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Buyer Agency
Benefits Of Buyer Agency
Who Pays The
Commission
Questions to Ask When Writing an
Offer
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Beginnings
The first person who will be involved in the
purchase of your new home is the real estate agent. The agent is the person who
will help you choose the home which satisfies your needs and desires and fits
into your budget. This person is the SELLING AGENT.
He or she can show you any home that is on
the market through the Metropolitan Regional Information System (MRIS), which
has replaced the Multiple Listing Service (MLS) in this area. He or she can
help you qualify for a loan, write the contract for the home and provide you
with numerous other services.
The selling agent will ask you some basic
questions about your finances in order to help you determine the size loan for
which you may qualify and, therefore, the price of the home you can purchase.
The agent will also ask you questions about your preferences in a home, such as
the number of bedrooms and bathrooms, size of yard, etc. This will help the
agent narrow down the number of houses you will inspect, and enable him/her to
show you homes that may interest you without wasting your time.
The Search
After the agent determines what kind of home
you want, he/she will begin to show you houses. Remember that the agent working
with you does not get paid until you settle on the house of your choice. That
agent will do an enormous amount of work for you that you will never see. For
instance, it can take hours to sort through all the houses on the market to
find ones you may be interested in and to make appointments for you to see
them. Respect the work the agent does for you by not looking at a house without
the agent because they will not receive a commission on any house they do not
show you. Again, the agent can show you any house listed in the MRIS used by
the local Associations of Realtors, and can also frequently show you houses
that are for sale by owner.
The Contract
Once you have found the house of your dreams
the selling agent will help you write a purchase contract. This is your offer
to the seller to purchase the house for the terms stated in the contract. The
selling agent will present your contract to the listing agent and seller as
soon as a meeting can be arranged. The seller may accept your contract as it is
written by signing at the bottom. At that time you have a RATIFIED
CONTRACT.
In many cases, the seller will counter your
offer by changing some terms, such as the price, the number of points to be
paid by the seller, the division of transfer and recordation taxes or even the
settlement date. If this happens, the selling agent will bring that contract
back to you. You can accept it, reject it, or counter the seller's counter.
Most contracts do not go back and forth too many times before being acceptable
to both purchaser and seller.
Select Settlement Company
After your contract has been ratified, you
should call a settlement company (title company) to tell them to begin
collecting the information necessary to conduct your settlement
Loan Process
Next, you will apply for your loan. One of
the most important people you will meet during this process will be your loan
officer. This is the person who will take your loan application and work to get
your loan approved. Like the real estate agents, they do not get paid until you
settle on your home.
When shopping for a lender, do not look only
at rates or points. Ask about the lender's reputation. Remember, without the
loan, you will not be able to purchase this house. The real estate broker can
be of significant help here by recommending a loan officer with whom they have
had successful transactions.
You will also get to know the processor who
will prepare your loan and gather and organize all the information necessary
for your loan. This is the person who will contact your employer to verify that
you are employed and obtain your credit report, along with many other
documents.
Termite Inspection
After you have made your loan application,
your real estate agent will need to contact a pest inspection of the property
for termites. This should be done no earlier than 60 days nor later than 1 5
days before settlement. You probably will never meet the inspector, but you
will receive a copy of the inspection report at or before
settlement
Surveyor
Unless you are purchasing a condominium, the
lender will require that a current "House Location Survey" showing the location
of the improvements within the boundaries of the property be provided prior to
settlement. The settlement company will arrange for this to be done for you. At
settlement, you will receive a copy of this survey.
Settlement
Settlement is the time when the money and
deed are exchanged through the settlement attorney. Upon completion of
settlement you will be the owner of the property!!!
The attorney conducting settlement will
gather all the information necessary for settlement from you, the seller, your
lender and your real estate agent, and will coordinate the settlement. Among
other things, the attorney will assure compliance with the loan terms provided
by your lender, that all the lender's documents are properly signed, that the
seller's loan on the property will be paid off and released, and that the deed
transferring the property to you is in proper form and signed. The original
deed is sent to the courthouse for recording and later delivered to
you.
The last people involved in this transaction
are the movers. Let's hope they come on time!
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Buyer Agency
As part of a mutual agreement, you can elect
to create a buyer agency relationship between us which will entitle you to the
fiduciary client level services which include:
- Loyalty
- Obedience
- Disclosure
- Confidentiality
- Accounting in Dealings
A buyers agent will represent you and your
interests in the purchase of your home. This is different from a typical
sub-agency transaction where the buyer is not technically
represented.
However, the seller agent has the duty to
exercise reasonable skill and care in the performance of the Broker's duties.
This is a duty of honest and fair dealing and a duty to disclose all facts
known to the broker which materially and adversely affect the consideration to
be paid for the property.
A dual agency situation can arise if you
have entered into an agency relationship and subsequently we look at a property
listed with our company. This is a potentially challenging situation because it
is difficult to afford both parties full client level services. Dual agency
should only be entered into with the written agreement of both buyer and
seller.
Agency is a legal relationship and a written
agreement should be completed to explain all the duties and
responsibilities.
Benefits of Buyer
Agency
Loyalty
The real estate agent must act in the best
interest of the buyer.
Obedience
Must follow the lawful
instructions
Disclosure of all material
facts
Examples but not limited to:
- Relationships between agent and other
parties
- Existence of other offers
- Status of earnest money
- Sellers financial condition
- Property's true worth
- Commission split with other
brokers
- Legal effect of important contract
provisions
Confidentiality
Any discussions, facts, or information that
should not be revealed to others but does not include responsibility of
fairness and honesty in dealings with all parties
Accounting in dealings
Reporting of where any money placed in the
hands of the broker is kept.
Reasonable skill and care
Arriving at a reasonable purchase price and
advising buyer of such.
Affirmatively discovering material facts and
disclosing them to the buyer.
Investigating the material facts related to
the sale.
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Who Pays the
Commission?
- The Seller
Does
The Seller has generally signed a listing agreement with his
agent specifying a certain fee to be paid, and many times it has provisions for
splitting that fee with the agent who sells the property, regardless of
subagency or buyer agency.
- The Buyer
Does
The Buyer can pay his agent a commission as set out in their
written agreement. If this is the case, it would be inappropriate for the
buyer's agent to accept any portion of the fee paid by the
seller.
- Indirectly, the
Buyer Does
Even though the seller pays the commission out of his
proceeds, it has argued that the buyer paid the commission as part of the
overall purchase price. This assumes the buyer could have bought the home for
less had it not been listed.
- Each Party Pays
Their Agent
Each party pays their agent as specified in their
written agreement
Back To Top
Questions to Ask
When Writing an Offer
- If yes, may I have a copy to look at?
- Has the owner completed a property
disclosure statement?
- What type of financing is available on
the property at this time? Do you have quote sheets available?
- What would be a reasonable repair expense
amount for this home?
- Has there been an appraisal made on this
home?
- Could you run comparables of recent sales
in the area?
- Are you aware of anything that might
affect the value of the home presently or in the future?
- Would you prepare an estimated closing
cost statement and figure the approximate payments?
- Would you prepare a comparison of an
adjustable rate mortgage and a fixed rate mortgage and a Homeowner's
Analysis?
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First Time Buyers >A Buyers Market
Is the real estate section of your local paper filled with stories about how the real estate market in your area is slowing down? Is it taking months to sell the homes on the market? If this description fits your area, and you have been waiting for the right time to buy a house, it may be time for you to make a move.
This kind of market is referred to as a "buyers' market" for good reason--it is an opportunity for buyers to select from a large number of homes that could satisfy their needs. Everyone involved is ready to bend over backwards to make it possible for you to buy your dream home. Most sellers are highly motivated and so are the local real estate agents, loan officers, title companies, and other professionals involved in the transaction. It is important to remember that the real estate market runs in cycles, and conditions can change without a lot of warning. This could be the perfect time to contact a good real estate agent to discuss your needs and to explore the possibilities available to you.
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