Your Merrimack Valley/North Shore Real Estate Experts

 

THE INFORMATION COMPILED HERE RELATES TO COMMONSENSE APPROACHES TO WORKING WITH REAL ESTATE AGENTS AS BOTH BUYERS AND SELLERS

 

FROM THE BUYER’S PERSPECTIVE;

We have assembled some guidelines you can use while shopping for a home that will keep you from getting into hot water with your real estate agent:

First, understand that agents work on commission, not on salary. If an agent doesn't close a transaction, he or she does not get paid. You are probably not that agent's only client! Don't make an appointment with an agent and then forget to show up. If you are going to be late, call and let your agent know when you expect to arrive.

As a Buyer you can and should choose a real estate agent to work in your best interest. This Buyer’s Agent will keep your information confidential and negotiate as a professional to obtain the best results possible. Typically, a Buyer’s Agent will not cost you any more money because he or she is typically paid from the proceeds of the sale. Ultimately a Buyer's Agent is more likely to save you money

Although it is not a recommended practice, you can deal directly with listing agents, however you must keep in mind that if you do that, the agent is compelled by law to share any and all information about you; such as personal motivation, financial ability, willingness to pay a higher price, etc. with his or her Client, the Seller.  

Do not call the Listing Agent if you are working with a Buyer’s Agent.

Remember that Listing Agents work for the Seller, not the Buyer. If you work with the Listing Agent, he or she will be representing the Seller. If the Agent agrees to represent both you and the Seller that Agent will now be working under Dual Agency. In that situation under Massachusetts Agency Law, the agent is restricted to acting as a Facilitator and is working the transaction and really not representing the best interests of either the Buyer or the Seller. If Listing Agents show you the property without knowledge of a Buyer's Agent, the Listing Agent will expect you to work with only them. To have a smooth buying experience, call your Buyer's Agent to make the appointment and let him or her do their job.

Practice open house protocol. Hand your Buyer’s Agent's business card to the agent hosting the open house. Sometimes this Agent will be the Listing Agent, but often it is an Agent also looking for unrepresented buyers. Announcing you are represented protects you. Do not ask the open house host questions about the seller or the seller's motivation. Let your Buyer’s Agent ask those questions for you.

When working with a Buyer’s Agent, be sure to sign a Buyer's Agency Agreement with a Buying Agent. It creates a relationship between you and the Agent, and explains the agent's duties to you and vice versa

Let your Buyer’s Agent know how you want him or her to communicate with you and how often. Do you want phone calls, emails, text messages, AIMs or all of the above?

Set realistic goals and a time frame to find your home. Ask your Buyer’s Agent how you can help by supplying feedback. If you are displeased, say so.

Do not feel silly for asking your Agent to explain a form to you. It is his or her job. Many forms are second nature to Agents but not to you, so ask for explanations until you are satisfied.

Realize Agents are not lawyers and cannot interpret law.

Be ready to buy. If you aren't ready to buy, you should make your intensions known and hire a Buyer’s Agent with the understanding that you are just looking right now. You can go to open houses by yourself with your Buyer’s Agents business card in hand. This will keep the Listing Agent from hounding you. If you become interested in a particular property, your Buyer’s Agent will schedule an appointment to view the property with you and assist you from that point on. Your Buyer’s Agent is knowledgeable of the market and the area. While you are in the “Looking” stage, he or she should provide you with up-to-date information on all aspects of the market as well as specific knowledge of the available properties to help you make the best use of your personal time.

If possible, hire a babysitter to care for children who are too young to stay out all morning or afternoon touring homes. Unhappy board children do not make happy house hunters.

Bring your checkbook. You'll need it to write an offer because earnest money deposits of $500.00 are expected to accompany an Offer.

When you are ready to be serious about buying, be clear about what you want. Make a list of your priorities numbered 1 through 10 and give it to your Buyer’s Agent. You can always revise the list, but give him or her something concrete so that he or she can research available listings more efficiently.

A Seller has an obligation to level with his Agent. If there is a serious flaw in the property, the Seller is obligated by law to disclose it. The Agent may have a way of actually dealing with the problem or of marketing the property to minimize the negative impact. Some "flaws" such as a murder or suicide in the house (usually called stigmas) may not need to be disclosed to buyers unless specifically asked, but if the flaw is one that must be disclosed, the Seller and Agent can end up in serious legal difficulties for withholding negative information.

A Buyer also owes his Agent loyalty. There is no reason to work with more than one agent in a market area. It is unfair to every agent involved and can ultimately work against the Buyer. In fact, with Buyer Agency, the Buyer is legally obligated to work only with his agent and if he buys a property directly from a For Sale By Owner (FSBO) or through another agent he may actually be responsible to pay his Buyer’s Agent a commission.

 

FROM THE SELLERS PERSPECTIVE:

When you're ready to sell your home, your Real Estate Agent will take care of all the details and concerns of the selling process. Agents are responsible for placing advertisements, showing the property, running open houses and navigating the closing process. Additionally, agents are trained to generate a Comparative Market Analysis (CMA) of your home to determine whether the asking price is relevant for the area and the current trends of the market. This analysis is also important when you consider buying a home. By performing a CMA, your agent will be able to tell you if the property is priced appropriately.

While Agency Laws require a certain standard of conduct on the part of the agent, the customer or client has responsibilities too.

If you are selling, create an information sheet that lists your home's features and best qualities, especially those you know others might overlook. Give this to your Listing Agent, who may be able to use the information in marketing materials or when talking with potential buyers.

When selling, talk to the Real Estate Agent about cosmetic improvements. Your home may need fresh paint or new carpeting. (Choosing neutral colors are a relatively safe bet.)

This may seem obvious but when listing your property for sale; you will have many issues on your mind. Some important reminders would be to make sure you keep the main areas of the home clean. Eliminate cobwebs and dust. Keep the kitchen counters, bathroom counters and mirrors wiped down. Vacuum and sweep daily during the selling process. This will make the situation much less stressful when the Listing Agent calls to tell you that a Buyer is interested to view your home.

 

AGENCY:

Real Estate Agents:

Nonexclusive Buyer Agents subscribe to the practice that the agent represents either the buyer or the seller, but never both in the same transaction. Because these "buyer" agents work in offices where listing agents represent sellers, find out how the agent will handle a conflict of interest. Will they then become dual agents?

Seller's Agents. More straightforward is the Selling, or Listing, Agent. Working under the umbrella of a real estate firm, this Agent works with the Seller to establish an appropriate sale price for the home then markets that property.

When a seller engages the services of a Listing Broker or Agent, that Seller becomes the Agent's client. The Agent owes the Seller undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. He or she must put the Seller's interest first and negotiate for the best price and terms for their client, the Seller. (The Broker may also authorize other agents associated with the Broker to represent the Seller in marketing the property to buyers).

Any personal and financial information given by a potential buyer to a Seller's Agent must by law be told to the Seller. Buyer beware!

Dual Agents. Today most Real Estate Brokers offer buyer and seller agency, so it is not unusual for a Buyer Client of a Buyer’s Agent to buy a home listed by another Agent (Seller’s Agent) in the same office. In such a case, the Agents do not become “Dual Agents”. The only occurrence of an Agent becoming a Dual Agent is when he or she is acting as the Listing Agent of the Seller and is representing a Buyer for that Seller’s property. This is called "dual agency" because the Agent is representing both sides of the transaction. This dual allegiance should be fully transparent and disclosed to both buyer and seller, but is neither unethical nor illegal. And, it is, of course, common for a single agent, (let's say Kristine, an agent with Coldwell Banker Residential Brokerage Real Estate) to list a home (Ken Snell’s) and thus represent Ken as a seller agent; and contract to represent Bob Johnson as a Buyer Agent throughout his home buying experience. Two separate buyers, two separate transactions, so Kristine can certainly perform both roles independently of each other.

But what happens if Bob Johnson falls in love with Ken Snell’s house and wants to buy it? Can Kristine represent Bob as a Buyer Agent and represent Ken as a Seller’s Agent, in other words, act as a dual agent?

Certainly Kristine is ethically, and legally, required to divulge to both of her clients the existing relationships. Bob is likely aware of Kristine’s relationship as Listing (Seller's Agent); her name is on the listing sheet and probably on a great big sign in front of the house.

Ken, however, has no way of knowing that Bob is a represented Buyer. Once the dual agency is disclosed and with the consent of Buyer and Seller, Kristine clearly must cease advocating for either of her clients and become a facilitator. Even better, if the size and structure of the office permits it, Kristine should step aside and let her manager and/or another agent in the office represent her Buyer Client, at least during the negotiation process.

A Broker or Agent can work for both the Buyer and the Seller on the same property provided such Broker obtains the informed consent of both parties. The Agent is then considered a disclosed dual agent. This Broker owes the seller and the buyer a duty to deal with them fairly and honestly. In this type of agency relationship the agent does not represent either the seller or buyer exclusively and they cannot expect the agent's undivided loyalty.

Undisclosed dual agency is illegal. Disclosed dual agency is legal only if there is full disclosure of potential conflicts of interest and the implications of service to both the Buyer and Seller.

Designated/Dual agency is when one Real Estate Agent in a company is appointed (designated) to represent the Buyer and another Agent within the same company is appointed (designated) to represent the Seller. This means the same real estate office may now represent both the Buyer and Seller of the same property!! Every client must understand all the implications of the conflicts of interest inherent in Designated/Dual Agency. Such as:

When an Agent discloses to you that their brokerage/company is a designated agency, you the consumer must understand that your relationship is limited, the rest of the brokerage or company does not represent or protect you.

COMMISSION:

Once you find your home and the deal is sealed, your Agent is most likely paid by commission. The Listing Broker, for whom the listing or Seller's Agent works, typically requires that sellers pay a percent of the sales price. Because most real estate transactions involve two Agents, the Agent who finds the Buyer and the Agent who finds the Seller, the commission is usually split between the two brokerage offices. Then, within each office, the Agent who handled the transaction gets a share.

There are a few exceptions to the commission method of payment. If you use a Buyer's Agent, the contract you could be required to sign may or may not require a fee for services or a fee in addition to the commission. Most Buyers' Agents, however, simply split the commission with the Listing Broker. In any event, the Buyer's Agent contract stipulates that the Agent works exclusively for you and is required to work with your best interests at heart.

AGENTS:

One of the most complex and significant financial events in peoples' lives is the purchase or sale of a home or investment property. Because of this complexity and significance, people typically seek the help of Real Estate Agents when buying or selling real estate. Real Estate Agents have a thorough knowledge of the real estate market in their communities. They know the local neighborhoods to work within the clients' needs and budgets. They are familiar with local zoning and tax issues and know where to obtain financing. Agents also act as intermediaries in price negotiations between Buyers and Sellers.

During your initial meeting, Agents typically help you determine the viability of your wants and needs in both a community and a home. In this pre-qualifying phase, the Agent helps determine how much the buyer can afford to spend. The Agent will help you find suitable financing, and tell you what to expect as you shop for a home. Your Agent will also devise a strategy or shopping plan based on your needs, how much you can afford and current market conditions. In addition, the Buyer’s Agent and the Buyer usually sign a “Buyer Agency Contract” which states that the Buyer’s Agent will be the only Agent working with the Buyers. He or she will then generate lists of properties, their location and description and available sources of financing. In some cases this will be done face to face or in other cases as dictated by the needs of the Client, the Agent will make arrangements through the internet or other sources to provide the Client with the latest and most up-to-date data that the Client is looking for.

Agents may meet several times with prospective Buyers to discuss and visit available properties. Agents identify and emphasize the most pertinent selling points. To a Buyer looking for a house, they may emphasize the convenient floor plan, the proximity to schools and shopping centers. To a potential investor, they may point out the tax advantages of owning a rental property and the ease of finding a renter. If bargaining over price becomes necessary, agents must follow their client's instructions carefully and may have to present counteroffers in order to get the best possible price.

Once both parties have signed the “Purchase and Sales Agreement” contract, the Real Estate Agent must make sure that all special terms of the contract are met before the closing date. For example, the Agent must make sure that the mandated and agreed-upon inspections take place. Also, if the Seller agrees to any repairs, the Agent must see that they are made. Increasingly, Agents are handling environmental problems as well, by making sure that the properties they sell meet environmental regulations. While loan officers, attorneys or other persons handle many details, the Agent must ensure that they are carried out.

To help you buy a home, your Agent must have a vast working knowledge of the Real Estate Market, including price trends, neighborhood conditions and amenities, real estate law, zoning issues, financing, taxes, insurance and negotiating. The best Agents are also "street smart" in the psychology of home buying and the stresses that accompany it.

When you have a question, concern or idea as you shop, your Agent should be able to respond either directly or by referring you to someone who can help. An Agent cannot arrange a mortgage or other financial deal. However, hiring an Agent to represent you will give your Agent license to advise and recommend mortgage lenders, inspectors, attorneys and other professionals for the buyer to interview.

On top of all the advantages of a Real Estate Agent's inside knowledge and information, you should also expect a strict fiduciary responsibility from your Agent to ensure that your best interests are being represented in each transaction. If your Agent is a member of a Local and/or National Board of Realtors, you have the added assurance that they are held to a very strict code of ethics by an organization that takes their reputation seriously and does not look lightly on infringements of its rules and regulations. Agents are also required by the Real Estate Commission to complete additional hours of continuing education each year in order to remain licensed. Therefore, your Agent will be expected to represent you at a very high standard of competency by agencies that have the clout to enforce it.