When you work with a real estate agent in buying or selling real estate, the National Association of Realtors requires that you be informed whom the agent is representing in the transaction.
As a prospective buyer or seller, you should know that unless the purchaser chooses to establish a written Buyer Agency agreement:
- Both the agent who lists the property for sale (the listing agent) and the agent who works with a buyer (the sub-agent or selling agent) are agents for the seller.
- Their loyalties are owed to the seller, and they must inform the seller of all important information they know which might affect the seller’s decision regarding the sale of the property.
- While neither is the agent of the buyer, they can provide the buyer with information about available properties and sources of financing and aid the buyer in comparing the features of different properties as well as showing properties and assisting in making an offer to purchase.
A selling agent must treat the buyer honestly and fairly. The agent will:
- Educate you on the home buying process.
- Locate suitable properties through an extensive computer and catalogue system.
- Make arrangements to view selected properties.
- Help you determine if you have found the right home by providing you with market information.
- Provide professional financing guidance and arrange mortgage pre-approval.
- Inform you of normal expenses associated with the purchase of a home.
- Disclose known material facts about the property.
- Help you successfully navigate the offer process, and ensure that the offer is promptly presented to the seller for consideration.
- Provide information on the availability of related services, such as appraisal, home inspection, legal, survey, contracting and other services.
- Coordinate all of the details to ensure a smooth transaction. Your agent’s services do not end when your offer is accepted, they continue until you are happily in your new home!
- When working with a selling agent, these services are available at no charge to you. The selling agent is paid by the vendor.
If you prefer to establish a written Buyer Agency agreement, the agent’s responsibilities to you will be that of your agent.
How does the Buyer’s Agent get paid?
In most cases the sellers will pay the commission or it will be included in the mortgage. It should cost the buyer no more, and often less to be represented under a Buyer Agency agreement, than under sub agency.
With a written Buyer Agency agreement, you can expect fiduciary duties beyond the services that can legally offered to you as a selling agent.
A Buyer’s Agent’s duties include:
LOYALTY: The Buyer’s Agent has a duty to act in the best interest of the Buyer at all times. This means that negotiating the best price and terms for the Buyer is paramount.
OBEDIENCE: As long as the request is legal, and within the scope of the exercise of agency, a Buyer’s Agent is obligated to do as the client asks. Something considered unreasonable may be discussed with the client, but may not be arbitrarily refused.
DISCLOSURE: If the buyer gets carried away with the emotional aspects of a property, it is the agents’ job to remind the buyer that it may not be suitable based upon other factors. Sellers’ agents must disclose only material defects such as structural faults, or inappropriate zoning, but otherwise should stress the benefits, not the disadvantages. Buyers’ agents must disclose everything.
CONFIDENTIALITY: The Buyer’s Agent may not reveal by word or deed that the buyer is willing and/or able to pay a penny more than he has offered! A Buyers Agent must not reveal that the buyer has been unable to find a comparable property that meets his needs, or any other fact that might affect the buyer’s negotiating position.
REASONABLE CARE AND DILIGENCE: A Buyer’s Agent is obliged to be competent, make appropriate enquiries and recommendations, and must call upon his/her full range of skills and knowledge on behalf of the buyer. A Buyer’s Agent should use his/her expertise to determine the lowest market value, not the highest as presented by the listing agent.
ACCOUNTING: Not only does this mean accounting for any deposit money or retainer fees, but it means seeing that everything the buyer expects is included in the contract to purchase. If the agent is being paid from any source other than the buyer, the agent must account for this fact with his client.
A Buyer’s Agent’s role is not as a salesman, but as an agent. If you have any questions regarding the role and responsibilities of real estate agents, please ask!