Buyers Agents.... What are they? How are they paid?

Question: What is the difference between a buyer's broker and a traditional real estate agent? Does the buyer's broker have to be paid by the buyer? Traditional agents don't represent buyers Legally.

Answer: A buyer's broker (also called buyer's agent) is a real estate agent hired by the buyer to represent his or her interests at no additional cost. Traditionally, real estate agents have listed property for sale and formed a legal relationship with the seller. Buyers who desire to have their positions advocated, and have the agent negotiate on their behalf, can now hire agents to represent them. A professional Buyer Broker does not carry/list company listings -- to avoid conflicts of interest.

The buyer's agent can be paid by anyone ---the buyer, a third party, or could receive the co-broker (selling broker) share of the commission offered by the listing broker through the multiple listing service. This last method of compensation is typical in a high percentage of buyer agent sales nationwide. After all, the compensation is part of the appraised value.

How can we see everything available?

Question: Our family is interested in finding a larger home, and since we know there's a lot of property on the market, we think it would be a good time to buy. Our concern is that we won't see everything available, particularly if we work with a real estate agent. What do you think?

Answer: I doubt that your true desire is to see "everything available"---but to find several of the best prospects from which to choose. Working with a real estate agent can accomplish that for you. Hire a Buyer's Agent.

A Buyer's Agent will listen to your needs and search through properties available (from the multiple listing service), weeding out the inappropriate ones. He or she will probably then show you several to get your feedback, and repeat the process again until you find the right home. Additionally, the agent is informed of new properties as they become available and also those which may be for sale shortly. What could end up taking you months on your own can be done in a timely and cost effective manner with the help of an agent. Be wary of an agent showing you their company's listings.

One suggestion: Be candid with your feedback to the agent. When you see something you don't like, explain why. Point out features you do like in the homes you see. This can greatly assist the agent.

Inform the agent if you are not satisfied with his or her service. Believe it or not, you will be best served by dealing with only committed Buyer's Agent/Broker, versus "shopping the field" with a variety of agents and brokerages. If you make the agent aware that you are committed to work with him or her, there is no reason why the agent won't do all in his power to work diligently with you as a buyer, your buyer agent.

Can the agent give the buyer comps?

Question: We've been looking for a home in a certain area, and finally found one we want to make an offer on. Our only question is whether it's really worth what the seller is asking. We read earlier in your column that the agent is working for the seller; but would it be allright if the agent gave us examples of what other properties have sold for in the development.

Answer: It's not only all right, it's a great idea. The listing agent probably did a comparative market analysis (CMA) before listing the property. This compared the property you're interested in to sales prices and terms of properties recently sold (usually within six to twelve months). These comps were similar in size, style, and amenities to the subject property and helped determine its listed price.

The agent would need to get permission from the seller in order to show you the seller's CMA (since it was prepared for the seller/client). However, there would be nothing wrong with the agent using information from other sold properties from brokerage files or from the Multiple Listing Service information to show you a range of values in the area. This information is usually accessed through a computer database, and is up-to-date. Be smart---find a Buyer's Agent/Broker to represent your needs, and avoid these conflicts/questions.

Can the agent representing the seller divulge facts about your offer?

Question: My husband and I were thinking of making an offer on a property when I happened to tell the listing agent that even though we'd start at $80,000, we would consider paying the listed price of $85,000. Was I ever shocked when I heard he passed on this information to the seller. Was this ethical?

Answer: Not only was this ethical, it was legally correct as well. The listing agent is employed to represent the seller in marketing the property. They form a legal relationship, based on trust, honesty, and diligence. In fact, anything the agent knows that might affect his client's position must be communicated to the client. This relationship with the seller filters down to include brokers and agents from other offices who would show the property as subagents of the listing broker and seller.

It's the law in forty-eight states that the real estate agent must explain whom they represent to all parties in the transaction. If this was done, it should have been reclarified when you "volunteered" the information. It sounds like agency disclosure in general was not adequate based on your degree of surprise after revealing what you'd offer.

In addition, you had the right to seek representation of your own, should you require it. If this is important to you, you might consider hiring a Buyer's Broker as an agent to represent your interests or seek counsel from a real estate attorney, at no cost to you.

Q: Can any real estate agent be a Buyer's Agent?

A: Yes any licensed real estate agent in Virginia may be a Buyer's Agent. However, before you hire an agent, check the experience the agent has in buyer agency transactions and whether the agent has the Accredited Buyer's Representative (ABR) industry Professional Designation.

Q: The last time I bought a home, I believe my agent really looked out for me. Why would anything be different today?

A: In the past, there was a lot of rule bending. Agents believed they had to take some risks in order to obtain referrals and future business from you. In today's litigious environment, real estate agents must be much more cautious. The only way to ensure an agent is representing your side is to hire a Buyer's Agent via an Exclusive Right to Represent the Buyer Agreement the same as the seller does when he secures his agent via an Exclusive Right to Represent the Seller Agreement.

Q: If this is so good for the consumer, why aren't all real estate agencies offering Buyer Agency?

A: Companies across the country are reluctantly changing their methods of doing business to accommodate the increasing consumer demand to be represented by a Buyer Agent, the same as the seller is represented by the listing agent when the seller sells a home. However, Buyers should check the experience and industry Designations of the agent before working with and/or signing a contract with the agent.

Q: Won't I get a better deal if I buy directly from the listing agent?

A: ABSOLUTELY NOT!!! The listing agent's loyalty is owed to the seller, and the listing agent cannot, therefore, legally get the buyer a better deal. Although some Buyers believe the listing agent should be willing to take a lower commission, because the agent does not have to share it with another agent, they fail to consider it is a matter of legal representation, not just a matter of the listing agent has twice the amount of work if there is not another agent available to help with the Buyer, so the listing agent may still not be willing to give up commission.

Q: What other differences can I expect from a Buyer's Agent?

A: When you hire a Buyer's Agent, the entire home finding process changes. Rather than trying to sell you one of his Company's listings and/or the good points of the properties, a Buyer's Agent will bring logic vice emotion to your decisions, pointing out all of the positives and negatives of a home. Especially those aspects/features that will hinder your selling the property in the future. A Buyer's Agent should also prepare a contract offering the buyer better terms and conditions which also favor the Buyer's move and possession dates. A Buyer's Agent will look more diligently for homes that favor/meet your needs, such as FSBO, and properties not yet on the market. A Buyer's Agent should be willing to be on your side throughout the entire process. If not, you, the Buyer, are in "harms way". BEWARE IS BEING AWARE!

Q: Can my agent list my home and also be my Buyer Agent?