Buyers - Who Represents You?
Posted by Carmen Isais
Recently, holding my listing's Open House in Wildhorse I came upon acouple that were looking for to move into a larger home. They weren'tworking with another agent and it was clear, early on, that we had hitit off and we would have a comfortable working relationship.
Fast forward two weeks later when, after exhausting the MLS listingsin their price range, this couple decide they might want to place anoffer on my listing after all.
Great! Another agent might say... except this one (Carmen, here), doesn't double end deals as a matter of ethics.
An important topic in the world of real estate is the issue ofagency. Some people might have you believe that it really doesn'taffect you, the buyer, and that nothing much has changed. But they arewrong.
The topic of agency is important to buyers because it answers themost fundamental question that can be asked of any real estateprofessional: Who do you represent in this transaction?
Until that question is answered, you may be left with the impressionthat all agents who work with buyers actually represent those buyers,and that you have somebody going to bat for you in a transaction. Well,the issue of agency is important, because without it you can never besure who represents who.
Here's another scenario:
At an open house, you meet a great agent named Bonnie. Even thoughthe house Bonnie is showing is not right for you, she tells you she hasothers to show you that fit your needs exactly. You spend an hour or sowith Bonnie looking at a half dozen homes and talking about your needsand your wants. During the course of the conversation, you volunteerthat you have $250,000 cash to spend and that you will not go over$250,000 purchase price no matter what. Then you find the perfecthouse. Asking price is $250,000 but you decide to offer $242,500 basedon recent sales in the area. During negotiations, the seller asksBonnie directly how much cash you have and how high will you go. Whatdoes Bonnie say?
Here's the answer: Unless you have signed a "Buyer Agency Agreement"with Bonnie making her your buyer agent, she is most likely acting as asubagent to the listing agent who represents the seller. If that is thecase, she has a fiduciary obligation to the seller to disclose to himany information she has that might "promote or protect his interest" inthe transaction. Guess what? Bonnie has that information.
The seller, having talked to Bonnie now has knowledge of yourfinancial position, counters at a full $250,000. He knows you canafford it and that this price falls within your desired range. He alsoknows that you have seen a number of other homes and that this is theone you want.
Regardless of what eventually happens in this scenario, it canhardly be called an even playing field. So, how can you protectyourself from a possible disclosure required of a seller's agent?
- Get a written "Buyerâ€™s Agent" agreement. Make sure that theagent you are working with has agreed, in writing, to represent you asa "Buyer's Agent." This will mean signing a buyer brokerage agreementin which you promise to work only with that particular agent for aspecific period of time, often 90 days. It also means that you promisenot to buy from anybody else, even FSBOs, without involving yourbuyer's agent. In almost every case, the commission will still comefrom the seller, but your agent must present the offer.
- Never disclose anything you wouldnâ€™t want the seller to hear. Neversay anything to anybody unless you would be willing to have thatinformation repeated into a seller's ear. Assume that everybody, and Imean everybody, is working for a seller unless you have specificallyhired them to work for you.
So, how do I handle an issue of dual representation? I don't.
Instead, I happily will refer you to a couple of great buying agents I've worked with in the past. his ensures that you, the buyer, are well represented, as are my sellers, and as a result... I sleep well at night.
If you are interested in learning more about my work philosophy,buyer broker agreements, or real estate in general... give me, CarmenIsais, a call @ 530.601.1003. My office is right here in Downtown Davisand I'm always available to answer your questions.