First Time Austin Home Buyers
Dealing with REALTORS
Ask anyone who's ever sold a home, and they'll tell you how
seriously they took the process of selecting a real estate
agent to represent them. It's likely they also took a
proactive role in ensuring that the agent worked hard to
market their home. When it comes to home buyers however, the
number of people who end up with a real estate agent by
accident is amazing. The person who helps you find and buy
your house is integral to the success of the process, which is
why buyers ought to put the same effort into finding an agent
as home sellers would.
Who's who in real estate agents
To find the right real estate agent, it helps to understand the difference
between a broker, a REALTOR, a buyer, and a listing agent. Brokers
occupy the top of the real estate totem pole. Some are easy to identify
especially in the case of small firms, because it's usually their name on
the "For Sale" sign outside the house. The broker is the person licensed by
the state to buy and sell houses. An agent can't do business without a
broker, which is why agents part with a percentage of their commissions.
Brokers may also be agents themselves, active in both sales and
administration, but generally they provide the management blanket under
which agents operate.
A REALTOR is a broker or agent who is a member of the Board of
REALTORS, an organization that follows a code of ethics beyond state license
laws. It is realtors who sponsor the Multiple Listing Service to which every
real estate agent in the country is beholden for listing or searching
Once upon a time, all real estate agents worked for the seller. Now they
tend to specialize into listing agents, buyer's agents, and dual agents. A
listing agent puts a home for sale on the Multiple Listing Service,
and works primarily with the home seller. A true buyer's agent does
not list homes for sale very often and works primarily for buyers. While
many agents focus on either listing or buying, there are also agents who
split their time between buyers and sellers. These are dual agents.
If you are in the market for a house, any type of agent can do the job. The
question is which one is most likely to look out for your interests. If you
approach the listing agent who represents the property you most desire, for
example, working solely through him or her could give rise to a conflict of
Shopping for a real estate agent should be no different from searching
for any other professional, like a lawyer or an accountant. If you know
someone in the business - such as an escrow officer, title representative,
or homeowners' insurance salesperson - ask for a recommendation. You could
even cold-call real estate offices and ask the manager to steer you toward
someone from another office. It may take some sales dodging, because the
person you ask will effectively be passing up a commission, but when you
finally get a name it'll likely be a respected competitor.
Be sure to shop for an agent
When interviewing prospective agents, ask questions about the local market
and expect informed answers on the spot. If they have to call you back after
they check the listings, it could be they're not doing due diligence.
According to Bradshaw, "You need someone who knows the neighborhood very
well, is out there previewing houses, staying on top of what goes on in the
community. A smart agent will likely grill you about your financial
situation to gauge whether you're thinking in the proper price range. Agents
have a responsibility to their clients, their colleagues, and themselves.
They must know for sure that a buyer actually can buy the house they're
viewing when it comes time to make an offer. You can't waste a seller's time
like that - it could send them into financial difficulty, even foreclosure."
Above all, you want an agent who will give it to you straight instead of
sweet-talking his or her way to a quick commission. Referrals might be a
good way to go if a friend or family member recently bought a house in the
same community and had a good experience, but certainly not just if they
know somebody who knows somebody.
Almost always, it is the seller of the house who pays the real estate
commissions. The buyer should receive, and is highly entitled to, top-notch
service because she or he is the most important element in the equation. No
buyer equals no sale, no commission. In most markets, 6 percent of the
selling price is split between the listing agent and the buyer's agent, who
then split a share with their brokers. Even if the agent you are working
with has signed a buyer brokerage agreement with you, the seller still pays
the commission unless a separate (and fairly unusual) transaction has been
negotiated with you, the buyer.
In an ideal world, if you have a buyer's agency agreement with a real
estate agent, you should trust that anything you disclose is confidential
and, above all, will be withheld from the listing agent. Ideally too, this
agent will make an exhaustive search of all properties that match your wish
list and will do a thorough checking of each property to discard any that
fall short, before wasting your time. Then, the agent will have the keys or
make arrangements to be able to gain access to the very best properties at
times that suit your schedule. Finally, the agent should guide you through
the whole paperwork process, from offer to the close of escrow. That is in
an ideal world.
As with salary negotiations, guard your numbers
From how-to books to online real estate guides, experts strongly caution a
buyer to beware about disclosing too much vital information to an agent,
even if you have a buyer's agency agreement. Should the listing REALTOR┬« know
how much you are willing to pay for the home, or even the loan amount for
which you have been qualified, that information could work to your
disadvantage in the negotiations.
"Even though agents are keen to close the deal, most work with great
integrity," said Bradshaw. "They won't give up critical information that
could harm their client, whether they represent the buyer or the seller."
Agents have great incentive to get the best price for their clients
because they want repeat business from referrals. Some of the best agents
don't even need to market themselves because they have such a good pipeline
of satisfied customers. That is precisely why a prospective buyer should do
the homework to find the right referral.
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