If you are a buyer, your agents status is not always as clear. You may for example work with the seller's agent in some states, (known as a dual agent) if you don't have an agent, or other states allow you to use the seller's agent as a transaction broker. Or you may use an agent as a single agent representing you.You can also choose to work with a buyer's broker who agrees in writing to represent only you. Some states presume that an agent who works with a buyer is the buyer's agent.
Make sure to clarify with the agent as to what their status will be, so you will know what the status of your agent is and whom the agent is representing and what their function will be. Before you tell any important information! Most states require an agency disclosure before you start to work with an agent. So if your not given an agency disclosure ask if there is one!
GarWEB.com Network
Buyer's Agent
Contract Cautions
Before you sign a contract to work with a buyer's agent, make sure it specifies an expiration date and fee. Visit our tips & article section to understand about how contracts work and about other transactions.
Getting PreApproved or Pre-qualifying
Seller's and Agents will take you more serious if you are preApproved, becuase seller's know that you are approved by a lender and only need to find the home you want. So seller's and agents know you will be less likely to waste their time. You can start by first pre-qualifying yourself. Learn about the benefits of getting PreAppvoved or Pre-qualified.
Home buyers have had the option to work with buyer's brokers for years!
That is, agents who owe exclusive loyalty to buyers.
Buyer's brokers are active in most major metropolitan areas. Many states have now changed the laws and practices governing agency relationships to do away with the automatic presumption of subagency and better protect buyers' interests. Make sure you know how the law and customs work in your state and understand all of your options before you choose an agent. Remember, an agent who represents you is a buyer's agent, but not all buyer's agents are buyer's brokers.
A buyer's broker is an agent who represents only buyers in real estate transactions and who legally
acts in the buyer's best interest, not the seller's. If you hire a buyer's broker, your agent's goal will be
to get you the best house for the least money at the terms most favorable to you.
This means your agent might show you not only properties included in the local MLS, but also For-Sale-By-Owner (FSBO) homes. There are distinct differences, based on state law or local custom,
in how agents who practice buyer brokerage structure their responsibilities.
Listings and Compensation are two examples;
Listings
Some buyer's brokers do not work with sellers at all and do not accept property listings.
Buyer's Brokers & Agents, for example, must sign a written pledge that they and their offices
will only represent buyers, not sellers.
Compensation
Either you or the seller may pay your buyer's broker. Many buyer's brokers ask for the equivalent
of what they would have earned in a traditional commission structure (3 percent, or half of a typical
6 percent commission, for example), though their fee may work out to less than that of a traditional agent on more expensive homes.
The commission is usually factored into the sale price of a house and stipulated in the listing agreement in a typical transaction. Increasingly though, buyer's brokers work on an hourly basis or for a set fee negotiated in advance. If you decide on this form of compensation, it will be in your best interest to negotiate a fee that is not tied to the sale price of the house you want to buy. The broker may expect
to receive a portion of the fee as a retainer at the time you enter into the agency agreement.
For a variety of reasons, however, the seller still most often pays the commission for a buyer's broker
in a typical transaction.
A buyer's broker may be able to negotiate a lower sale price if you pay the broker's fee yourself.
Many consumer advocates believe that you can't completely eliminate any influence the sale price
may have on an agent unless you, not the seller, pay your buyer's broker.
Buyers who work with the seller's agent often do so because they think they may get a better deal, or they worry that they may not see as many homes with a buyer's broker.
Buyers who work with a buyer's broker often do so because they feel they'll get better advice on making an offer, and their agent may negotiate a lower sale price if his or her commission is not affected by it.
Why don't more people use a buyer's broker?
The idea is still relatively new, and many buyers aren't prepared to pay for agency services themselves, (though that's just one option for compensating a buyer's broker).
