Buying Your Home - Working With a Real Estate Broker
Can I use a broker for a new home?
Yes, however buyers should be aware of the differences inherent in working with sales agents who are employed by the developer, rather than traditional real estate brokers.
Builders commonly require that an outside broker be present, and sign in, the first time a prospective purchaser visits a site before payment of commission even is discussed. At times when buyers use an advertisement to find the development themselves first, builders can refuse to pay any commission regardless of how helpful a broker may become later in the process. It is advisable to call the development first and inquire about their policy on compensating real estate brokers if you are using one.
What about a buyer's broker?
In many states, it's now common for a broker to represent the buyers exclusively in the transaction and be paid a commission by the sellers. More and more buyers are going a step further, hiring and paying for their own broker, referred to as buyers brokers.
How do you find a good broker?
Getting a recommendation from a friend or work colleague is an excellent way to find a good broker, whether you are a buyer or a seller. Be sure to ask if they would use the broker again. You also can call the managers of reputable real estate firms and ask them for recommendations of brokers who have worked in your neighborhood.
A good broker typically works full-time and has several years of experience at minimum. If you are a buyer, you don't usually pay for your broker's services (in the form of a commission, or percentage of the sales price of the home). All brokers in a transaction usually are paid by the seller from the sales proceeds. In many states, this means that your broker legally is acting as a subbroker of the seller. But in some states, it's legal for a broker to represent the buyers exclusively in the transaction and be paid a commission by the sellers. You also can hire and pay for your own broker, known as buyer's brokers, whose legal obligation is exclusively to you. If you are a seller, you should interview at least three brokers, all of whom should make a sales presentation including a comparative market analysis of local home prices in your area. The best choice isn't always the broker with the highest asking price for your home. Be sure to evaluate all aspects of the broker's marketing plan and how well you think you can work with the individual.
How much does my real estate broker need to know?
Real estate brokers would say that the more you tell them, the better they can negotiate on your behalf. However, the degree of trust you have with a broker may depend upon their legal obligation. Brokers working for buyers have three possible choices: They can represent the buyer exclusively, called single agency, or represent the seller exclusively, called sub- agency, or represent both the buyer and seller in a dual-agency situation. Some states require brokers to disclose all possible agency relationships before they enter into a residential real estate transaction. Here is a summary of the three basic types:
* In a traditional
relationship, real estate brokers have a fiduciary relationship to
the seller. Be aware that the seller pays the commission of both brokers, not
just the one who lists and shows the property, but also to the sub- broker, who
brings the ready, willing and able buyer to the table.
* Dual agency exists if two brokers working for the same broker represent the buyer and seller in a transaction. A potential conflict of interest is created if the listing broker has advance knowledge of another buyer's offer. Therefore, the law states that a dual agent shall not disclose to the buyer that the seller will accept less than the list price, or disclose to the seller that the buyer will pay more than the offer price, without express written permission.
* A buyer also can hire his or her own broker who will represent the buyer's interests exclusively. A buyer's broker usually must be paid out of the buyer's own pocket but the buyer can trust them with financial information, knowing it will not be transmitted to the other broker and ultimately to the seller.