Real Estate Guide: Is Your Agent Working for You?
Don’t Take it for Granted that any Realtor you Meet is on Your Side.
It’s hard to go through the home buying process without having an excellent real estate agent on your side. The method of choosing a realtor seems simple enough: you go to the nearest real estate agent’s office, and they show you the houses they have available. If you find a property you like, the home buying process is over. If you don’t, you wait a little longer or try another realtor.
But don’t move on to our mortgage articles just yet. There are several different types of real estate agents, each with very different priorities, and they’re not easy to tell apart. To ensure that you’re getting the best information and deal when you’re buying a home, you need to know which type of realtor you’re dealing with and which type you want to deal with. Choosing the right real estate agent is almost as important as selecting the right real estate.
The three main types of realtors – and a few tips on what they can and can’t do for you – are listed below:
1) Sellers’ Agents
Most real estate agents do most of their work as seller’s agents. This means that they agree with the owners of properties on the market: the seller allows the realtor to try to sell their home by showing it to buyers and marketing it to other agents. In exchange, the seller’s agent receives a fee, usually a percentage of the home’s final sale price.
Not surprisingly, the primary loyalty of sellers’ agents is to the seller. Various legal and professional codes require that a seller’s agent promote the seller’s best interests and avoid telling potential buyers anything that may be detrimental to the seller’s interest.
Of course, these same codes require that a seller’s agent not deliberately hide important information from potential buyers. If a seller’s agent knows a home’s foundation is cracking, they must let the buyer know about it. However, their job is to get the seller the highest price possible (and thus get themselves the most significant commission possible).
If you’re a seller, deciding how to select a seller’s agent means figuring out how well connected, knowledgeable, and loyal potential realtors are.
2) Buyers’ Agents
If a seller’s agent is like a prosecuting attorney, then a buyer’s agent is a defence lawyer. A buyer’s agent is a real estate agent whose primary objective is to get the buyer the lowest price possible on the home they want. A buyer’s agent hunts around for homes that fit your needs, and when it comes time to negotiate a fee, they represent you during the bargaining. Just like a seller’s agent is prohibited from giving away too much information to the buyer during the sales process, your buyer’s agent is prohibited from doing anything that will hurt your chances of getting a property for the lowest price possible.
Occasionally, buyer’s agents may work for the same real estate agent as the seller’s agent representing the home you’re interested in (this is known as a “designated agency” arrangement). However, for the purposes of your transaction, the relationship is kept adversarial.
Of course, buyers’ agents have to be paid. In some cases, buyers’ agents simply charge their clients a fee. However, in most cases, both a buyer’s and a seller’s agent are involved in selling a home. The seller’s agent will often negotiate a deal to split their commission with the buyer’s agent. When this happens, the buyer doesn’t have to pay anything.
3) Dual Agents
In rare cases, you can end up with a dual agent. A dual agent is a realtor who is working as a seller’s agent for a particular property and, should you become interested in the property, serves as your buyer’s agent as well. If it sounds a little confusing, dual agents are supposed to simultaneously represent your interests and the interests of the seller.
In these cases, the dual agent is prohibited from sharing too much information about one party with the other. However, if you contract with a dual agent, it’s best to remember that their loyalties are divided. Dual agent arrangements work best when the buyer is prepared to pay the seller’s asking price and both parties want to close the deal quickly.