Buyers/Selling
WHY USE A REALTOR®?
All real estate licensees are not the same. Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly display the Realtor “®” logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.
Here are several reasons to use a REALTOR®
- Your REALTOR® can help you determine your buying power- that is, your financial reserves plus your borrowing capacity. If you give a REALTOR® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders – banks and mortgage companies – offer limited choices.
- Your REALTOR® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agency to find all available properties.
- Your REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of information resources. REALTORS® can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
- Your REALTOR® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
- Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of the property and can be mired in confusing status of past owners or right of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR®, title company or attorney can help you resolve issues that might cause problems at a later date.
- Your REALTOR® can help you understand different financing options and in identifying qualified lenders.
- Your REALTOR® can guide you through the closing process and make sure everything flows together smoothly.
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WHAT IS A BUYER BROKER AND SHOULD I USE ONE?
How can a broker have my best interests at heart when he or she is being paid by the seller? How can a broker help me find the best property at the best price when he or she is bound legally and financially to serve the seller’s best interests? If you find yourself having these qualms about traditional brokerage, you may want to consider buyer brokerage. You find a buyer broker you want to work with and then sign an exclusivity contract that states that you will not look for a house with another broker for a specified period of time. The buyer broker will hunt for homes that are appropriate for your needs and budget. He or she will negotiate every facet of the contract, striving to get you the best price and terms. Some buyer brokers will even help you find the best mortgage and home owner’s insurance with the most favorable terms. Then the broker will represent you at closing.
A buyer broker is completely on your side, bound by contract to provide you with all the information you need to buy your dream home at the lowest price possible and the most favorable terms. Experts say buyers generally have trouble with two facets of buyer brokerage: the exclusivity agreement and the payment for services rendered. When a buyer opts for buyer brokerage, he or she is asked to sign an exclusivity agreement. According to
most of these contracts, the buyer agrees to work only with the buyer broker for a certain
amount of time. If the buyer purchases a home within the exclusivity period, he or she will owe the broker a fee. Sounds simple enough, but buyers, who are used to changing agents at will, sometimes find the idea of exclusivity disquieting. If you feel that a ninety day exclusivity period is too long, offer a thirty day term that is renewable. A good buyer broker will understand your nervousness (you’re not the first to feel this way) and should be happy to make you feel comfortable; thirty days will be enough time for you to decide if you like the buyer broker’s services. Payment of fee is another issue-especially for first time buyers who are often short on cash. In the real world, the buyer broker’s commission is usually paid by the seller. What happens is the seller’s agent agrees to split the
commission with a cooperating agent.
There are many reasons to choose to work with a buyer broker, but the most obvious one is hardly ever mentioned. Because the buyer broker works for the buyer, he or she is free to bring the buyer to any property that is available, including those that are For Sale by Owner.
Is a buyer broker the right choice for you? More buyers, especially first timers, are choosing buyer brokers because they like having someone represent them. As when making any selection, interview a buyer broker and a seller broker and decide who will help you most.
CHOOSING YOUR AGENCY RELATIONSHIP
For the protection of anyone who is considering buying or renting a home, Virginia law requires a REALTOR® to define the type of agency relationship they are offering between the agent and the buyer/renter. In order to do this, an Agency Disclosure form must be presented to determine agency relationship.
Important Terms
Agent: Person (in our case, the REALTOR®) who works for or represents another person.
Principal: Person represented by Agent. In Real Estate, the principal may be buyer or seller.
Client: Another name for the Principal who is represented by the Agent.
Customer: Party in a sale or rental who is not represented by the agent. It is important to remember that working with an agent does not mean the agent represents you. You must create an agency relationship, with an agreement, to become a client instead of a customer.
Agency: Agency is the relationship between Agent and Client/Principal. Agent owes certain duties to the Client/Principal such as loyalty, following instructions, disclosing helpful information, keeping allowable confidences, and giving advice regarding the process of buying and selling Real Estate.
What are your options?
Seller Representation: Agent assists Buyer in finding a property, but is responsible for representing Seller. Agent is known as Seller Agent.
Buyer Representation: Agent assists Buyer in finding property and is responsible for representing Buyer. Agent is know as Buyer Broker.
Why would a buyer want to work with a buyer broker?
Property Value Assistance: When Agent represents Seller, Agent must remain loyal to Seller’s interests. Advising the Buyer to offer anything but the list price would conflict with the Seller Agent relationship. On the other hand, Agent representing Buyer may provide any knowledge or information available to Agent to establish fair market value of home or confirm fairness of price.
Negotiating Expertise: Often Agent’s Real Estate experience can provide Buyer with special insights when negotiating terms, conditions, amenities or price of property within the neighborhood with the Seller.
A Clearly Defined Relationship: Many Buyers have a concern that the Agent is only interested in making a sale. When Agent represents Buyer, Agent is bound by law to keep Buyer’s interests before their own at all times.
Why wouldn’t a Buyer want to work with a buyer Broker?
Commitment: Buyer Brokering requires a written commitment to work with a particular Agent. However, for many years, Sellers have recognized the benefit of selecting one Agent with whom they can build a trusting relationship, and holds accountable for their performance.
Money: Most Buyers do not understand how Agent will be compensated. Since most Buyers are accustomed to Seller compensating Agent for their services, Buyers have concerns with whether they will be responsible for compensating Agent. However, in their listings, most Sellers authorize the paying of a commission to a Buyer Broker.
Marketing: Many Buyers are never told about their option of selecting a Buyer Broker.