Which Type of Real Estate Agent
to Choose - Seller's Agent vs. Buyer's Agent
Which type of real estate agent to choose - seller's agent vs. buyer's agent
So, you're ready to buy a new home and have decided to enlist the help of a real estate agent. Smart decision. But what kind of agent do you contact? A listing agent, or a selling agent? Make no mistake about it, there is only one right answer to this question. You want to contact a selling agent. The reason is that a selling agent, also known as a buyer's agent, contracts to represent the person looking to buy a house - that's you. A listing agent, meanwhile, contracts to represent the person selling the house - that's the other guy.
Since two parties are generally involved in the transfer of ownership of a home - the party purchasing the house, and the party selling the house - there are usually two real estate agents involved as well. Let's discuss the differences between a seller's agent and a buyer's agent.
The Seller's Agent
The seller's agent, sometimes referred to as a listing agent, is usually a real estate agent who works for an established real estate firm. The seller's agent meets his or her client in two ways. One way is for the client (the seller) to contact the agent directly in response to a referral from a family member or friend, an advertisement, or some other method the agent has used to advertise his or her business. The other way is by the seller choosing a real estate firm, and a representative of that firm assigning a real estate agent to work with that seller.
Regardless of how they meet, the seller's agent's primary duty is to market the property so as to attract potential buyers. To do this, the seller's agent will use any number of methods to stimulate interest in the property. Contrary to what you might think, the seller's agent's job is not necessarily to directly advertise to buyers, but rather it is to advertise to buyer's agents who will bring buyers to the property.
To make buyer's agents aware that the house is for sale, the seller's agent might employ some of the following techniques:
Placing a "For Sale" sign in front of the house
Putting up a brochure stand which contains flyers with information about the home, and contact information next to the sign
Distributing flyers that contain photographs and information about the house
Listing the property with the Multiple Listing Service (MLS) - a database that makes information and photographs about the property for sale accessible to all buyer's agents in the area
Listing the property in real estate magazines and newspapers
Holding an Open House so that buyer's agents can bring potential buyers to visit the house for sale
Promoting the property at meetings of Realtor organizations to which they belong
Be aware that the seller's agent's obligation is to their client, not their office. Although it is the seller's agent's task to find a buyer for the house, this does not mean that the buyer of the property has to be represented by a buyer's agent from the seller's agent's office. The reason why the MLS exists is so that all real estate offices have access to the same database and, hence, the same properties for sale. In fact, it is very common for a seller's agent from one office to market the home, and a buyer's agent from another office to find a buyer.
If you are a buyer and a seller's agent speaks to you, that agent may request you to sign a statement that verifies that he/she disclosed his/her agency status to you. This is not a contract, it is simply a disclosure. Be aware that as a buyer you should never reveal confidential information to a seller's agent.
A seller's agent has the following obligations to the seller that he or she represents:
1. To get the price and sales terms wanted by the seller for the house.
2. To disclose the same material facts necessary of a buyer's agent. These
material facts refer to any problems a house may have, such as electrical problems or other potential repairs.
3. Not to reveal personal information about the seller without their consent.
The Buyer's Agent
A buyer's agent, often called a selling agent, not only represents the buyer in a real estate situation, but also agrees to work in the best interest of the buyer. It is highly recommended for buyers to work with a buyer's agent.
For one reason, a good buyer's agent can provide you with information about what types of homes are for sale, where they are located, and how much they are selling for. He/She will also be able to give you useful information and relevent statistics about the neighborhood and community into which you are thinking of moving. Needless to say, trying to do all of that research yourself would take a lot of time and effort on your part.
Another reason why, as a buyer, you should work with a buyer's agent, is to ensure that you are making proper financial decisions. For example, a buyer's agent will be able to tell you if you are paying a fair price for the home, or what the resale potential of the prospective property might be.
A third reason is that certain seller's agents and offices prefer not to take offers directly from buyers. Why? Because if a conflict should arise between the buyer and the seller, the buyer will assume, rightly or wrongly, that because the seller is the one paying the commission, the agent will automatically take the seller's side. While it may not necessarily be who pays the commision that is the influencing factor, realize that the seller's agent does represent the seller and, therefore, is obligated to them. As previously mentioned, one of those obligations is to get the price and sales terms for the house wanted by the seller. Since most seller's agents do not want to have to deal with this scenerio, many will request that you find a buyer's agent to represent you.
To find an agent, you should interview a number of buyer's agents until you find one that you like (see How to Select a Good and Qualified Real Estate Agent). After you have decided upon which buyer's agent to work with, you will likely be asked by that agent to sign a contract known as a Buyer Agency Agreement. Be aware that by signing this contract you are committing to work exclusively with that agent. This is why it is so important that you choose the right buyer's agent to represent you. Not to worry, the agreement only remains in effect for a specific period of time that you and the agent both agree upon. That length of time can be anywhere from one day to a few months.
As a home buyer, you usually do not have to pay a fee to your agent. Your agent ends up splitting the commission fees at the closing of the deal with the seller's agent; fees which the seller generally pays. However, if you purchase a For Sale by Owner home you may have to pay your agent a fee since there is no seller's agent involved. Be aware that by signing a Buyer Agency Agreement you are agreeing to pay that fee. Be certain to read your contract and discuss this point with your buyer's agent before you sign.
Once you sign a Buyer Agency Agreement, your buyer's agent is bound by certain obligations to you. These obligations include:
1. To get you the best possible price and sales terms on a home purchase.
2. To disclose all material facts about the house, such as plumbing problems, electrical problems, or any other possible problems and potential repairs the home may face.
3. To disclose any personal facts and information that might result in a seller being willing to negotiate a reduced price, such as foreclosure, an impending divorce, or some other personal situation.
A Dual Agent
There are times when one real estate agent ends up representing both parties involved in the sale/purchase of a property. This may occur when a seller's agent markets a home and is then approached directly by a buyer who presents an offer. The agent may decide to work with both parties to complete the deal. A real estate agent who does this is acting in a dual capacity as a dual agent. Dual agency can also occur if a buyer's agent shows his or her client a home that is listed by the buyer's agent's own real estate firm. Both situations are very uncommon, however. The majority of real estate agents focus on either working with the seller's or on working with the buyer's during a home sale. Some agents even decide to become specialists and work exclusively with only one party in all deals. A number of real estate agencies actually go so far as to forbid dual agencies.
Real estate agents have a very difficult time handling the role of dual agency. He/She is obligated to both of the parties involved and is prohibited from disclosing any personal information about one party to the other. A real estate agent who intends to act in a dual agent capacity is required to reveal his/her role as a dual agent to both parties berfore the home selling/buying process begins, and before any steps are taken both the seller and the buyer must agree to the arrangement in writing.
The difference between a seller's and a buyer's agent - an example
Let's say you sign an offer to purchase a house for $180,000. You really want the home and there is a chance that other offers are being made. You tell the agent that "I'll go up to $190,000 if I have to, but don't tell that to the seller." Guess what, if you are dealing with a seller's agent, he/she may be obligated to tell the seller exactly what you have just asked them not to. In fact, the seller's agent usually has no obligation of confidentiality toward you. At most, to treat you fairly and honestly, the seller's agent may be required to warn you that he/she is duty-bound to convey to the seller any information that would be useful and for you not to tell him/her anything that you would not tell the seller. Therefore, when you are a buyer dealing with seller's agents, it is best to keep all confidential information to yourself. This is also why it is wise to hire a buyer's agent, one who owes their full range of duties, including confidentiality and obedience, to you - the buyer.
Which type of real estate agent to choose - seller's agent vs. buyer's agent. It all depends on whether you are selling a home or buying a home. If you're buying, you definitely want to have a buyer's agent working for you.
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