Working with Agents
LEARNING TO WORK WITH REAL ESTATE AGENTS
The real estate industry needs to do a better job of educating the public about how agents function. Few buyers and sellers really understand how real estate agents work and how they get compensated. Many don’t know the difference between a Realtor and a real estate agent. They don’t know who pays the real estate agent’s fee or even that the agent gets paid only if the transaction closes. Most don’t understand that the compensation comes from a commission and not a salary. Most don’t know the difference between buyer agency, seller agency, or dual agency. Most don’t know the duties of an agent to their client or customer. We will address these issues and others.
As we begin to discuss these issues, let’s begin by examining why you should use a real estate agent. The number one reason is because of their education and experience. They are in the business every day whereas you may only buy or sell a home every few years. Agents serve as buffers between you and the public who are buying or selling. They can filter through a lot of stuff that can be annoying and wasteful. They are knowledgeable with data that will help you see the market from a realistic viewpoint. They can guide you through the current condition of the market and help you decide on appropriate pricing. They network with other professionals who can assist you with home repairs, insurance, maintenance, etc. Agents are skillful negotiators who can remove themselves from the emotions that accompany buying or selling. They handle all the paper work and details that are a part of closing. They are also there to support you and to calm your anxious feelings when things get difficult. In the end the money you save will far out weigh whatever their cost.
How do you find a real estate agent? All Realtors are licensed real estate agents, but not all real estate agents are Realtors. Realtors belong to the National Association of Realtors and pledge to follow a code of ethics which establish levels of conduct that are higher than ordinary business practices or what is required by law. Look for the Realtor logo on the agent’s business card to know their affiliation. Along with searching by affiliation there are other ways to find the right agent. Ask others who have had previous experience with an agent. You can search online using Google to find offices in the area you are interested in. You can go to open houses to meet agents or look for real estate signs in your particular area of interest. Interviewing more than one agent is a common practice. You will need to let the agents know that you will be meeting with more than one agent to decide whom to use. Some questions to ask are: how long have you been in real estate; how do you market your homes; how do you search for homes; would you provide references; what do you charge; and what is your average list price to sale price ratio (usually 98-99%).
It’s important to understand agency and the duties of an agent to a seller, a buyer, or both. Seller agency means that the agent represents the interest of the seller as a client. This relationship is established through a written agreement. Without the agreement in writing the seller is considered a customer. As a seller client, the agent will seek a buyer to purchase the property at a price and under terms and conditions acceptable to you. The agent will assist in the negotiations. The agent will also seek reasonable proof of a prospective purchaser’s financial ability to complete the transaction. As a buyer client, the agent will seek a property for you to purchase at an acceptable price and terms and will assist with negotiations. The agent will also advise you to consult with appropriate professionals, such as inspectors, attorneys, and tax advisors. A dual agent is representing both the buyer and the seller in the same transaction. The agent must promote the interests of both parties with equal skill and care. The agent is not allowed to disclose confidential information to either party without permission. In all cases, the agent is to be honest and ethical in dealing with the interests of both parties.
An agent is only compensated when the transaction is closed if they are working on a commission bases. It is important to understand this because if you are not serious about buying or selling you will be wasting the time and resources of the agent. It is difficult for agents to have a client use their services and then to cut them out of the transaction after all the work the agent has accomplished. In most areas of the country the seller pays the real estate commission. However, a buyer may hire an agent to find a certain property to purchase. Like the written agreement between an agent and a seller, the fee paid by the buyer to an agent is also put into writing.
When working with an agent it important to let them know of your expectations. Let them know how often you would like to be contacted. Let them know how you want to be contacted: phone calls, emails, personal visits, etc. When looking at homes with your agent, be honest in your opinions. Let the agent know what you like and what you don’t like.
There are also some agent protocol tips to know. It’s important to keep your appointments with your agent and to be on time. If you are working with an agent to find a home, use that agent exclusively. Don’t call listing agents to see a home when you are working with another agent. If you go to open houses on your own, give the listing agent a business card from your agent and let the listing agent at the open house know you are working with another agent. Understand that you will be asked by your agent to sign contracts to list your home for a disclosed fee and time period. An agent working with a buyer will also ask you to sign a buyer’s agreement. Discuss before hand how either of those agreements may be terminated.
If you find that you are dissatisfied with your agent, you may cancel your agreement by mutual consent. Both the parties must be fair and considerate of the situation. If the agent refuses to cancel the agreement, then call the agent’s broker. Most of the time the broker will agree to a cancellation to keep good relations. However, the broker may suggest assigning a different agent from the same office. If there are no workable solutions, you may call a real estate attorney to assist in the termination of the agreement.
Finally, to understand more completely a real estate agent’s scope of duties and responsibilities you may go online to look at the Federal Fair Housing Act and the National Association of Realtor’s Code of Ethics.