out as a Transaction-Broker until you feel more comfortable with him/her and the Buyer Agency agreement.
Q. How does my agent get paid if I have them show me a house listed by someone else?
In real estate, when someone sells a house they agree to pay a commission to Realtor to get that home sold. It is generally 6%. If the person who is listing the house is lucky enough to sell the home to someone they know, they get the entire 6% commission. This doesn't happen often. Because of the Multiple Listing Service, that home is available to all agents with access to the MLS. In that case, the Realtor who does find a Buyer for the home gets half the commission (or 3%). So the Listing agent gets 3% and the person representing the Buyer gets 3%.
Q. What else should I consider when choosing a Realtor to represent me?
How quickly after an initial contact does the person follow-up? Does he/she seem competent? Has he/she prepared well for your meeting to prove him/herself to you before asking you to make a commitment to him/her? Is he/she willing to let you out of the contract if you are not satisfied with the level of service provided? Does he/she do what he/she says he/she will do? Is he/she easily reachable (more than one number)? Does he/she return calls promptly? Do you like him/her and do you feel you would enjoy working with him/her?
If you have more questions please feel free to contact me.