How Do I Help an Agent Help Me? Once you find an active agent, you must decide whether he or she is right for you. Watch for obvious problems such as personality clashes or basic differences in outlook. In addition, you want to be sure that the agent isn’t so aggressive as to overwhelm you. You want to be able to control your agent, not the other way around. Remember, agents influence your decision by what they do or do not say. Be sure that they aren’t using this power to manipulate you into something you may not want. You will want to be forthright with an agent. Let the agent know your price range. Tell the agent the areas you want to consider. The agent isn’t a mind reader and can’t find the perfect house for you unless and until you give the agent the parameters of what you’re seeking. This doesn’t mean you need to tell agents everything about your finances or your intentions, as we’ll see shortly. Just offer enough to enable them to work for you.

Should I Work with Several

Agents? It’s okay to work with several agents, but only one at a time. Don’t hip-hop from one to the next. Only when your relationship peters out and the agent stops showing you properties you want to see should you move on. Reward a good agent with your loyalty, and the agent will reward you with good work. When you find that your current agent is no longer productive, try another. But be “up front” with both agents. Tell the second agent the properties you’ve already seen. Ask the second agent for something new or different to show you. There is a good reason for switching agents over time. First, while the vast majority of properties listed by agents are put on the Multiple Listing Service (MLS), where nearly all agents can work on them, some agents keep really good properties as “vest pocket listings.” Other agents won’t know about them and, therefore, won’t show you the properties. Further, in some areas, companies won’t list all of their listings on the MLS. As a result, any one agent may not be able to show you all the properties that are listed. On the other hand, understand that the agent who first shows you the property you eventually buy may be entitled to a portion of the commission even if a different agent eventually makes the sale. This could cause hard feelings or even problems later on should a different agent submit the offer. Instead of working hard to negotiate the best price and terms for you, the various agents could get into a squabble over who gets what portion of the commission. Work with only one agent at a time and tell that agent the properties you’ve already seen and other agents you’ve worked with. It will save you time and possible problems later on.

TRAP BEWARE OF THE OVERLY

DETERMINED AGENT Years ago (before the consumer protection movement was even dreamed of) I knew an agent who had a very aggressive style. He would get his clients in his car, which was connected to his office by two-way radio. (This was before cellular phones.) He would then take them out looking at properties. After he had exhausted his immediate list of properties, he would call his office and ask his secretary to look up other properties to show. Some clients were impressed. They would continue to look until they were exhausted and then ask to be taken back to the office, where their car was located. The agent would refuse! Oh, he wouldn’t exactly say, “No!” Instead, he’d tell them about some other house that was just around the corner and was just right for them. He literally kept them prisoner in his car until they finally agreed to make an offer! Of course, they could have always made him stop and then gotten out. But more often than not, the clients were new to the area and had no idea where they were. While some clients did get angry and refuse to consider anything until the agent brought them back, a surprising number actually were coerced into making offers! Fortunately, such actions today are unheard of. But the story illustrates an important point. Some agents are more actively aggressive than you want or can handle. If that’s the case run, don’t walk, away. They’ll try to coerce you into making deals you may or may not want.

The Agent’s Responsibility Is Not Always to You! This is a most important point that most buyers simply don’t understand. Let’s say that you’ve found an active agent whom you like and with whom you can work. You must now come to grips with the fact that, in many cases, this agent does not work for you! He or she is the agent of and works for the seller. It doesn’t matter that your agent shows you around to many houses listed by other agents on the Multiple Listing Service. It doesn’t matter that the house you decide to make an offer on has a separate agent who listed it. (This can be confusing to buyers, particularly when very often there is one agent yours who shows you a house and takes your offer and another agent the one who listed the property who seems to represent the seller.)

Actually, the agent who shows you around may be the “subagent” of the agent who listed the property. In other words, both may be the agents of the seller!

TIP FIND OUT THE AGENT’S FIDUCIARY RELATIONSHIP The law of agency in all states is quite clear. It requires that an agent maintain a fiduciary relationship with whomever that agent represents. Usually that’s the seller. If the “subagent” who’s been showing you around takes an offer from you and presents it to a seller, who is represented by a listing agent, both of these people may have a fiduciary relationship, not with you, but with the seller. What does having a fiduciary relationship mean? It means that the agents owe the seller “integrity, honesty, and loyalty.” That translates into the following.

The Effects of Dealing with a Seller’s Agent Unless the seller has authorized it, your seller’s agent can’t disclose how much less than the selling price the seller might take, even if the agent knows of a specific figure! (This isn’t to say that many agents don’t hint at the lower figure, but they aren’t supposed to come right out and tell you, for example, that the seller said, “My price is $100,000, but I’m so desperate to sell I’d take $75,000, butdon’tyou dare tell that to any buyer! ”) The agent can’t disclose that the seller might accept terms more favorable to you unless the seller has authorized the agent to tell you. On the other hand, if you tell the agent that you’re desperate to buy, that even though you’re offering $175,000 you’d be willing to pay $200,000, the agent is obligated to tell the seller what you said! Working with a seller’s agent is almost like having an enemy spy in your camp! Of course, in actual practice there is some bending of the rules. And a good agent will always attempt to work fairly with both buyer and seller.

In today’s world, where consumers are so litigious, many agents are hesitant to do anything that a seller might construe as violating the fiduciary relationship and that might result in a lawsuit against them. Hence, when you work with a seller’s agent (or subagent), don’t expect advice on how to get the best terms or price.

TIP “LOOSE LIPS SINK SHIPS!” When you’re working with a seller’s agent, even one you consider on your side, button you lips. Don’t tell the seller’s agent the highest you’ll go on an offer. Remember the old World War II slogan about loose lips. Don’t let the agent know the best terms you’ll give the seller. Think of the agent as the seller’s earphone. Don’t whisper anything that you don’t want the seller to hear. Keep your own confidences.

Buyer and Seller? There is no easy solution to the problem of agency for buyers. One answer, however, that is gaining increasing popularity in some areas of the country is to have a “dual agent.” Adual agent represents both buyer and seller. This agent owes both the seller and you, the buyer, “integrity, honesty, and loyalty.” However, unless permitted by the seller, the dual agent still may not tell you if the seller will accept a price less than the property is listed for. However, to compensate for this, the dual agent may also not tell the seller that you’d be willing to pay more than the price you offer. (The same generally holds true with terms.) Thus, while the dual agent really isn’t 100 percent on your side, the agent also isn’t 100 percent on the seller’s side either.

Dual Agent versus Buyer’s Agent versus Seller’s Agent In a dual agency:   The agent tries to represent both you and the seller   The agent tries to avoid telling either party anything that will hurt the other. Usually this means not saying anything that will benefit you

In a buyer’s agency:   The agent represents just you   The agent must tell you if he or she learns the seller will take less In a seller’s agency:   The agent represents just the seller   The agent must tell the seller if he or she learns you are willing to pay more

How Do I Know Whom My

Agent is Working For? Ask. Your agent is obligated to tell you. Further, before you sign any documents, including a sales offer, your agent should present you with a written statement describing who that agent works for (seller, dual, or buyer). Many states now require a formal disclosure as part of their agency law. (California, for example, requires dual agents to give a signed statement to that effect to both buyer and seller.)

TRAP GET YOUR AGENT TO DECLARE Don’t assume that just because your agent isn’t the listing agent of the property he or she is a “dual” agent. Unless your agent specifies whom he or she is working for, you can probably assume it’s the seller.

Should I Work with a Buyer’s Agent? As if it isn’t confusing enough already, there is yet another designation of agent we’ve hinted at, a buyer’s agent. This is an agent who truly works for you, the buyer. (After all, if sellers can have their agents, why can’t buyers?) There’s are some good reasons to work with a buyer’s agent. After all, it’s the only way you can be sure the agent is on your side. Remember, a true buyer’s agent has a fiduciary responsibility to you, not to the seller. Such agents must tell you everything they know about the property and about the seller that’s to your advantage, including any information about the seller’s willingness to accept a lower price or better terms. The only problem in dealing with a buyer’s agent usually is the fee. If you want a buyer’s agent, you sometimes have to pay the commission yourself! (Usually, however, the sellers pick it up.) At this point I’m sure some buyers are ready to hurl this article out the window. Pay a commission when you buy? In addition to the cost of the house, the down payment, the closing costs, and on and on. Add to that the cost of a buyer’s agent’s commission? That’s crazy! Not really. In most cases the seller ends up paying for the buyer’s agent anyhow. Buyer’s agents are adept at working out the commission with the sellers. The buyer’s agent’s fee is usually half of a full commission. (If the commission rate in your area is 6 percent, the buyer’s agent’s commission may be 3 percent.) Often a deal is worked out in which the seller agrees to pay your agent half the commission and the seller’s agent the other half.

What About Commissions?   The commission amount is negotiable, although the average today is around 5 percent.   When one agent represents the buyer and another the seller, the commission is usually split down the middle.   The sellers usually pay the full commission.   The sellers will usually pay your buyer’s agent half a commission.   If the seller’s agent refuses to split the commission, you might have to pay your buyer’s agent’s fee.   The brokerage takes a percentage of each agent’s commission.   The brokerage may try to impose a “transaction fee” in addition to the commission in order to recover some of its costs fight this! Thus, it may cost you no more than if you had worked with a seller’s or a dual agent. On the other hand, by working with a buyer’s agent, you might save so much on the purchase price that it would be worth your while to pay a commission yourself!

Some areas of the country have many buyer’s agents; other areas have almost none. They do advertise in phone articles and in newspapers. In addition, regular seller’s agents in almost every area know of buyer’s agents and usually are willing to at least let you know who they are, if not recommend them to you, once you make it plain that’s what you want. Should you use a buyer’s agent? The vast majority of buyers don’t, and that’s unfortunate. The only way to get an agent really on your side is to use a buyer’s agent. I wholeheartedly suggest you look for one when you get ready to buy. However, be very wary about signing a buyer’s agent agreement. These vary greatly, so have your attorney check it out to see that you don’t commit to paying a commission (or a portion of a deposit), or that you can get out of it if the agent proves not be satisfactory.