Advantage: Buyer Realty ROCKLAND'S ONLY EXCLUSIVE BUYER'S REAL ESTATE AGENCY

Piermont from the pier

Welcome to the Neighborhood

This website will likely change the way you buy real estate forever! Buyers are no longer willing to be unrepresented in a transaction ó they want to save time, money, and aggravation.


Exclusive buyer broker aims to get the best deal for the home buyer.
—Business Week


You can't have partial loyalty, an agent either works for you or works for someone else.
—Consumer Reports


Groups such as the Consumer Federation and the American Association of Retired Persons recommend using buyer's agents...the reason is they work.
—Smart Money


You save big bucks by hiring a buyer broker.
—Money Magazine


Buyer Brokers make a great deal of sense.
—The New York Times




(from www.bankrate.com)


REAL ESTATE AGENTS NOT ALL THE SAME

You wouldn't — for a lot of good reasons — go into a contested divorce proceeding without an attorney, or worse, take the advice of your spouse's attorney.

Why, then, would you buy a home — an adversarial process regardless of how friendly everyone involved in the transaction seems — without someone on your side?

Oh, you think home buyers have always had representation? Well, think again.

As a buyer, you are not represented unless you've told the real estate agent who is showing you homes that you want that agent to represent you as your buyer agent. If you haven't, your agent could be representing the seller.

agentsRecently, more home buyers have been asking, Who represents whom? As a result, many are opting to be represented by a buyer's agent to take them through the process, from house hunting to closing. The greatest thing about this is it doesn't cost the buyer anything and often saves them thousands.

THE WAY WE WERE

Until a few years ago, real estate was sold the way it always had been — the listing agent obtained the listing from the seller and represented that seller. A second agent, the selling agent, brought the buyer to the table, but was acting as a sub agent (an agent of the listing agent) often unbeknownst to the buyer. In this situation, even though the selling agent may have never met the seller, he or she still had a legal obligation to report to the seller any information the buyer revealed, or any information the agent found out about the buyer's situation that would help the seller's negotiating position. That makes the agents sound evil, but in fact, if they had not communicated the information to the seller, they would have been breaking the law. Both agents had a fiduciary obligationóa legal and moral obligation to work toward the best interests of the beneficiary. The seller was the client for whom agents were working. The buyer was merely the customer.

THE REVOLUTION BEGINS

In 1983, however, a classic study started a revolution in real estate sales. The Federal Trade Commission found that 72 percent of all buyers believed the agent they worked with was representing their interests. That meant that three out of four buyers were providing sensitive information to agents who weren't representing them, as one buyer agent wrote. The report fueled a nationwide legislative agenda that forced the real estate industry to disclose whom the broker or licensee represents in every situation. By 1988, most states had disclosure laws in place.

Janet Branton, former executive director of the 44,000-member Real Estate Buyer Agent Council, says times have changed.

A survey conducted in 2001 found 46 percent of home buyers used buyer representation, Branton says.

REBAC, a wholly owned subsidiary of the National Association of Realtors, trains real estate licensees how to serve the buyer and grants the respected Accredited Buyer Representative designation to agents for reaching certain education and experience standards.

Buyer representation is not the exception anymore, it's the norm, says Branton. Consumers now know they have the right to be represented.

TELLING IT LIKE IT IS

In some states you can still work under the old sub-agent system, or you can choose buyer representation. Many states and the NAR Realtor Code of Ethics, however, now require Disclosure of agency by which any agent is required to disclose his or her legal relationship with a buyer or seller at first substantive contact, That is if you, as a prospective buyer or seller, start telling an agent information that would compromise your bargaining position in any way, the agent should immediately explain agency and give you a choice in how you want to move forward. Unfortunately, some don't, so it's up to you to protect yourself.

Any licensed real estate agent in the United States can legally act as a buyer's agent, although not all have experience doing so. You can also engage what's called an exclusive buyer's agent. This is the purest form of buyer representation, but unfortunately, few firms are able to make a go of representing only buyers, since listings are the lifeblood of real estate, and listings are what make the phone ring.

A listing of exclusive buyer agents can be found at the Web site of the National Association of Exclusive Buyer Agents.

Why choose a buyer's agency? While any agent will arrange property showings, suggest sources of financing, provide accurate information, explain the forms and agreements, and monitor the entire process, a buyer's agent should perform services for you that many the seller's agents can't, such as show you reasons not to buy a particular property; negotiate the best price and terms for you; include contingencies in the contract that protect you, rather than the seller as in most standard contracts; and keep confidential any information that could hurt your bargaining position.

OTHER TYPES OF AGENCIES

What if the house you want is listed by the same agent or firm that's representing you as buyer's agent? In that case, you can agree to:

  • Disclosed dual agency, in which the agent represents both you and the seller.
  • Designated agency, in which your agent continues to represent you while another agent in the same firm represents the seller. Keep in mind that information can leak easily within an office. Designated agency does not provide undivided loyalty of the agent according to NY sate law.
  • Transaction agency, in which the same agent or firm works for both buyer and seller but discloses to both that the agent is not in a fiduciary relationship with either party.

Perhaps the best way out of this dilemma is simply to terminate your agreement with that buyer agent and find another buyer agent not affiliated with that firm, according to exclusive buyer agent Roy Flanders, owner of ProBuyer Associates of Nantucket, Mass.

Designated agency is a loser for consumers, says Flanders, who has been licensed for 25 years and an exclusive buyer agent for the past 10.

The designated agency or transaction broker concept, Flanders says, is being pushed by the mega-brokers who want to keep both sides of the transaction, and works to the detriment of both seller and buyer. He says keeping information private within an office is too difficult.

Designated agency is nothing but a new way to describe disclosed dual agency, he says. It's really nothing more than a more lofty sounding name to still allow the mega brokers to capture a buyer and still do an in-house sale and keep both sides of the transaction and all of the commission. It is designed to circumvent the potential loss of a buyer who wants true fiduciary representation.

YOU GET WHAT YOU PAY FOR

you made it

One thing hasn't changed: Almost without exception, the seller is going to pay an average of 5 percent of the sales price to a real estate firm. Most sellers agree to allow the listing agent to split the commission with the buyer's agent, which means the seller is paying the buyer's agent to represent the buyer against the seller. While many people think that whoever is paying the lawyer or agent is the one getting the best representation, courts have made clear that paying an agent does not automatically mean the payor is the client.

Why would a seller agree to allow half of the commission to go to a buyer's agent who is representing a buyer against the seller? Simple -- the seller wants to sell. And as some real estate agents note, the transaction really funds the commission. Yes, the seller is paying the commission, but the house might be 6 percent cheaper if no agent were involved, so the buyer is really paying the commission in the increased price of the home. The whole idea here is fairness: If the buyer is bringing the money to the table to buy the house, shouldn't that buyer get representation? Finally, after nearly a century, the answer is yes.

The struggle is over. Buyer agency is here. We still need to educate the consumer, but buyer agency has come of age, says REBAC's Branton.

—Christopher Cruise is a senior mortgage banker and freelance writer based in Silver Spring, Md.