Mortgage Information

What is buyer representation?

When you agree to work with a buyer's agent, you have the benefit of someone representing your best interests and negotiating on your behalf. The agent has a fiduciary responsibility and pledges to you loyalty, confidentiality, obedience, accountability, reasonable care, and diligence. These are not just words; you have an agent that helps you through every step of the transaction and puts your interests above everyone else's, including her own.

Can't I just call the agent whose name is on the sign in front of the house?

You can call that agent, but you must remember that he/she is representing the seller and will work in the seller's best interests. The agent can show you the house, and you must either consent to unrepresentation (you are on your own) or dual representation. If you choose to be unrepresented party, you must sign a paper that says that you understand that. If you want the agent to represent you, both you and the seller must sign papers that you agree to dual representation, and the agent will do his/her best to represent both parties fairly. A third option is that the agent can assign another agent from her broker's office to represent you, in which case you will have designated agency. But, Why would you not want to select your own agent who works just for you?

Won't I get a better deal if I go to the listing agent?

This is a misconception that persists among novice buyers. Some people think that an agent will talk the seller into accepting a lower offer if that agent has both the buyer and seller because the agent will be getting all the commission. The reality is that the agent may be representing both parties, but the people in control of the final outcome are the seller and the buyer. If the seller doesn't want to accept your offer, it isn't going to happen. If you, the buyer, don't want to agree to the terms, it isn't going to happen either. Wouldn't you rather have an agent who will negotiate fully on your behalf so that you don't have to worry about where someone's allegiance lies?

Can you show me properties that aren't your listings?

Yes! Not only can your buyers agent show you any property that is listed on MLS but they can also show you For Sale By Owners (FSBOs). When the sellers list their homes for sale, they agree to pay the buyer's agent if they sell the home. The same is true for most FSBOs as well. The owners of FSBOs save money by not using a seller's agent, but most agree to pay a buyer's agent a commission. So if you see a property that interests, just let your agent know and they will arrange for us to see it.

How much does buyer representation cost?

In 99.9% of the cases, the commission is paid by the seller, so buyer representation costs you nothing. The buyer representation agreement, however, will spell out that you will be responsible for my commission if the seller does not pay. But two things are important here: First, it is extremely rare; and second, you generally know ahead of time if there are any issues with the commission.

Do I have to sign anything?

Yes, the agreement is called Exclusive Right to Represent Buyer/Tenant and it outlines what each of the parties responsibilities are. Some state laws state that an agent can only show you other brokers' listings if you either have an Exclusive Right to Represent agreement or if the agent gets permission from each seller to show you the property. Rather than getting permission for each property, the Exclusive Right to Represent allows the agent to show you all properties that are listed by any broker. Your agent should go over each section of the agreement so that you understand it, but essentially it says that for a period of time they will work together in an agency relationship and that they will represent you in the purchase of your new home or land. You agree that you will use them exclusively as your agent and will let others know that you have signed a buyer representation agreement. This protects you, your agent, and other agents by letting them know that you have an exclusive relationship.

How long do I have to sign the agreement for?

The period of time that you are under the agreement is negotiable. Agents want the relationship to be a mutually satisfying one. For that reason select a period of time that you feel comfortable with. If you don't want to sign a long agreement at first, you can always extend it later if you and your agent both agree.

What else do I need to know about buyer representation?

The other thing that many homebuyers don't understand is that buyer representation not just about finding the property and writing up the contract. A buyer's agent is critical in the steps leading up to the closing. The inspections that need to be done, and inspection issues that need to be negotiated. After inspections are completed, a buyer's agent will monitor the mortgage process, make sure that the commitment date is met, and make sure that the final walk-though meets the buyer's approval. Any extra services, such as coordinating attorney services, utility switch-overs, and verifying that inspection issues have been completed may be part of the agent's responsibilities.