1. A real estate transaction is complicated. In most cases, buying or selling a home requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page government-mandated settlement statements. A knowledgeable guide through this complexity can help you avoid delays or costly mistakes.
2. Selling or buying a home is time consuming. Even in a strong market, homes in our area stay on the market for an average of ____ days. And it usually takes another 60 days or so for the transaction to close after an offer is accepted.
3. Real estate has its own language. If you don´t know a CMA from a PUD, you can understand why it´s important to work with someone who speaks that language.
4. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you´ve done it before, laws and regulations change. That´s why having an expert on your side is critical.
5. REALTORS® provide objectivity. Since a home often symbolizes family, rest, and security, not just four walls and roof, home selling or buying is often a very emotional undertaking. And for most people, a home is the biggest purchase they´ll every make. Having a concerned, but objective, third party helps you keep focused on both the business and emotional issues most important to you.
Understanding Agency
It´s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.
1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.
2. Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer´s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.
3.Buyer's representative(also known as a buyer´s agent).A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.
4.Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them is legal in most states.
5.Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.
6. Nonagency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Questions to Ask When Choosing a REALTOR®
1. How long have you been in residential real estate sales? Is it your full-time job? While experience is no guarantee of skill, real estate, like many other professions, is mostly learned on the job.
2. What designations do you hold? Designations such as GRI and CRS, which require that agents take additional, specialized real estate training, are held by only about one-quarter of real estate practitioners.
3. What types of specific marketing systems and approaches will you use to sell my home? Look for someone who has aggressive, innovative approaches, not just someone who´s going to put a sign in the yard and hope for the best.
4. Will you represent me exclusively, or will you represent both the buyer and the seller in the transaction? While it´s usually legal to represent both parties in a transaction, it´s important to understand where the agent´s obligations lie. A good agent will explain the agency relationship to you and describe the rights of each party. It´s also possible to insist that the agent represent you exclusively.
5. Can you recommend service providers who can assist me in obtaining a mortgage, making repairs on my home, and other things I need done? Keep in mind here that agents should generally recommend more than one provider and should tell you if they receive any compensation from any provider.
6. What type of support and supervision does your brokerage office provide to you? Having resources such as in-house support staff, access to a real estate attorney, or assistance with technology can help an agent sell your home.
7. What´s your business philosophy? While there´s no right answer to this question, the response will help you assess what´s important to the agent-fast sales, service, etc.-and determine how closely the agent´s goals and business emphasis mesh with your own.
8. How will you keep me informed about the progress of my transaction? How frequently? Using what media? Again, this is not a question with a correct answer, but that one reflects your desires. Do you want updates twice a week or don´t want to be bothered unless there´s a hot prospect? Do you prefer phone, e-mail, or a personal visit?
9. Could you please give me the names and phone numbers of your three most recent clients?
Reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® Copyright 2005. All rights reserved. www.REALTOR.org/realtormag