BUYERS: Are You Jeopardizing Your Purchase?

April 26th, 2007 category: Real Estate News, Real Estate Philosophy

Purchasing a home is a huge financial obligation. You know that.
Purchasing a home comes with complications- if you don’t know that, you’re about to find out.

Purchasing a home can be a JOY, or it can quickly turn into a bad experience, then a joy again, then an issue, etc.

If you drive around, see a Realtor Open House, and decide to stop in, keep this in mind: The moment that you conduct any conversation with respect to that property with the agent, you are jeopardizing your opportunity to be represented by a real estate agent hired BY you, to PROTECT your interests. This was not your intention- you were simply curious. Understanding the basics of buyer agency is an important part of any home buyer’s strategy, and an unintentional action on your part shouldn’t cost you financially, but it can.

A BUYERS AGENT is an individual hired by you, with an agreement that your best interests are the job description for this individual. It is incumbent upon this agent to oversee your purchase and make certain that you are treated fairly, provide all available impactful information, and LOCATE THE PROPERTY OF YOUR CHOICE FOR YOU.

For this service, the agreement that you sign will include a commission amount due the agent upon the closing of said property- it is a contract between you and the agent. It does not involve any party on the selling side until a property is located by your agent, you sign a purchase agreement for said property, and the seller agrees to pay the fee that is your obligation under the buyer agency contract. Typically, the listing agreement signed at time of listing includes a fee to cover buyer agency- it’s common and normal practice. If you don’t involve a buyer agency in the transaction, and utilize a sellers agent, the same fee is paid by the seller of the home.
Sound easy? It can be, and for you, it absolutely should be. Problems arise, however, when sellers agents observe that you arrived unrepresented, developed an interest in the property, and (unfortunately, without your written consent) waived a buyers agency fee that their seller would have paid. How did this happen?

When your buyers agent was not present, an important inclusion to your contract was also not present- buyers agents are responsible for locating a property for you. The contract has been compromised in the eyes of the selling agency. They would prefer to keep ALL of the commission on the transaction than split it with a buyers agent that had nothing to do with locating the property- YOU found it, driving around, maybe seeing the ad that they paid for. It’s business- and whether it’s fair or not, the new can of worms that has been opened is WHO PAYS THE BUYERS AGENT in the transaction? This is when the fingers start to point at YOU, the buyer…

There was a definite missing link to the purchase in this scenario- your buyer agency may not be enforced. Any attempt of enforcement of this by an agent that you hire is compromised by the circumstances. The fact remains- regardless of the squabbling between the sellers agent (NOT the actual seller of the home) and your hired agent, you now do not have representation in this transaction from a your Realtor. Not an outcome that makes anyone happy (except the selling agent).

As a buyer, DECIDE as soon as you start looking IF you want representation from a buyers agent. If you do, be aware of potential scenarios that may jeopardize your representation, and avoid them. If you see a home that you love, resist the temptation to call the sign, or be present at an Open House without your agent. They’ll drive fast and furious to accommodate you- let them. If they don’t, they know the rules.
If you are considering a new home, do NOT VISIT the sales center without your agent. If you just absolutely can’t help it, let the person on-site know that you have a buyers agency, and tell them that you will not purchase without assistance from your agent, who will be paid by the builder. Be up front, and if they suggest that you return with the agent, once again, call and tell them to meet you…now.

While it might sound drastic, it is what it is. Real estate agencies can decide to kink your buying experience, through nothing more than following the legal documents and contracts signed by you. Just READ THEM, and make your own decision about what’s best for YOU and your situation.

This entry was posted on Thursday, April 26th, 2007 at 10:27 pm and is filed under Real Estate News, Real Estate Philosophy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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