In short, a real estate agent is someone licensed to list and sell real estate, including homes, multi-family properties, and commercial and industrial buildings. A REALTOR®, however, is somewhat different. A Realtor® is a member of the National Association of Realtors®. While an agent is always a real estate agent, a real estate agent isn’t always a Realtor®.
Real estate agents who work on behalf of the best interests of the buyer are commonly called buyer’s agent (the seller’s agent/listing agent explanation above, aside). All listing agents represent the seller, but other agent who don’t have the buyer-agency agreements with respective buyers – even though they may show homes to those buyers – are working on behalf of the seller and must obtain the best price they can for the seller.
In contrast, buyer’s agents work on commission, which is contracted in the listing agreement. When a buyer’s agent brings the buyer, the listing agent must split the contracted commission with the buyer’s agent.
How to Choose the Best Agent for Your Needs
You might feel urge to pick the first real estate agent who appeals to or approaches you, but that’s something to avoid. Like any professional, there are degrees of professionalism, dedication, and experience. The “wow factor” will simply wear off. Meet the prospective buyer agents in their offices. A good buyer’s agent will want to know whether you are loan-preapproved by a financer, what kind and the terms of the loan you’re getting. They should spend adequate time to discover what you’re looking for in a house. They should listen as much as talk and ask questions. Watch to see if the agent make notes.
If the agent doesn’t broach the topic, ask for an explanation of his understanding of agency relationships and obligations to you. The law requires agents to explain whether they’ll be working for the buyer or the seller whenever they have substantive contact with a customer or prospective client. If the agent doesn’t offer you a buyer’s agency agreement, that agent is representing the seller, not buyer. If the agent can’t explain agency concepts to you, them move to the next agent.
Be sure the agent will be showing you all listings or properties on the market that meet your requirements, not only listings that are handled in-house. Buyer’s agents have the legal duty to put buyer’s needs ahead of their own. Even when an agent will be paid more for selling an in-house listing, they must inform you about other available, suitable listings and take you to see those you believe are viable prospects.
A good buyer’s agent will provide a home-buying education. The listing agent will point out all the features of a home; a good buyer’s agent will point to the faults – or advise when they can be overlooked.
Competent buyer’s agents help their buyers to think clearly as the home-buying process unfolds. For example, if a house is a good buy, a buyer’s agent might suggest looking past the dated bathroom and kitchen and look at the space above the garage that will make the perfect studio you desire. Likewise, a cute house with amenities, but with knob-and-tube wiring or a 40-yesr-old roof might not be worth the asking price. According to the San Francisco Chronicle’s Home Guide, if you decide to buy with the intention of building an addition, the agent should advise you to check the zoning before making the offer.
Agree to sign the buyer’s agency agreement after you have met with an agent. Some people sign an agency agreement after attending a showing given by the agent. Working with a seller’s agent is a mistake, according to an article by Amy Fontinelle of Forbes’ Investopedia. Any information you reveal will become leverage that the seller can use in a purchase negotiation. A buyer’s agent is legally required to maintain your confidentiality, disclose material facts to you, and maintain loyalty to you. These are fiduciary duties.
Excerpted from my book “The Home Buyer’s Guide – Everything You Need to Know About Buying a Home”
Ricardo Parente, Realtor®
Coldwell Banker Realty | Winter Park, FL