Photograph by Kathy De La Torre

Today's busy home buyers can easily be lulled into saving time and money by using the Internet in place of a Realtor. The question is, who is going to look out for the buyer's rights ?

Many buyers go to the table unrepresented

By Blanche Evans

The purchase of a home is one of the most complex, high-risk and expensive transactions most people will ever go through, yet 40 to 50 percent of home buyers go to the closing table without a representative or advocate on their side. This startling research, performed in separate studies by the National Association of Realtors and the National Association of Exclusive Buyer's Agents, shows that many buyers do not understand the importance of having an advocate.

Are you an unrepresented buyer? Like half of all home buyers in the nation, according to REALTOR.com you may be searching the Internet for information to save you time and money, including shopping for loans and other services.Yet, without someone actually representing you, how do you ensure that you get into the home of your choice at a price you want to pay?

There are many reasons to hire a Realtor to represent you, including these:

• Realtor is commonly used as a generic word for real estate broker or agent, but only a member of the National Association of Realtors can be called a Realtor. The association provides advanced educational opportunities to its members, enabling them to offer accredited sub-specialties such as buyer's representation (ABR,) residential real estate expertise (CRS,) or Internet readiness (e-PRO) to the public. Many excellent Realtors do not have extra certifications and designations, but if you should notice letters next to an agent's name, be sure to inquire about the meaning. For their own reasons, many real estate professionals choose not to join the professional association. If you would like to work with an agent who is not a Realtor, ask about the agent's experience and specialties.

• When you have a Realtor as an advocate, you may reduce some of the risk of home buying. Otherwise, it's buyer beware. The agent is paid to assist you, advise you and help you navigate the transaction legally and safely. Your agent will make sure you take appropriate steps to protect yourself. Incredibly, many states do not have laws or regulatory bodies in place that protect all aspects of homebuying. Only 20 states currently license or certify home inspectors, for example. Further, these and other professionals are usually liable in civil suits for the amount of their fees, not for any costs incurred by the buyer for problems or repairs that were undetected before the closing. If your agent suggests that you get a structural inspection, do so for your own protection. She or he will know how an inspection should be performed and will attend the inspection alongside you.

• It is hard to name any other profession whose members work on a contingency basis. Even attorneys charge by the hour except for some types of lawsuits. You don't typically pay for any services upfront with an agent. That means the agent incurs the costs of doing business on your behalf until you find and close your home. Therefore, it's in your agent's best interest to work quickly, diligently, and to use all his or her resources to help you meet your goals. Some agents will ask you to sign a buyer's representation agreement that allows him or her to represent your interests. Be sure to ask what the advantages are, and what your release options are. Interview several agents before making your choice and compare their representation styles. Make sure you understand how the agent you choose will work with you, according to the laws and regulations of your state.

• Real estate professionals have house-by-house, street-by-street, and market-by-market experience. Their experience is invaluable and can't be learned overnight. Realtors who have weathered the pendulum swing between buyers' markets and sellers' markets know that the real estate market can turn abruptly. Rising and falling interest rates affect the number of available homes for sale and their prices within weeks or days. All it takes is the entrance or exit of a major employer, and thousands of homes in a neighborhood can be affected.

• According to The National Association of Realtors, more than four-fifths of existing homes in the United States are represented by real estate brokers. So are 70 percent of new homebuilders and their products, according to NewHomeNetwork.com. Realtors cooperate with each other through an organization called the Multiple Listing Service (MLS.) The MLS has the current broker-represented properties for sale in its database. Your agent can also show you homes outside of the MLS inventory, including for-sale-by-owner homes, new builder homes, and institution-operated homes. However, no Realtor can be expected to show you this additional inventory without a representation agreement and an assurance of being paid at closing.

• MLS data entry can take from one to 10 days, depending on the listing agent, his or her broker, and the MLS. By the time the home is posted on the Internet, it could already be sold. Clever agents don't wait that long to find a home for their buyers; they network with each other. Your agent will tell other agents about you and your wish list in exchange for information about upcoming homes for sale. That's how many homes are bought and sold in a hot seller's market, without a sign ever going into the yard. If you want to be the buyer positioned to make first and best offers on these homes, hire an agent.

• Less than a decade ago, a home could be bought with a two-page contract. Now consumer-mandated seller's disclosures, environmental and structural reports, and other liabilities have turned the home transfer into a complicated minefield. Realtors work with contracts daily, and can fully understand which points are harmful and beneficial to you. From helping you make a reasonable offer, to providing for the discovery and disclosure of material facts, your agent can also interpret information for you.

• Your agent not only represents your interests but also works on behalf of the transaction. Does that seem like a conflict of interest? It isn't. Buyers and sellers are natural adversaries. You want to buy for the least price, and the seller wants the best price. Agents must be skilled negotiators to keep bargaining chips from turning into deal-breakers. As the buyer, remember that you are the one in control. You can instruct your agent how far to go in negotiations on your behalf. One day, you'll be glad your agent talked you out of walking away because the seller wouldn't leave the chandelier.

• Realtors' services are somewhat negotiable. The more risk you ask your agent to take, the higher the fees will be, so the more your broker serves as your advocate, the more you can expect to pay. New ideas are coming to the real estate industry, which allow the consumer to pick and choose real estate services based on what brokers offer in the marketplace. Some offer only full service brokerage services. Others offer menu services and are paid accordingly. If you want to save some money, be prepared to pay more up front and shoulder some of the responsibilities yourself.

  One of the greatest endorsements you have for using the services of a Realtor is from your lender. Lenders are usually willing to finance agent commissions for buyers in the mortgage loan. That should tell you how important it is that you get proper representation. Many lenders agree you may get a better price for your home and better terms by having an advocate.

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  Article information contributed by Wells Fargo Home Mortgage

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