Photograph by Kathy De La Torre
Patricia Best, broker/owner real estate agent at ReMax West Valley in Sunnyvale shows what a buyer-broker agreement looks like.
Buyer must do homework to choose agent
By Sue Stone
Prospective buyers entering the market for a home not only face the daunting task of finding an affordable home in the area, but they also need to do their homework about selecting a real estate agent to represent them. Purchasing a home is usually the largest single expense on anyone's balance sheet, so buyers would do well to choose their agent wisely.
"Every buyer, but especially first-time buyers, should carefully interview several licensed agents to find the right match of personality, experience and philosophy," said Penny Pompei, executive vice president, Silicon Valley Association of Realtors. "First-time buyers need assistance on the whole purchase process, so having the right agent who can walk them through the steps is very important to securing a successful experience for the buyer."
Pompei adds that working with an experienced Realtor can provide a certain amount of security for the buyer, but some newly licensed agents can offer excellent service, as well, depending on their background and training.
Most people are referred to real estate agents by friends, family or business associates who had a good experience with a particular agent. Personal referrals are a good place to start when researching potential Realtors, but there are other sources that can be used. For instance, HomeScape.com recommends that buyers review the local newspaper and note the agencies that advertise on a regular basis, visit open houses in the desired neighborhoods and spend time talking to the listing agent. In addition, prospective buyers are encouraged to explore www.mlslistings.com to research available properties, review style, prices and comparable listings. Using the online Multiple Listing Service also provides a resource for locating a potential Realtor.
There are several books on the market that potential home buyers can use to help them through the process of finding a real estate agent who meets their needs. 100 Questions Every First Time Home Buyer Should Ask, Times Books, focuses on the interview process and what buyers should consider when selecting a Realtor.
Answers to questions such as the agent's number of years in business, the number of transactions completed on average in a year, and what is the average dollar volume of their transactions will give the buyer a feel for the Realtors' level of experience.
The buyer may want to know if the agent specializes in certain types of homes and/or communities as an agent who primarily represents buyers looking for multifamily units in the San Jose area may not be as experienced amily homes in Monte Sereno. Although Realtors can represent their buyer client in any property listed on the market, most agents come to know certain communities and geographic areas better than other locations and, therefore, know the market values and history well enough to advise their client accordingly.
Issues such as does the agent smoke? Is he or she punctual? Are they organized? Do they return phone calls or is there an assistant who buyers have to work through during the purchase process? The answers to all of these questions and more, according to 100 Questions First-Time Home Buyers Should Ask, will reveal the agent's style, temperament, philosophy and work ethic.
"It's very important that the Realtor and the buyer have complementary styles as it's the little things that can mean so much in representation relationships," adds Pompei.
Selecting the right real estate agent also means reviewing the various options for buyer representation. Most agents who represent a buyer are considered the "buyer's agent." The agent is simply acting on the buyer's behalf during the research and transaction process. The agent may work in a large, multinational firm or as a single proprietor.
Another option to the buyer is to sign a written buyer's agreement with a buyer broker or exclusive buyer agent. Buyer brokers represent the buyer solely during the transaction, but they do not have an exclusive agreement with the buyer; therefore the buyer can enter into other agreements as they wish. The exclusive buyer's agent is what the title implies--an exclusive agreement with a financial responsibility on the part of the buyer.
"The buyer's broker agreement allows for a certain commitment level between the two parties," said Kim Richman, manager of Century 21 Seville Contempo. "We don't see it being used as much out here in the West Coast like it is back East, but it is an option certain buyers may wish to entertain."
Experts in the industry say that buyers typically are concerned by two facets of the buyer brokerage agreement--the exclusivity agreement and the payment for services rendered. When a buyer decides to work with a buyer broker, he or she may be obligated to the agent to pay a fee for the service. Buyer brokerage fees can be paid either as a flat payment, hourly or as a percentage of the purchase price of the home.
The most common form of commission, according to the National Association of Exclusive Buyer Agents, comes from the seller, just as it is in the traditional buyer-agent relationship. The 6-percent commission is usually split between the seller's agent and the buyer's agent.
"I would say 95 percent of the time the seller pays the commission, but there are rare exceptions, usually related to For-Sale-by-Owners, where the buyer is required to pay the fee," said Patricia Best, broker/owner of ReMax West Valley.
The buyer's broker represents a buyer in the same way a traditional agent would by researching homes, price ranges, neighborhoods, etc., and negotiating the purchase contract in the end. The difference between the two types of agency lies in the objectives and obligations stated in the written contract.
"The agreement between a potential buyer and a buyer's broker stipulates length of time the buyer wishes to retain the broker, specifications for home styles, prices and community areas and the broker's obligation to disclose any knowledge of the property he or she has," adds Best. "If a buyer is a little uncertain about the length of time they wish to employ a buyer broker since the two probably have never worked together before, I recommend that the buyer stipulate a shorter period of time in the contract such as two weeks to try the process first. If they are happy and want to continue then we just extend the length of the contract."
Whether the buyer decides to use a traditional real estate agent or a buyer's broker, the questions about experience, style and general knowledge of the area desired apply. According to the Silicon Valley Association of Realtors the most important thing home buyers need to remember when looking for a qualified Realtor to represent them is what qualifications and traits the agent need to have to make the buying experience successful for them. That answer will be different for every buyer in the market, but if it is a question buyers can't answer for themselves, then how will they know when they meet the right agent.
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