Realtor-Associate is the term used by some boards of realtors for salespersons associated with member brokers.
So, as you start your search for the best agent, do you prefer a salesperson or a broker? There's something to be said for each. In general, you can expect a broker to have had more education and experience. On the other hand, some longtime salespersons remain in that status simply because they prefer not to set up in business for themselves.
Does the broker
work for you?
In recent years, a study by the Federal Trade Commission found that most buyers believed the agent who helped them buy a house was their agent, putting their interests first. Many sellers also thought so and, regrettably, so did many brokers.
It just isn't so.
Among the specific duties involved:
-- Obedience to the principal's instructions, unless they are illegal. For example, an agent would not obey instructions like, ``Don't show the house to any Lithuanians.'' Or, ``Keep quiet about the broken furnace.''
-- Loyalty to principal, which, strictly interpreted (it almost never is), includes obtaining the highest possible price for the property and never suggesting any offer under the listed price.
-- Confidentiality, which prohibits the agent from sharing with you details of the seller's financial or family situation, unless the seller has authorized such action to encourage offers.
-- Notice, a duty that obliges the agent to forward to the principal any fact that it would be in the seller's interest to know, whether the seller knows enough to inquire or not.
So where
do you stand?
None of these duties are owed to you. ``Yes,'' you say, ``I know those are the duties of the listing agent. But I'm dealing with a different firm that works with the first one through the multiple-listing system. My broker is the selling agent, and that's different.''
No, it isn't. Both firms are agents for the seller. The second one, the one you're working with, is a sub-agent of the first firm, and of the seller. You are merely a third party in that relationship, a customer rather than a client.
It can be scary to realize this, but things aren't as bad as they seem.
First, the law requires the broker to be honest, straightforward and trustworthy with third parties. Your questions will receive honest answers, although sometimes an honest answer might be, ``I am not allowed to tell you whether the seller is facing foreclosure; I must keep financial information confidential.''
In most states, besides answering your questions honestly, agents and sellers have an obligation to volunteer information about any
serious hidden defects you could not see for yourself.
Secondly, you will receive a great deal of free service, paid for by the seller because without this service to buyers, the property might never be sold.
And finally, you can take heart from the fact that as a practical matter, brokers often violate their duty to the seller. A good agent empathizes with you, wants you to find what you want at a price you can afford, may emotionally adopt you. If brokers didn't to some extent identify with the buyer, not much real estate would get sold!
To protect yourself
If the agent is duty-bound to put the seller's interest first, how should this affect your relationship with the broker? First, realize that there is no duty of confidentiality owed to you. It's only practical to reveal your financial situation if you expect to get effective service, but you may want to keep some information to yourself. The broker who knows you would pay more ``if we have to'' is - strictly speaking - obliged to convey that information to the seller. Saying ``but don't tell the seller that'' won't help because the agent does not have that special duty of obedience to you.
Then, take advantage of the fact that you must receive honest answers by asking questions. ``Are you aware of any defects in this house?'' is a good all-purpose query for both seller and broker, preferably in front of witnesses.
For sale by owner
Sellers who handle their own property are known by the term Fisbos (For Sale by Owner). Some do it for the satisfaction of tackling an unaccustomed job. They're not doing it just to pass on the saved commission to you. They usually plan to sell at fair market value and pocket the commission as extra profit in return for their efforts.
You will have extra work when you buy directly from an owner. Unless you retain an agent (perhaps on an hourly basis), you'll have to negotiate face to face, have extra attorney's input into the written contract, explore financing options on your own and ride herd on your own mortgage application process.
Two situations in which you might want to deal directly with a Fisbo:
-- the property is unique, and you feel strongly attracted to it; or
-- the property has been underpriced by a Fisbo who chose to do without the services of an appraiser as well. In that situation, be prepared to act promptly; some investors lie in wait for unwary Fisbos and jump as soon as underpriced property hits the market.
It wastes your energy to start your house hunting with Fisbos. Until you have a good grasp on price levels in the area and the entire home-buying process, it's difficult to deal with homeowners who often have an exaggerated idea of their home's value and who don't know how to proceed. Wait until you, at least, know what you're doing.
Choosing an agent
You will meet agents by answering advertisements, calling on lawn signs and visiting open houses. Best of all, perhaps, is a name suggested by a relative or friend who has had a good experience, but only if the agent in question specializes in the areas or types of house you want.
Remembering that you have no legal obligations to the agent, you might be tempted to play the field, thinking that you'll get many people out there looking for your dream house.
In reality, the buyer who works with many brokers is working with no one. The first time an agent calls to tell you about a house that just came on the market and hears ``as a matter of fact, we saw that one with someone else this morning,'' your name is crossed off the list. In the absence of a legal relationship, most successful transactions flow from informal trust between buyer and broker. When you find a good broker, stick with him or her.
Tell your broker about other firm's ads that interest you, even about Fisbos, so that he or she can investigate and report back to you. Ask for advice before visiting open houses on your own. And if you have the agent's home phone number, don't hesitate to use it. Real estate agents are accustomed to evening and weekend calls. Service is the only thing they have to sell, and they welcome any sign that you want to take advantage of it.
Using a lawyer
The law does not require that you have legal counsel. It is, nevertheless, foolish to proceed without professional help - your own attorney, entirely on your side. Lawyers are useful not so much for getting you out of trouble as for heading off trouble before it starts.
Your attorney can make sure the sales contract protects your interests, intervene if problems arise before closing, and review final figures to make sure you get proper credit at settlement time.
Lawyers specialize, just as physicians do. To find a specialist, you can:
-- ask your real estate broker to suggest two or three names;
-- ask a bank which firm handles its real estate work;
-- call a large law firm and ask which partner specializes in real estate.
Call an attorney's office, and explain that you're starting to house hunt. Don't hesitate to inquire about what the service is likely to cost. If you don't feel comfortable with what you hear, shop around.
What the agent
does for you
The average person assumes that a real-estate agent's job is to help you find a house, but that's only the tip of the iceberg. The typical broker will spend more time bringing you into agreement with the seller, and most important, helping you arrange to finance your purchase.
Some services you can expect, even though you are likely using a seller's broker:
-- Analysis of your financial situation.
-- Education in basic real-estate principles.
-- Recommendation of a specific price range.
-- Information about different locations.
-- Screening of listings. The agent will show you any house that's on the market, and must be careful not to narrow your choice by the use of subtle steering based on racial, religious or other forbidden criteria.
-- Showing of property. The agent will set up appointments for house inspections and will accompany you.
-- Estimation of ownership costs. When you are seriously interested in a specific house, the agent will sit down and help you figure out how you could buy it and what it would cost you to carry it each month.
-- Contract negotiation.
-- Liaison with your attorney, if you are using one. The broker works closely with the attorney from the moment you make your first written offer to purchase.
-- Financing expertise, which is probably the most important, and certainly the most time-consuming, of the agent's activities.
-- Mortgage application assistance.
(Distributed by Los Angeles Times Syndicate)
Tomorrow: Part 3, The Costs of Home Ownership
From the book ``The Complete Homebuyer's Kit'' by Edith Lank, Copyright (c) 1989, Longman Group U.S.A. Inc. Reprinted by permission of the publisher, Longman Group U.S.A., Inc. |
