Working with Real Estate
Agents
When buying or selling real estate, you may find it helpful to have a real
estate agent assist you. Real estate agents can provide many useful
services and work with you in different ways. In some real estate
transactions, the agents work for the seller. In others, the seller and
buyer may each have agents. And sometimes the same agents work for both the
buyer and the seller. It is important for you to know whether an agent is
working for you as your agent or simply working with you while acting as an
agent of the other party.
This article addresses the various types of working relationships that may be
available to you. It should help you decide which relationship you want to
have with a real estate agent. It will also give you useful information
about the various services real estate agents can provide buyers and sellers,
and it will help explain how real estate agents are paid.
When buying real estate, you may have several choices as to how you want a
real estate firm and its agents to work with you. For example, you may
want them to represent only you (as a buyer's agent). You may be willing for
them to represent both you and the seller at the same time (as a dual agent).
Or you may agree to let them represent only the seller (seller's agent or
subagent). Some agents will offer you a choice of these services.
Others may not.
Duties to Buyer: If the real estate firm and its agents represent you, they must
- promote your best interests
- be loyal to you
- follow your lawful instructions
- provide you with all material facts that could influence your decisions
- use reasonable skill, care and diligence, and
- account for all monies they handle for you.
Once you have agreed (either orally or in writing) for the firm and its
agents to be your buyer's agent, they may not give any confidential information
about you to sellers or their agents without your permission so long as they
represent you. But until you make this agreement with your buyer's agent,
you should avoid telling the agent anything you would not want a seller to know.
Unwritten Agreements:
To make sure that you and the real estate firm have a clear understanding of
what your relationship will be and what the firm will do for you, you may want
to have a written agreement. However, some firms may be willing to
represent and assist you for a time as a buyer's agent without a written
agreement. But if you decide to make an offer to purchase a particular
property, the agent must obtain a written agency agreement. If you do not
sign it, the agent can no longer represent and assist you and is no longer
required to keep information about you confidential. Furthermore, if you
later purchase the property through an agent with another firm, the agent who
first showed you the property may seek compensation from the other firm.
Be sure to read and understand any agency agreement before you sign it.
Services and Compensation:
Whether you have a written or unwritten agreement, a buyer's agent will
perform a number of services for you. These may include helping you
- find a suitable property
- arrange financing
- learn more about the property and
- other-wise promote your best interests.
If you have a written agency agreement, the agent can also help you
prepare and submit a written offer to the seller.
A buyer's agent can be compensated in different ways. For
example, you can pay the agent out of your own pocket. Or the agent may
seek compensation from the seller or listing agent first, but require you to pay
if the listing agent refuses. Whatever the case, be sure your compensation
arrangement with your buyer's agent is spelled out in a buyer agency agreement
before you make an offer to purchase property and that you carefully read and
understand the compensation provision.
You may permit an agent or firm to represent you and the seller at the
same time. This "dual agency relationship" is most likely to happen if you
become interested in a property listed with your buyer's agent or the agent's
firm. If this occurs and you have not already agreed to a dual agency
relationship in your (written or oral) buyer agency agreement, your
buyer's agent
will ask you to sign a separate agreement or document permitting him
or her to act as agent for both you and the seller. It may be difficult
for a dual agent to advance the interests of both the buyer and seller.
Nevertheless, a dual agent must treat buyers and sellers fairly and equally.
Although the dual agent owes them the same duties, buyers and sellers can
prohibit dual agents from divulging certain confidential information about them to
the other party.
Some firms also offer a form of dual agency called "designated agency" where
one agent in the firm represents the seller and another agent represents the
buyer. This option (when available) may allow each "designated agent" to
more fully represent each party.
If you choose the "dual agency" option, remember that since a
dual agent's
loyalty is divided between parties with competing interests, it is especially
important that you have a clear understanding of
- what your relationship is with the dual agent and
- what the agent will be doing for you in the transaction.
This can best be accomplished by putting the agreement in writing at the
earliest possible time.
Seller's Agent Working with a Buyer
If the real estate agent or firm that you contact does not offer buyer
agency or you do not want them to act as your buyer agent, you can
still work with the firm and its agents. However, they will be acting as
the seller's agent (or "subagent"). The agent can still help you find and
purchase property and provide many of the same services as a
buyer's agent.
The agent must be fair with you and provide you with any "material facts" (such
as a leaky roof) about properties.
But remember, the agent represents the seller—not you— and therefore must try
to obtain for the seller the best possible price and terms for the seller's
property. Furthermore, a seller's agent is required to give the seller
any information about you (even personal, financial or confidential information)
that would help the seller in the sale of his or her property. Agents must
tell you in writing if they are sellers' agents before you say anything
that can help the seller. But until you are sure that an agent is not a
seller's agent, you should avoid saying anything you do not want a seller to
know.
Sellers' agents are compensated by the sellers.
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