Understand Your Relationship With Real Estate Professionals – Sellers Agents and Buyers Agents
Posted by admin on Mar 10, 2012 | 0 comments
When you call an agent and ask them to show you some properties, you have to remember that they are always working for the seller — not you — even if they are not the listing agent! (The listing agent is the agent who was hired by the sellers to list their home.) This ties in with the fact that the agent is paid a commission based on the selling price of the house. (Usually 6% split between both agents involved.) So, the higher the sales price, the more money the agent makes.
It may be hard to keep this in mind as you spend time with the agent and feel you know and have a relationship with that person. Even though you trust the agent, it is very important never to reveal the highest price you are willing to pay, or other concessions you know you would be willing to make. Because the agent represents the seller, he/she must relay this type of information to the seller.
The flip side of this is also true. Again because the agent is representing the seller, he/she is not allowed to divulge anything that would tip the scales in your favor — like why the seller is selling or how low the seller will probably go regarding the selling price. Remember, the agent is bound by contract to work to get the best possible deal for the seller. However, there is another option known as a buyer’s agent.
A buyer’s agent will work to negotiate the best price, ensure the property is inspected, and make sure you have the representation you need. Things you tell a buyer’s agent remain confidential. Using a buyer’s agent also means that you will be shown homes that are “For Sale By Owner” (FSBO). It might seem like using a buyer’s agency means you are going to pay more — but that’s not always the case. Although there are situations where agents charge an hourly fee or a flat fee for the service, in most situations they are simply working for the same commission that is paid by the seller and split it with the seller’s listing agent. While there is still some argument that this method leaves the incentive for a higher sales price, buyer’s agencies counter by pointing out that a $10,000 savings for the buyer only amounts to a $150 difference in commission for the buyer agent. They feel that the benefit of your satisfaction with their service and the word of mouth promotion they will get outweigh the loss of this small amount of money.
The type of agreement you sign with a buyer’s agent will dictate how the arrangement works. A limited agency agreement may stipulate, specifically, for what the agent will be paid. For instance, the agreement might state that if you find a home on your own, then no commission will be paid. Basically, you can negotiate the terms of the agreement up front so both you and the agent know what to expect and are comfortable with the relationship.
Mills Auction and Real Estate professionals are willing to represent you in a way that best fits your needs. We find that many times, people have not been educated by their agents so we hope this article will help in clarifying agency representation.
