| Does Your Real Estate Agent Really Work For You? |
If you are thinking of buying a new home, it is in your best interest to know the difference between seller, purchaser and dual real estate agents. Using the wrong style of agent could affect the cost of the house you buy and have substantial legal implications. Read on to arm yourself with an understanding of the difference and how to use it to your advantage when buying a home.
There has been a significant amount of talk over the past few years about buyer's agents and seller's agents. Real estate law now obligates an agent to indicate who they are representing. This is more often than not done early in the process through a disclosure document that you must sign that identifies whether the agent is aligned with the purchaser or seller. A seller's agents represent the seller. Most real estate agents who show and market houses are seller's agents. The agent is may be friendly to you as a possible buyer, show you multiple homes and help you through the offer process. However, the agent is typically representing the seller and looking out for the interests of the seller. Conversely, buyer's agents actually work for the purchaser and have an obligation to look out for the interests of the buyer. There are also dual agents, but we’ll come back to that in a moment.
Generally, this has little to do with who really pays the agent. Why should you be concerned about this? If you are the purchaser, you want to use a buyer's agent because of the financial, legal and ethical implications. A seller's agent has a fiduciary duty to the seller not to you as the buyer. Accordingly,during the negotiations a seller's agent will be negotiating for the seller. Here's a real life illustration to help clarify. Suppose an agent learns that the seller has a significant personal event, has become highly motivated and is now willing to accept $25,000 under the listed price. If the agent is a purchaser's agent - working for you - he/she will be obligated and likely excited to tell you this news. However, if the agent is the seller's agent aligned with the seller - he/she will not have to reveal this information to you and may keep the essential fact initially in an effort to get the greatest offer from you.
Now, back to dual agents. Occasionally your will find an agent that says the agent is are practicing in a dual role; meaning the agent is are performing as a purchaser and seller agent. Be cautious in this home sale/purchase. As a buyer you may want to avoid a dual agent. In reality, the dual agent is unable to fully represent the purchaser's interests without adversely affecting the seller and visa versa. There are some exceptional agents that can operate effectively in the dual role. However, as a purchaser, you should appreciate the possible conflict. If you want the bottom price on a home, seek a first-class buyer's agent whose loyalties are aligned totally with you.
You may be wondering who really pays for a purchaser's agent. Usually the selling agent lists the house in the MLS ("multiple home service") and evenly divides the commission with the agent who brings the purchaser. More often than not, the seller's agent and the buyer's agent share the real estate commission with fifty percent going to each agent. This means that although the buyer's agent is representing for you, the seller is funding the commissions to the purchaser's agent. On occasion you may find a home where the selling agent will not agree to split the commission with the agent who brings the buyer and in that case you would have to settle on who will pay for the buyer's agent.
Understanding the financial, legal and ethical implications of buyer, seller and dual agents is consequential to you as a home buyer. Prior to hitting the market to look for a new home, find yourself a positive purchaser's agent with at least 7-8 years of expertise in your market. They will be aligned with your interests and have the expertise to help you agree the lowest price for the home.
Kristi Cole is a real estate and home remodeling expert at  www.inhomeimprovements.com
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