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As a home buyer, one of the most important things you should ask about your real estate agent is: “Is this agent really working for me?” In many cases, the answer is no. The Problem When a seller’s agent, or traditional agent, is showing you a property, then that agent is working in the best interest of the seller, not you, the buyer. This means that the agent cannot tell you anything that would be detrimental to the seller’s position, such as the seller’s reason for moving, market/neighborhood conditions you should know about, the lowest price the seller would accept, etc. A lot can fall through the cracks. Yet in most states real estate agencies can do this very thing – represent both the buyer and the seller in the same real estate transaction. This is called dual agency and, not surprisingly, it can create a serious conflict of interest and put the buyer or seller at a disadvantage. The situation would be equivalent to one law firm representing both the defendant and the plaintiff in the same case. Over the last few years, some states have attempted to regulate the dual agency system while other states have banned it altogether, but New York State still allows it. Sometimes the practice can be disguised through the twists and turns of the real estate industry. Even if your agent checks off the “buyer’s agent” box on the agreement you sign, for example, this does not necessarily mean that they have undivided loyalty to you. If they work for the same firm as the seller’s agent, the firm listing the home for sale, they become known as a subagent, and as such may have to disclose information about you, the buyer, that could prevent you from getting the best deal. The Solution: An Exclusive Buyer’s Agent So how do you ensure that an agent works for you, the buyer, and only for you? The answer is to enlist the help of an exclusive buyer’s agent (EBA) - the only kind of agent that can exclusively represent the buyer in a real estate transaction. A designated exclusive buyer’s agent has the following legal responsibilities to the buyer: reasonable care, undivided loyalty, confidentiality, full disclosure and duty to account. This full range of fiduciary duties can only be guaranteed in all real estate transactions by an exclusive buyer’s agent who has his or her license held at an exclusive buyer’s agency, in contrast to most real estate agents, who may end up representing and owing their loyalty to the seller in many of their real estate transactions. Cost Concerns It doesn’t cost extra to have an exclusive buyer’s agent on your side. In most cases, the seller pays an agent’s commission, a percentage of the sale price of the home, to the selling agent, but when an EBA is involved in the transaction the commission is split between the seller’s and buyer’s agents. On a commission of 6%, for example, the seller’s agent and the exclusive buyer agent/Realtor would each receive 3% instead. Ultimately, the cost to you, the buyer, is the same. Why It Pays to Have an EBA on Your Side If you are a buyer, only an EBA can truly represent your best interests because they do not list homes for sale and thus never represent the seller – they focus solely on representing home buyers. Currently, there are just over 100 exclusive buyer agent/Realtor real estate agencies throughout the U.S. and this number is growing as more and more people realize that only an EBA can provide you, the home buyer, with the guidance and advice that a seller’s agent cannot. Only an EBA can be trusted to give you an honest assessment of the property, neighborhood, and real estate market that you need to make the most informed decision about your purchase. An EBA also negotiates the purchase price of a home on your behalf, using his or her expertise and knowledge of the ins and outs of the negotiation process to get you the best price – without the conflict of interest that may arise when working in a traditional real estate situation! Considering a large percentage of your net worth is in the equity of your home, an exclusive buyer’s agent is crucial in getting the best deal when taking such an important personal and financial step in your life with your new home. This is what we are committed to at True North— bringing the services of designated exclusive buyer agents/Realtors to the Greater Rochester area. For those looking to invest outside of the Rochester area, we can help connect you with an exclusive buyer's agent within your region, call us at 585-393-9221 -John J Waugh, EBA, ABR, CBR, CSP, ITI, GRI ________________________________________ |
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