WHY SHOULD YOU USE A BUYERS AGENT?
Research shows that most homebuyers understand very little about whom their agents represent and its vital importance. While state law requires agents to disclose whose side they are on, most required disclosures are woefully inadequate, poorly explained, glossed over, minimized, and downright confusing.
A growing number of Brokers represent only the Buyer, which are known as Exclusive Buyer Agents (EBA) or as Exclusive Buyer Representation.
ALL REALTORS ARE NOT ALIKE.
There are four types of Realtors:
1. SELLER AGENTS list property and represent the seller. Remember that if you are buying a home and call the listing company, it is the legal obligation of the company's agents to get the highest price and best terms for the seller. Any information given by a prospective homebuyer to the sellers agent must be told to the sellers. This includes any reference to the buyer's financial and personal data, potentially increasing the cost of the home by thousands of dollars.
2. DUAL AGENTS (ILLEGAL IN FLORIDA) are real estate agents whose company lists property for sale, but act as buyer agents on those properties. Unfortunately, for buyers and sellers, dual agents are legal in most states. While dual agents attempt to justify this practice, consumer advocates warn NEVER to use a dual agent. The National Association of Realtors wrote that the practice of dual agency is as dangerous as playing Russian Roulette. If a real estate company lists property and represents the seller--you can strongly doubt any attempted claim that their agents can properly represent homebuyers.
3. TRANSACTION BROKERS (ALLOWED IN FLORIDA) are also known as a facilitators, finders, and statutory agents. These are true non-agents because there is no liability for wrongdoing. The attempt by a growing number of real estate agents to avoid the responsibility owed to buyers and sellers is legal in a few states (including Florida). Services by transaction brokers are substantially reduced from those of true agents, and should be avoided by all sellers and buyers.
4. EXCLUSIVE BUYER AGENTS -- represent homebuyers--never sellers. These agents are required by law to get the best price and best terms for the Homebuyer. All consumer advocates recommend that homebuyers take advantage of the benefits offered by exclusive buyer agents.
Exclusive buyer agents are specialists in the home buying process. This higher level of professional service for buyers has resulted in an average of over 5% savings and greater satisfaction for homebuyers. Because these agents do not list property, they do not have company listings to try to sell to you first. Instead, all homes are available to homebuyers without bias, including For Sale By Owner, New Build Construction by homebuilders, and Multiple Listing Service homes (other Realtor listings).
Exclusive Buyer Brokers will better protect the interests of buyers than dual agents, sub-agents, designated agents, or so called split agents. They are more likely to negotiate a lower sale price on a home, for example.
THE CFA RECOMMENDS ASKING IMPORTANT QUESTIONS:
According to the Consumer Federation of America (CFA),when interviewing real estate agents or buyer brokers to buy a home,"Make certain at least one is a Buyer Broker that works exclusively with buyers."
1. Will you (the agent) represent my interests only or those of the seller?
2. Do you have full access to the Multiple Listing Service?
3. Will you show me for sale by owner properties?
4. Can you give me the names of several current and former clients?
5. What experience do you have as an agent and Buyer-Broker?
NO DUAL, DESIGNATED, OR SPLIT AGENTS!
By agency law, a listing real estate company and all of their agents represent the individual(s) selling the home. If they say they can represent the buyer and the seller, that is dual agency or transaction brokerage in Florida. Confused? So are most traditional brokers and agents! If they try to minimize or downplay its importance to you be very careful. It is at this point that dual or split(transaction) agents may begin to protect their commission checks rather than your interests. An Exclusive Buyer Broker does not take listings and never represents sellers. They will not "steer" you into looking at their company inventory of homes for sale, because they do not have any!
SHOULD YOU USE AN EBA WHEN BUYING A BUILDERS HOME OR CONDO?
Yes. It is just as important to use a qualified Exclusive Buyer Agent Realtor in purchasing a new home. Benefits include:
1. There is no additional cost involved to have an Exclusive Buyer Broker represent you. The builder cannot give you any cash back because you are not licensed as a real estate agent. It would be illegal, so therefore the builder cannot give anything back to you, the buyer.
2. Knowledge and history of various developments help match the buyer with the right community.
3. Knowledge of builders' pricing strategies helps buyers determine best negotiating strategy.
4. Knowledge of other builders of equal and greater quality help buyers get the best builder for the money.
5. Knowledge of builders' reputations regarding quality, follow- up, warranty, and financial stability, help prevent problems after the sale is closed.
6. In many cases, lower prices or other concessions are offered to buyers with buyer agents, as builders consider these agents as "multiple sources of buyers." Individual buyers buy only one home; buyer agents bring in many buyers.
Be sure, however, to use only Exclusive Buyer Agents who can help buyers with both new and existing homes. So-called new home specialists often do not have access to or knowledge of existing homes and may have monetary relationships with builders, which can cost you thousands.
SELLING YOUR HOME: CAN AN EXCLUSIVE BUYER AGENT HELP YOU?
Yes. An Exclusive Buyer Agent only represents homebuyers and does not take listings. These agents, however, work with hundreds of listing agents which will provide excellent seller representation while the EBA brings buyers for your home.
TOP 5 REASONS TO USE AN EXCLUSIVE BUYER AGENT:
1. The Sellers Agent Is NOT on Your Side.
As the representative of the seller, the Sellers Agent is duty-bound to work against the interests of the properties BUYER, meaning Y-O-U!
As a home buyer, any time you call the properties Listing Agent, you're putting yourself in a vulnerable position. That agent - the one with the name on the yard sign, in the newspaper ad or on the multiple listing service - represents the seller. They may be very well-intentioned, polite and usually professional.
But as noted, they're just doing their job; it simply is not in their interest to tell you things that might be detrimental for their client; the sellers. In fact, even if they wanted to tell you things that might benefit you, they may be prevented contractually or even legally from disclosing critical information.
2. Stay out of legal & financial trouble.
When making an important financial transaction such as buying a home, it's important to know that you are protected in case things don't go as planned.
When an experienced Buyers Agent drafts a purchase agreement, they will include certain contingencies that protect you from issues, such as a loss of financing, failed inspections, insolvant condo associations or unfulfilled promises.
Most importantly, when you have an experienced Buyers Agent representing you, your Earnest Money Deposit is most always held in the Buyers Agents Escrow Account, and NOT the Sellers Agents!
3. Receive Unbiased Data.
Unlike the consumer-based Multiple Listing Service (MLS), a Buyers Agents internal listing program maintains a record of, not only all homes listed by Realtors in a given market, but also what the price of those homes sold for was and much more.
An experienced Buyers Agent will also be able to tell you how long the property your interested in has been on the market, how many price adjustments have been made, if a pre-foreclosure is looming and much more.
An experienced Buyers Agent can also run an unbiased Comparative Market Analysis (CMA) to determine a prospective home's Fair Market Value from the Buyers point of view, not the Sellers. This way, you will know whether or not the seller has their home priced fairly.
And with all the Short Sales and Bank Foreclosures (REO's) in todays market, you really need expert,up-to-date data.
4. Get the Facts...Good and Bad.
An experienced Buyers Agent will provide you with the true facts as to value and up-to-date market/neighborhood conditions derived from the internal Multiple Listing programs that are at the agents disposal.
But an experienced Buyers Agent will also disclose obvious material defects and other informaton that the Listing Agent cannot tell you, the BUYER, because they work for the SELLER. Information that may be detrimental for you and your finances.
Outstanding building permits, for example, can go unnoticed until its too late, costing you untold headaches, not to mention fines that you may be responsible for. Condo associations on the brink of financial collapse is another big concern right now.
5. 100% Representation, Disclosure & Protection.
The Sellers Agents enters into legally binding contract agreement that requires them to ALWAYS act in the best interest of their client, the Seller.
They are the seller's "coach" and will make sure that their clients' best interests are looked after. An experienced Buyer's Agent is there to make sure YOUR best interests are accounted for.
You get an experienced professional who represents only your interests, and protects you throughout the entire purchase transaction.
Did you know?
Only 22 percent of homebuyers are happy with their agent? Homebuyers are increasingly migrating to individual agents, believing that a large brokerage cannot provide the personal response and service that a smaller brokerage can provide.
Consumer Reports states, "You can find a true buyer's agent only at a firm that does not accept listings."
The advantages of using an Exclusive Buyer Agent is that they avoid conflicts of interest by working in the best interests of the buyer and not the seller, avoid homes and neighborhoods likely to fare poorly in the marketplace, ensure the buyer does not unknowingly overpay for a property, fully informs the buyer of adverse conditions, encourages the buyer to make offers based on true value instead of list price, which can sometimes be overstated, and works to save the buyer money.
A buyer agency firm commissioned a study that found EBA purchased homes were seventeen times less likely to go into foreclosure.
A real estate brokerage attempts to do the following for the buyers of real estate only when they represent the buyers with some form of written buyer-brokerage agreement:
- Find real estate in accordance with the buyers needs, specifications, and cost.
- Takes buyers to and shows them properties available for sale.
- When deemed appropriate, prescreens buyers to ensure they are financially qualified to buy the properties shown (or uses a mortgage professional, such a bank's mortgage specialist or alternatively a Mortgage broker, to do that task).
- Negotiates price and terms on behalf of the buyers and prepares standard real estate purchase contract by filling in the blanks in the contract form. The buyer's agent acts as a fiduciary for the buyer.
Due to the importance of the role of representing buyers' interests, many brokers who seek to play the role of client advocate are now seeking out the services of Certified Mortgage Planners, industry experts that work in concert with Certified Financial Planners to align consumers' home finance positions with their larger financial portfolio(s).
