...until you know who they represent. The following may seem long but read on because it could cost you thousands of dollars if you don't understand how real estate agents work.
Under The Real Estate Business and Brokers Act an agent represents the best interests of his principal in exchange for consideration. In plain English it means that an agent gets paid to get the best price and terms for his client. The question you should be asking yourself, then, is who is the client?
This is a grey area that up until a few years ago could be misleading. You see, there is what is called an agency relationship that is created when a listing agreement is signed between a seller and their agent.
Picture this scenario. It is, sadly, one that plays out every weekend, as any experienced agent can confirm. You're driving around on a nice Sunday afternoon and you see an open house. You just happen to be in the market for a home, and you like this neighborhood. You decide to go in. The salesperson greets you at the door and then proceeds to give you the grand tour. While they point out that this room with all the ceramic tile and a toilet in the middle of it is the bathroom and that one over there with the fridge and stove in it is the kitchen, they let out that the seller is desperate and must sell. He is asking $220,000 but "I know that I can get it for you for $210,000."
Having read last week's newspaper column about the importance of being pre-qualified, you respond by saying that the bank has approved you for $230,000 and you might pay $215,000. No problem says the salesperson. We can low ball the offer because the seller told me that he needs $190,000 or the bank is taking back the house!
You absolutely love this house and decide to have this sales person prepare an offer. You sign an offer for $190,000 and he then takes it to the seller. The seller explodes. "Why did you bring me this ridiculous offer?" he cries. The salesperson responds, "they are willing to go up to $215,000 and I wanted to get them on paper." The seller changes the price on the offer to $215,000 and the salesperson brings it back to you. A few choice words go through your head, but since you love this house you accept $215,000.
The question now is, who was this salesperson representing? You told him in confidence what you would pay and he told the seller. You trusted this guy because he told you that he would get you a deal.
Let's take a step back for a moment. Remember at the beginning? I told you that the salesperson has an agency relationship with his seller, not you. Unless they specifically state that they will represent you as a Buyer's Agent then you're out in the cold.
As a Buyer's Agent the job is now to find you that perfect home and represent you. That means anything discussed between you and your agent will stay in the strictest confidence. You may be asked to sign what is called a Buyer's Agency Agreement. This is a contract between you and the agent stating that he/she will represent you. It costs you nothing because the seller still pays the Buyers Agent's fee from the commission. Just make sure that the agreement has a provision allowing you to cancel if you are not happy.
This is important because you should know what happens if you decide you don't like this agent or feel that they are not working hard enough. This gives you an out if you want to work with another agent. We offer an Easy Exit Agreement which means that if for any reason either party is not happy, they can cancel, no questions asked. You can fire us if you're not happy and we can fire you if we are not happy.
All agents do not offer an Easy Exit Agreement.
If you want more detailed information, we'd be happy to send you a free copy of the Law of Real Estate Agency pamphlet.
or Contact Me.