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What Do The Experts Say About Exclusive Buyer Brokers |
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What Do The Experts Say About Exclusive Buyer Brokers |
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National
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How Does An Exclusive Buyer Broker Get Paid Why
use an
Need
Advice On A Real Estate Problem?
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To get a copy of AARP/CFA
Buying A Home
Exclusive buyer's brokers work only with buyers and don't take listings.
They're obliged to help you find the best deals and lowest price.
"Unfortunately, agency standards have changed so much in the past ten years
that real estate agents themselves are likely to be confused about their
obligations to buyers and sellers, even though in most places they are
supposed to give you a disclosure form explaining your relationship. Bottom
line: You don't truly have an advocate in your corner unless you both sign
a contract saying so.Kiplinger's Personal Finance
MagazineBut if you want to Buy a home,
"Exclusive agencies are best. They remove any conflict of interest, which
is the main reason for considering a buyer broker in the first place."
-Kiplinger's
CHANGING TIMESHOUSE HUNTING? SAVE BY HIRING
YOUR OWN BROKER
If you ever doubted the value of real estate agents who work solely
for home buyers (as opposed to traditional agents who report to sellers,
consider this: A recent study by U.S. Sprint found that 232 relocating
Sprint employees who hired buyer's brokers paid an average of 91% of a
home's list price. People who use traditional agents typically pay about
96%. On a house originally priced at $150,000, that's a difference of $7,500.
Money
Magazine
SMART MONEY: A PERSONAL SHOPPER FOR YOUR
DREAM HOUSE
When Sallye and Jim Ryan wanted to move from their Tampa apartment to a three bedroom home this spring, the busy couple used a buyer broker, Beth Tansey, to help. Within a week, they had bid on the house they now own. Sallye liked being able to delegate the house hunting. "With both my husband and me working, it was a lot easier," she says. "I don't think I would have found this house that I really love without her. There are so many homes for sale here, I would probably still be looking. Because Tansey is a buyer broker, who exclusively represents the home buyer's interests, the Ryan's trusted her to find the best deal on a house that suited their needs. By contrast, a traditional real state broker is legally bound to work for the seller who pays the commission and therefore may be more intent on selling listed homes than finding your dream house. Even Realtors who don't hold the listing on a given house act as subagents to the seller. So unless a broker says that he or she is working for you -- brokers are now legally obliged to disclose who they represent -- you can assume the broker is working for the seller. Such agents must pass on information such as the buyer's income to the seller, who then has a better idea of what price to hold out for. Because these brokers are obliged to get buyers the best deal possible, they approach houses with a critical eye for apparent flaws. You'll still need an inspector to uncover hidden defects, however. Buyer brokers also show properties sold by the owner, which can be cheaper because the only commission is what you agree to pay your broker. Sellers' agents usually won't show these homes because they don't make commissions on them. Brokers representing buyers should also appraise the value of the house, negotiate the price, and pre qualify you for a mortgage, sometimes at a better rate. Buyers' Agent brokers, for instance, narrow mortgage bids from 15 lenders nationwide to the three best offers -- and then get those three to rebid. "A well-trained, experienced buyer broker is a great asset," says Peter Miller, author of How to Sell Your Home in Any Market ($12, Harper Perennial) and other real estate guides. "You won't do any worse, and you may do a lot better. Usually, the buyer broker splits the sales commission with the seller's agent, just as a subagent who didn't have the listing would with the broker who did. So the fee still comes out of the sale price. Some people might assume that buyers' agents have an incentive to keep the price high. But again, the broker must get you the best deal. "In my experience, all of them do," says Stephen Brobeck, executive director of the Consumer Federation of America. A conflict of interest is more likely when a real estate firm that represents sellers assigns you one of its brokers as a buyer agent. That's why many people believe an "exclusive" buyer broker is preferable. If there aren't any in your area, and you have to use a listing broker, "make sure they disclose when they are showing you properties they have a financial interest in," says Brobeck.Business Week
Real Estate Agents: Get Your Money's
Worth
As the FTC noted: "many buyers may run several risks... if they identify as 'their broker' a person who is not in fact intending to act as their agent." For example: A buyer may "reveal information he or she might otherwise wish to keep confidential" because such information would help brokers working for the seller in obtaining the highest price for a home. A buyer may believe a broker is "'scouring' the market... as a representative, when in fact, he or she is picking out those properties... which both meet the buyer's criteria and which also will bring in a large commission...." A buyer may assume that the broker will use his or her expertise to discover defects in a house, when without a contractual agency relationship, the broker may feel he or she has no duty to do so. Survey data from the study revealed that, in many transaction, sellers were informed by agents about how much buyers might be willing to spend, while most buyers expected such information would not be revealed. Such double dealing can also work against sellers, if their agent isn't protecting their interests, but seeking simply to close a deal. For example, sellers can be required to refund the buyer's money if the seller's agent (or subagent) misleads the buyer about the nature of their relationship or facts about the house. Many large firms have indulged in the lucrative practice of "in-house sales" in which only one company is involved in listing the property and producing the buyer. In other words, the same company acts as the seller's agent and buyer's agent in the same transaction to pick up the 6% or so set aside to pay two agents. Recent laws passed in Texas, Georgia, Illinois, Minnesota, and Colorado would appear to minimize broker liability for this "double dip." You should begin by asking yourself whether you need an agent at all. If you cannot take care of yourself in a business transaction then it is money well spent to have a loyal agent of your own. Nevertheless, until the industry gets used to old-fashioned rules
of loyalty, you should remember that you are the boss in this market, and
you set the terms of employment. When you engage a broker or attorney to
act as your agent, you should look for companies that subscribe to a "single
agency" policy or "exclusive buyer agency" policy. Steer clear of companies
that offer disclosed dual agency as a policy. Remember, the first question
you should ask your broker is: "whom will you represent?"
"Don't ever buy a property directly from the
listing broker. Having your own agent will help you get the best price
and terms. It won't increase your costs, because your agent shares the
commission with the listing broker. This percentage amount is previously
determined in the listing agreement and will be paid according to that
agreement, usually when the transaction closes."
"Buyer brokers: agents that buyers can call
their own. Buyer's no longer have to fend for themselves."U.S.
NEWS & WORLD REPORT
CHICAGO SUN TIMES JUNE 22,1997
"unless the agent
CHICAGO
TRIBUNE MAY 31, 1997 "hiring
a buyer's
TULSA WORLD APRIL 13,1997
"A
buyers agent looks
THE SAN
FRANSICO EXAMINER MARCH 23,1997
FAIRFIELD COUNTY BUSINESS JOURNAL FEBRUARY
CONSUMER
FEDERATION OF AMERICA FEBRUARY 17,1997
COUNTRY
LIVING NOVEMBER 1996 "buyer's agents
CHICAGO
TRIBUNE NOVEMBER 9, 1996 "Buyer's
CHICAGO
SUN TIMES AUGUST 4, 1996 "What
the
RALPH NADER
- AGENCY LAW QUARTERLY AUGUST 1996
TIPS AND TRAPS WHEN BUYING A HOME / by
Robert Irwin
THE PATRIOT LEDGER (Mass.) JULY 19,1996
ORANGE COUNTY REGISTER JULY 14, 1996
"consumer
MONEY MAGAZINE JULY 1996
"You save big bucks by
LOS ANGELES
TIMES JANUARY 7, 1996 "Exclusive
BUSINESS
WEEK SEPTEMBER 1995 "Exclusive
buyer
SMART MONEY
JUNE 1995 "Groups such as the
MONEY MAGAZINE
MAY 1995 "Unlike
the traditional
CONSUMER
REPORTS FEBRUARY 1994 "You
can't have
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