Buyer's Agent - Who's Working for Whom? Do Buyers Know This?
Just like the Listing Agent represents the seller, a Buyer’s Agent has a written agreement, the Buyer's Representation Agreement, with the buyer to look out for the buyer’s interests. Buyer’s Agent represents the buyer just as a Listing Agent represents the seller. This representation will include searching for suitable homes, helping to find lenders and home inspectors if desired, handling the paperwork on the buyer’s behalf, negotiating the best price, and protecting the buyer’s interests throughout the entire home buying process. Best of all, this service is usually free to the buyer! The Buyer’s Agent generally receives a portion of the Listing Agent’s commission or is paid by the Home Builder, so the buyer will probably incur no extra cost for having a professional on your side. So if you're buying real estate in Austin or the surrounding area, use a Buyer's Agent.
It is a common misconception among home buyers that the role of a real estate agent is the same from one transaction to the next. In reality, many buyers are not even sure what the role of a real estate agent is, other than to put a listing into the local Multiple Listing System. Since buying a home is such an important decision, being misinformed about this topic can have a huge impact on how well your home purchase will go. The real estate agent can be your opponent or your ally, depending on what type of agent you are dealing with. There are several different types that the laws of our state permit, and here I will address the two most common types.
On the seller's side… …is a professional called the Listing Agent. If you have ever called on a For Sale sign or a newspaper ad to ask about a home that was advertised, you probably talked with a Listing Agent. The Listing Agent (also called a Seller's Agent) is hired by the seller to find a buyer for the property. But more importantly, this type of an agent has a written contract with the seller represent the seller when negotiating. This includes obtaining the best possible price for the property and making sure the purchase contract is written so that the seller’s interests are protected. As a buyer this is something you must keep in mind. The Listing Agent should answer all of your questions about the property honestly, but if you divulge any information that may give the seller a negotiating advantage, the agent will make sure that his client knows about it. It’s not because they are “out to get you,” but because that’s the law. This sure gives the seller a certain advantage, doesn’t it? “And what about the buyer?” you might ask.
A Subagent is an agent who is not the Listing Agent and who has not been hired to represent a buyers as a Buyer's Agent. In Texas, a Subagent actually works for the seller and does not represent a buyer. Click to read more about the benefits of using a Buyer's Agent.
Can an agent work both sides of a transaction? Sort of, if both buyer and seller feel that they understand the market and can negotiate on their own. If a buyer asks the Listing Agent to write a contract, the Listing Agent needs to have both buyer and seller sign an Intermediary Relationship Notice. In this case the agent now represents neither the buyer or the seller. The agent basically just passes paperwork back and forth.
Is this a wise position to be in if you are a buyer or a seller? In most cases I would say no. If a buyer does not have a Buyer's Agent, one can be appointed by the Listing Agent's broker. I would act as an Intermediary in a situation such as this example: I have a home listed by a builder or someone who has bought and sold many homes and understands the process and the market. An attorney wants to purchase the house. Since attorneys can write contracts, the attorney can handle his side of the transaction.
What if the Listing Agent and the Buyer's Agent are under the same Broker? Because both the are licensed under the same broker this is still an intermediary situation. However, both the buyer and the seller do have representation. If I am a Listing Agent and a buyer comes to me to write a contract, I like to recommend that the buyer allows my broker to appoint a Buyer's Agent.
So what if you have not signed a Buyer's Representation Agreement and you are talking with an agent about a home and that agent is not the Listing Agent? Can you talk freely? You need to realize that in Texas, unless you have signed a Buyer's Representation Agreement with that agent, the person is actually a subagent of the seller. Any agent you talk with about a property who is not your exclusinve Buyer's Agent is a subagent of the selling agent.
At some point while reading this you might have wondered...just what is the difference between a REALTOR® and a real estate agent? Is there a difference? Read more about just what a REALTOR® is . One of the main differences between a REALTOR® and an agent is that a REALTOR® is bound by a Code of Ethics .
If you have any questions about real estate in the Austin, Lakeway or the Lake Travis area, contact me right away. Contacting me does not obligate you to anything at all. I'm simply here to help. Questions? Email Sam Chapman.
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