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A REALTOR® can work for
a home buyer as well as a seller
Nowadays, if you are looking to buy a house, your first meeting with a REALTOR® begins with a discussion of the disclosure of agency. New York State along with many (but not all) states has enacted legislation that addresses the issue of representation and fiduciary obligation in the relationship between buyer or seller and broker.
The law is a means of consumer protection, obligating REALTORS® to discuss with buyers the fact that, in many instances, a broker is an agent of the seller. This means that although the broker is doing the job of helping a buyer to find a home, the broker owes loyalty to the seller. The broker must use negotiating strategy in the sellers best interest. The broker will try to obtain the best price and terms for the seller, and must refrain from disclosing to the buyer any confidential information, such as motivation for selling, which might adversely affect the seller's negotiation position.
In all circumstances, however, the law states that, "In dealings with a buyer, a seller's agent should (a) exercise reasonable skill and care in performance of the agent's duties; (b) deal honestly, fairly, and in good faith; and ( c) disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law."
The question naturally arises: Can a REALTOR® work for the Buyer? The answer is yes. This relationship is called buyer brokerage.
Buyer brokerage is not a new idea, but it is new in practice for many New York state REALTORS®.
REALTORs® generally work on a commission basis and, obviously, obtaining the best price for a seller brings the highest pay. However, the loyalty established in a buyer brokerage agreement commits a buyer (for a defined period of time) to purchase through a particular agent. All fees are negotiable between agent and client, therefore it is also possible to pay the buyer's agent a flat fee for their services.
As a buyer broker, a REALTOR® considers what terms and conditions are in the buyer's best interest. The broker is not obligated to disclose to the seller any facts about the buyer which might adversely affect the buyer's negotiation position. In fact it is illegal for the buyer broker to compromise their fiduciary duty by disclosing confidential information to a seller. By providing market comparables and interpreting sales data, a buyer broker can work towards obtaining the best possible price. A buyer broker also provides more in-depth research on the particular home the buyer wants to buy. This may include, but is not limited to, knowledge about water quality and condition of the septic tank; local zoning laws affecting the home; etc. CJ has a checklist detailing items a buyer may want her to research throughout the home-buying process.
Essentially, a REALTOR® acting in this capacity becomes the buyer's advocate and adviser with a fiduciary obligation to the buyer.
In exchange for these services, a REALTOR® working as a buyer's agent might ask for a contract with the buyer.
Such an agreement defines the obligation between parties, as well as the duration of commitment. Regarding compensation, in the Ithaca area, it is common practice for a seller, when listing a property, to agree to work with and compensate a buyer broker.
Honesty and fairness must always be maintained by a REALTOR®, whether acting as buyer's or seller's broker.
The key issue is representation, and as a consumer you have a choice. You should be clearly aware of whom your REALTOR® represents. The law of disclosure agency makes this your right.
If all this is not overwhelming and you are ready to hire your own buyer's agent, give CJ a call. Her experience and training in the area of buyer representation provides you with an easier transaction from offer to closing. Learn more about starting the buying process by visiting this link: Buying A Home.