Who Does The Agent Really Work For?
In many states, the sub-agency has been eliminated. In these states, if an agent is working for a buyer, he or she is a buyer agent. In this case the buyer must pay the percentage or fee to the broker or agent. If the agent is working for the seller, he or she is a seller agent (or conventional). That clears up some of the confusion. If the subagent t1 or the buyer broker is also the listing2 broker, he or she is known as a dual agent.
So let?s make it clear: If you haven?t hired a buyer broker and signed an exclusivity contract with him or her, and if you?re not living in a state that mandates buyer brokerage, you?re most likely working with a seller or conventional broker or agent. Don?t think now that working with a conventional broker or seller broker/agent is worse than working with a buyer broker/agent. That is not always the case. For years conventional brokers were the only game in town. They?ve helped millions of buyers successfully purchase homes. But if you have a choice, go with a buyer agent or broker. Remember, you want to work with the very best agent/broker you can. A seller broker may be a better choice for you than a buyer agent/broker who doesn?t really know the particular neighborhood that is of interest to you.
1 The subagent is an agent or broker who brings the buyer to the property. Although it appears to be working for the buyer, they are paid by the seller and have a responsibility by the seller. 2 The listing is a legal procedure, where a property will be listed for sale by a broker in return for a commission
How Agents and Brokers Get Paid When a person wants to sell their home they usually contact a local real estate agent. The agent views the property, estimates what the selling price should be, and advices the seller of any other things that need to be done to the property to make it more saleable.
The seller and the agent sign a contract that the house will be listed by the agent and that the agent will receive a certain percentage of the selling price when the house closes (or sells). When the property is sold, the seller?s agent who got the listing gets his or her percentage of commission. The seller?s agent then takes part of that amount and gives it to the buyer agent. This percentage of split is determined by prior agreement. For the real estate agency, it is more profitable when both the buyer agent and the seller agent are working for this agency. This way, the agency will get the entire percentage of the selling price as listed in the contract, as opposed to having to split it with an agent who works at another agency.
The Agent?s/Broker?s Obligations A good agent or broker has more obligations, which are significant for you in the buying process. Here are the most important four obligations a good agent or broker should have to you: 1. Eyes and ears ? A good agent or broker is supposed to act as your eyes and ears, prescreening homes no the market, finding out why a home is for sale, and selecting the homes he or she thinks might be right for you. 2. Less legwork ? A good agent or broker is supposed to do at least some of the necessary legwork, which means walking through the available homes and eliminating those that won?t meet your needs and wants, or your standards. 3. Guide you ? A good agent or broker will make the appointments for you, chauffeur you around from showing to showing, help you understand the good and bad features of a house, provide you with enough information to create an offer, and than present that offer to the seller and seller agent or broker. 4. Educate you ? A good agent or broker will educate you about the home buying process and the local real estate market. He or she should be able to point out the good and the bad, so you can make an inform decision. What Not to Say to Real Estate Agents Never let your real estate know that you are willing to know that you are willing to go higher in an offer for a home. The higher the selling price, the more commission they make. While it is not ethical, your real estate agent may be tempted to tell the sellers that you are willing to pay more.
Traps Used to Make the Sale Very important is to know what motivates your agent or broker. You?ll know this if you know how real estate agents or brokers get paid. Don?t forget these two important factors: 1. It is more profitable if the same agency that list the property also sells it. 2. It is more profitable to sell the property at the highest price possible. Most of the real estate agents or brokers do not defraud in order to get the sale. However, the following are some of the more common traps used to push a sale. a. Amplifying the value of the house. Real estate agents or brokers can increase the worth of the house in a number of ways. These two are the most common of them:
1. Showing you houses listed at a higher price range as than the homes are actually worth. Once you have seen a few over-priced houses, the agent show you a house that is properly priced, but still in the same high price range. There are two problems here: 1. The high-priced homes may be beyond what you want to pay 2. The over-priced homes you looked at may not be a good example of what is available for that price. This manipulation makes the one properly-priced home look like a great offer. 2. Using the asking price of similar homes and not the selling price when making a comparable calculation. This make homes look like they are worth more than the market value and again may push you into considering property above what you decided was your limit.
If you want to know the worth of a particular house, ask that the real estate agent or broker show you similar homes that have recently sold at a similar or comparable price. A good agent or broker should be able and willing to give you this information. If yours is not, consider getting a different agent or broker. b. Rushing you to make an offer. The real estate agent or broker may also rush you to make an offer by saying you that they have heard that someone else is making an offer on that property right now, so you must hurry. That there are times when people are standing in line to make an offer for a particular piece of property, is totally true. But normally this happens very seldom.
Another time when you could be rushed to make an offer is after you made the offer. The seller rejects the offer and come back with a counteroffer 3 that is more money that you want to spend. I personally do not like playing games with the real estate purchase. When I make an offer on a property it is usually fair and in accordance with what I believe the property is worth and what I can afford. If the sellers counters with an amount that is outside of my budget or I feel is outrageous for the property, which means he is not acting in good faith and I look for another property. You?ll have to be careful, because many agents or brokers want to urge you to meet the sellers offer, to extend yourself more and do it right now. You will be urged to do this immediately before someone else buys the property -- before you get the chance to think.
3A counter-offer is when the seller or buyer responds to a bid. For example if you decide to offer $100,000 for a home listed at $130,000, the seller might counter your offer and propose that you purchase the home for $120,000. That new proposal, and any subsequent offer, is called a counteroffer.
Buying a home is one of the biggest decisions of your life and you do not need to be pushed into making it before you are ready. When you find the right home you will not be asking for time to decide. The decision will feel right.
About the Author: Carey Pott is an experienced mortgage broker and owner of January Financial in Foothill Ranch, CA. You can find more information on mortgage financing at http://www.januaryfinancial.com.
Carey is also a frequent contributor to many websites with mortgage articles, including http://www.homeexpertsonline.com.