A SMART Home Buyer

A SMART Home Buyer

A Smart home buyer doesn't have anything to do with IQ.  It does have a lot to do with common sense.  There are a lot of opinions out there on what NOT to do as well as opinions of what to do. A smart home buyer uses their common sense to determine what best serves their needs. 

Years ago,  back in the 1950s, companies that were looking to purchase property decided what they needed was a Real Estate professional that had the company's and only the company's best interest as their goal.  So companies began hiring their own real estate professionals.  They would put this individual on the companies payroll with the single task of finding the properties that met the company's needs, researching them thoroughly and negotiating the very best purchase.  The thinking was these real estate buyer specialists would save the company more then enough money to pay their salary.  Companies wanted an experienced agent that had enough sales experience to understand the seller's perspective but not the driving influence of a sales organization. This person would not only be the companies employee but, would also have the legal duties and responsibilities as their AGENT.

Today, the vast majority of real estate brokerages are sales organizations.  They contract with property owners to sell their property.  Their loyalty is to the seller as it should be, with the primary objective of selling the property for the highest possible price. 

So, common sense tells us we should look for one of these buyer specialists to work for us.  Today these specialists are called "Exclusive Buyer Agents". They do NOT work in your typical "sales orientated" Brokerage, they work in Buyer Only Brokerages or as Buyer Brokers. They never have listings they must sell or the sales obligations Traditional Brokerages have that go along with listings.  Their loyalty and commitment is to the buyer only.  Perhaps the best thing about getting your own buyer agent is that there is no payroll,  there is typically no cost at all to buyers.

So, common sense tells us. . . . . . just,  Get Your Own Buyer Agent.

Real Estate Teams - Do Buyers want to Play?

Real Estate Teams are growing in popularity and size. It used to be a Team was two maybe three people; today some Teams can have 30 or more members! Many of these Teams may be "Top Producers", meaning they close a lot of deals - great for real estate companies!

The book The Millionaire Real Estate Agent, by Keller Williams founder Gary Keller and co-authors Dave Jenks and Jay Papasan has been instrumental in promoting the Real Estate Team concept. A "Team" typically divides it's members; some work with Sellers, some with Buyers. The Team usually works out of a larger real estate office/company (Brokerage). The key is cordinating all the different members of the Team to maximize the number of closed deals so that the Team makes enough money to support all it's members. Closing the deal, making the sale is the driving force in this form of Sales Organization.

The foundation of the Team is based on the typical Real Estate model of "Dual Agency". Dual agency is where the same real estate Brokerage represents both Buyers and Sellers. Part of the Team focuses on getting listings contracts - contracts to sell property for a property owner. These contracts create an obligation for the Brokerage as well as the Team to market, promote, display the Seller's property in the most favorable light and sell for the highest price possible. Another part of the Team works with Buyers.

From a Buyer's perspective how does this Team concept benefit the Buyer? The Buyer's main objective is to find the best property for the lowest price. A Team member will want to show and sell one of the Team's property listings - first. Buyers often complain that Team/Brokerage properties get "talked up" while other properties get "talked down" or are just not shown at all. Why? Because by selling a property the Team has listed the Team could double it's commission.

Can you imagine your Buyer Agent Team member "fighting" fellow Team mates to get the Buyer the best deal?

While many professions do have team concepts: surgeons, contractors, sports, etc.; these team members typically do not serve clients that have opposing objectives.

Real Estate Representation de-Mystified?

For the most part when Buyers start to look for a property to buy they don’t think about who they are going to be working with, they pretty much assume all Realtors© are the same, an assumption that could cost them cash.

To set the stage we need to define what an “agent” is. An agent is defined as a person or business authorized to act on another’s behalf. A real estate agent is a person who works for you to effect a successful real estate purchase.

Unfortunately when it comes to who represents you – the Buyer – in the purchase process State laws and regulations are not uniform; rather a mishmash of methods to avoid litigation and ensure the most profit for real estate franchises and brokerages.

For years a form of buyer representation known as sub-agency was widely practiced. Many multiple listing services required that the brokers listing property in their service offer compensation to “co-operating” brokers only if the co-operating broker acted as a “sub-agent” of the listing broker. What that meant was that buyers were not really represented. The agent they thought was working for them had a contract with the seller to get the seller the best price for the property since as a “sub-agent” they were working under the direction of the listing agent.

Sub-agency proved a legal nightmare so in the early 90’s ways were sought to allow real estate brokerages to keep the commissions from both sides of the transaction and avoid getting sued for misrepresenting who was working for whom.

The result is a host of “relationships”; from dual agency – where one “agent” works for both parties in the transaction to “non-agency” relationships (Transaction Brokers) which does away with agency relationships altogether. Even though the National Association of Realtors© has never endorsed transaction brokerage, Florida and 24 other states allow Realtors© to act simply as “facilitators”, providing services to Buyers without representing them as their agent.

In Florida it is assumed that all real estate sales associates are acting as Transaction Brokers (non-agency). Florida law changed in 2006 and with that change sales associates do not have to provide consumers with disclosures letting them know that they are working as non-agents (Transaction Brokers).

Interestingly according to a survey conducted by the National Association of Realtors© only 10% of Realtors© said they practiced Exclusive Buyer Agency; working exclusively in the Buyer’s interest.

For a more in-depth discussion visit this Inman News story.

What HUD.gov say's about Realtor Representation

Here's what HUD says, "It is your responsibility to search for an agent who will represent your interests in the real estate transaction. If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you."

Because 98% of all Real Estate Brokerages are Seller orientated, that is they sign a contract with the Seller, they can not provide Buyers Fiduciary Representation. Fiduciary Representation means Full Disclosure, Complete Confidentiality, seeing ALL properties meeting your requirements and putting the Buyers Best Interest First.

An Exclusive Buyer Agent can be found at brokerages that do NOT contract with Sellers. These Buyer Brokerages never list properties for sale and work exclusively for the Buyer.

Looking for your own Buyer agent?  Try  www.GetYourOwnBuyerAgent.com

FLORIDA - a Transaction Agent State - What does it Mean?

Understanding “Transaction Brokerages”..

A Transaction Broker, in some state referred to as a Dual Agency, provide limited representation to clients. Their primary function is to FACILITATE a transaction between a Seller, usually their client and a Buyer. Florida is by statute a “Transaction Brokerage” State. Prior to 2008, an Agent was required to advise his prospective client who he represented. Today, that is not required. His representation roll has been reduced to that of a mediator.

a Transaction Broker can not provide these Critical Buyer services:

1… Be an advocate for you.
2… Negotiate the best price for you.
3… Negotiate the best terms for you.
4… Suggest an appropriate offering price.
5… Research on your behalf and bring to your attention, defects and/or problems.
6… Provide information about the seller motivation and position.
7… What the Seller paid for the property and his mortgage.
8… Research previous attempts to Sell the property.
9… Provide Fiduciary Representation.

Transaction (Agents) Brokers can and usually do switch from Transaction Broker to “Buyer’s Agent” to “Seller’s Agent”, back to Transaction (Agent) Broker.

The Question is: Who do these Agents really work for?

Answer…The Brokerage. All agents have employment contracts with the Brokerage they work for.

Ok, The Question to follow would be…

Who does the Brokerage work for?

Answer…If the Brokerage Lists properties for Sale, they have Legal Contracts with Property Owners to Market, Advertise, and Sell the owners property at the Price and Terms the Seller wants.

The Agents working for the Brokerage secure these Listings however, the Brokerage owns these Listing Contracts, Not the Agent.

All the Agents working for the Brokerage are obligated under these Listing Contracts and their Contractual Relationship with the Brokerage to Sell these Listings.

Now, the Obvious Question is…

How can the Brokerage’s Agents provide Buyers “Fiduciary Representation” ?

Answer… They Can’t. There is an inherent “Conflict of Interest” that prevents brokerages Contracting with Sellers from providing Buyers, “Fiduciary Representation“. It’s questionable that they can provide it to their Listing Clients.

The Solution…

Has been to choose up sides. Either you work with Sellers or work exclusively with Buyers! To this end, enter the Buyers Brokerage and Exclusive Buyer Agents. Because they do not take Listings or ever work with Sellers, they can provide Buyers Fiduciary Representation from Start to Finish. Finding an Exclusive Buyers Agent to work with may be more of a challenge then a traditional Listing Agent however. Searches on Exclusively Buyers Realty or FAEBA.org (newly formed Florida Association of Exclusive Buyers Agents) can get you to the right Exclusive Buyers Agent. “a Clear Choice for Today’s Sophisticated Buyer"