Who DOES your agent work for?!

Real Estate Agent with Residential, Investment properties, rehab projects, property management, luxury homes, new construction!

I talk to a lot of people about real estate.  It's fun!  It's a great and popular topic and of course I love it!

One thing that seems to confuse a lot of home buyers (and to a lesser extent, home sellers) is WHO is a particular agent working for?

In a traditional home sale, it's pretty easy to figure out.  Agents are required, by law, to provide a form called "Information about Broker Services" that defines who the agent represents.  It defines the "fiduciary" responsibility of the agent as being either with the buyer, the seller or as an intermediary.

So what happens when you walk into the office of a new home builder? 

You are welcomed into the office by the builder's representative.  Usually NOT a licensed agent and therefore not subject to the same laws as licensed agents are.  Now, I'm not here to talk down the builder's representatives.  They are normally very nice and very helpful.  They generally know their stuff.  However...

They are representatives of the builder.   Their job is to make money for the BUILDER, not save you money on your house purchase.  It's ok, that's their job and as long as you, as a home buyer, realize a couple of things, it all works out.

1. You are allowed to have your own buyer's agent (who is a professional negotiator) and the buyer's agent fee is not paid by you but rather out of the builder's advertising fund (the builder realizes that over 90% of all of their business comes through agents and that's how they allocate their budgets!)

2. A buyer's agent can often negotiate things that a buyer can not simply because of VOLUME.  If you buy a home, that's generally the end of it.  If you have a buyer's agent and the builder treats your home purchase right, your agent, statistically will bring 1.4 more buyers into that builder over the next 2 years.  So yeah, it's a lot easier for a buyer's agent to negotiate even little extras into your home purchase.

So remember that the builder's representative works FOR the builder.  It's his job to get the most money for each house that he/she sells.  Your buyer's agent works for YOU and they have a responsibility to get you the best deal and negotiate the best things on YOUR behalf. 

Comments (2)

John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

Great information! Thank you for sharing it with us!

Mar 27, 2011 05:34 PM
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

There are companies (Mostly Ryan homes in this area) that will not pay a buyers agent. I have heard so many horror stories from unfortunate buyers that had no representation. They are ONLY working for the seller.

Mar 29, 2011 01:33 AM