Copyright ©2001, 2006, and 2008 by Jody Hudson
This is now a Buyers Market and Most Realtors are Seller’s Agents, by law. The SELLER’S agent must be honest, to a large degree, but he need not be fair. Do YOU still want to deal with a Seller’s Agent - or would you rather have your own agent, a Buyer’s Agent - who looks out for YOU in opposition to the seller and seller’s agents? Read On, to the end, this is important stuff!
There is a relatively new and not always well understood practice in Real Estate sales; it is called Buyer Agency or Buyer’s Agent.
The Real Estate Market has dramatically changed in the late spring of 2006. Most sellers are still trying to get far, far, more money than the market will support and most properties are not even being shown, not at all. As a Buyer, you know there are some good buys out there. However, there are nearly 8,000 properties on the market now (Aug 29, 2006) and last year about this time there were about 3,000 properties on the market. The only properties that are selling are the very best priced properties of any given description, and they are selling fast. There are more buyers than ever, they are more savvy and they are looking for bargains. I suspect you are one of those savvy buyers, seeking a bargain!
Savvy Buyers are seeking out ONLY the very best values in the particular kind of property they want and ONLY those properties are getting any looks at all. Savvy Buyers also know that Realtors usually represent ONLY THE SELLER. By law, a Seller’s Realtor must represent only the seller and thus that agent is your opponent, no matter how friendly they seem to be. If they look out for your interests, for real, they can loose their license. They may pretend very well and they may be very, very nice to you! They do this in order to get the most money for their seller. There is a better way for you, the Buyer.
Until recently Realtors and agents usually represented the seller, in opposition to the buyer, during the real estate transaction. Even the real estate agent who drove you from home to home was not legally, ethically or truly working on your behalf. By law, the agent was required to work on the seller’s side in order to get the highest price and the best terms for the seller — Period! Some, perhaps most, agents still work this way.
In the last few years, first the law and now the practice of representation has changed. You and I have an entirely different set of options and agreements when we are buying real estate. These options were previously only available and utilized by large companies or wealthy individuals or experienced and knowledgeable Real Estate Agents buying for themselves.
In the past, the buyer would get a buyer’s representative by paying a fee up front and usually by the hour, plus expenses, as well as hefty performance bonuses when the transaction was complete. Years ago half or more of my work was done this way for professional and wealthy sellers and buyers.
Twenty five years ago, as a personal agent for wealthy clients and companies, I charged and worked an average of 20 hours a week or more, at $30 per hour, plus expenses, plus 10% of the transaction (or when I was the buyer’s agent, a $2,000 retainer fee to start with and then $30 per hour and 10% of the amount below the listed price that I was able to obtain for my buyer. If there was financing involved I also was paid to find and obtain the best financing). This work was in addition to my work as a Broker/Agent in my office here in Lewes, Delaware.
Currently things are much easier for the buyer; As a buyer’s agent, a signature on a buyer’s agent contract from my prospective buyer begins the transaction. Usually the same original commission fee that would have been paid by the seller is split and half goes to pay the buyer’s agent.
In some cases the selling agent does not set up any fee to the buyers agent, or a very reduced fee, such as those agencies that advertise 2% or 3% or 4% commissions to the sellers, etc. The agents who do this do not pay the other agents much, sometimes nothing at all.
In that case the Buyer just picks up the missing commission and at settlement another 1%, 2%, 3%, or 4% or 5% comes out of the transaction and goes to us as Buyer’s Agent. We set that up in the initial Buyer’s Agency Contract, so there are no surprises. Whatever amount the seller’s agent has set aside for the buyers agent is subtracted from the amount the buyer pays us. Our fee is usually only 4% on residential and 7% to 11% on commercial and raw land; that is negotiable. For raw land development our fee is usually more and there can be fees paid us during the time (usually several years) we are getting the land approved for development.
With a Buyer’s Agent Contract between you and us; there is a guarantee from us that we are working ONLY for you the buyer and in opposition to the seller and the seller’s agent - in exchange you guarantee us a commission of 5% to 12% or as otherwise agreed. Our fee is usually already taken care of, or at least part of it, by pulling it from the the seller’s agent’s commission. Often, the seller’s agent’s commission pays our entire fee, not always however.
Your investment in a Buyer’s Agent, especially when it is us, is well placed as we will usually save YOU several times our commission in either a better deal for our buyer or far more protection and better buying strategy on behalf of our buyer.
I can draw this division of fees out for you on paper if need be when we meet the first time. Bottom line; you don’t really pay any more and you get the absolute best representation.
To read this article in its entirity, please click here.
Also, please feel free to visit all our websites with more information for the buyer, the seller, and the prospective buyer or seller…
My website.
My collaborative website with my partner Kate Baird.
My rural properties website.
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