Even though I have been brokering real estate for over 20 years, I forget that first time home buyers often don’t understand how buyers agents get paid. By the time many of you connect with an agent, you‘ve seen every property on the internet, maybe visited open houses, gorged yourself with information from various websites, but never learned along the way how a buyer’s agent is compensated.
If you sign a written exclusive agreement with your Buyer's Agent, it will have language in the contract explicitly defining how the agent is paid, whether by cooperating agent or, in the absence of a cooperating fee, by you, the buyer. In some circumstances, it may be a combination of both.
More typically, there will be a cooperating fee offered as compensation from the seller extended through and reported in the multiple listing service listing of the property. Without a contract signed by the buyer, this compensation would suffice for the buyer agents fee. If a Buyer contract states that the buyer agent fee is 2.5% and the cooperating fee is only 2% the buyer who has signed a contract with a buyer's agent would be responsible for the extra .5 %.
The buyer agent fee is what’s due the Buyer agent’s company or the "brokerage", not the individual agent. The actual fee that the agent earns is a function of the arrangement the buyer agent has with their brokerage. This will differ among brokerages. Normally, the total fee will be divided among several parties; the franchisor, it there is one, the brokerage and the buyer agent. There are often third party fees; brokerage to brokerage referral fees or relocation company fees.
Buyer's agents work on a contingency basis, that is: they only get paid when a closing takes place. The total fee is what’s due the Buyer agent’s company or the "brokerage", not the individual agent. The actual fee that the agent earns is a function of the brokerage’s compensation plan. That will differ among brokerages. Normally, the total fee will be divided among several parties; the franchisor, it there is one, the brokerage and the buyer agent. There are often third party fees; brokerage to brokerage referral fees or relocation company fees.
Either way, we are bound by the law of agency to provide lawful obedience, loyalty, disclosure, confidentiality accountability and reasonable care. When both parties understand that they are in a partnership, there is greater opportunity for a happy ending for all.
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It's a new season and many folks are getting back to the business at hand: Looking for single family, condo or multi-family property to call home! This task usually involves visiting Sunday open houses and so we've re-publishing this blog. Here's the information you need to know when you pass through the door and say hello to the person waiting to greet you.
The Internet is usually the place buyers begin their home search. After filtering through the inventory and taking virtual tours, they are ready for the next step. That may mean touring weekend open houses.
If you are a buyer who has not yet engaged the services of an Exclusive Buyer’s Agent, there are things you should know about the role of the real estate agent hosting the open house. The hosting agent may be the Seller’s Exclusive Agent, or the host may be another agent - a Facilitator. The Facilitator is there to answer questions about the property, but she doesn’t represent either the seller or a buyer in that specific role. A Facilitator may become a Buyer’s Representative with a Buyer’s consent.
The Seller’s Exclusive Agent can assist you with the purchase of her exclusive listing but only with Consent to Dual Agency, which would need to be granted by both you and the Seller. Alternatively, the Seller’s Exclusive Listing agent can assist you in the purchase as the Seller’s agent, meaning the Buyer purchases without a “Buyer’s” representative.
The Open House host, regardless of who it is, is required, by a Realtor Code of Ethics, to determine if you are already under contract with an Exclusive Buyer’s Agent before she can engage in a conversation about working with you. Expect to be asked, it doesn’t reflect over aggressiveness.
If you feel the host is someone you would be comfortable with, ask about how you might work with her. In the end, a Seller wants to sell, and a Buyer wants to buy. We just need to be sure everyone understands our responsibilities and obligations to the consumer.
Debby Heffernan, principal
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Despite the snow falling outside my window, it is Spring and time for home buyers to sprout up amongst us like crocuses in the garden. If you are one of those fortunate enough to be looking to buy real estate in Metro West Boston this Spring, I thought I might mention a few things you should watch for in your travels.
1)Banks. Or, should I say financing. It has become an enormous, messy, harassing road block for many. Even buyers who were told that they were well qualified or “pre approved” are having trouble getting their financing. Be sure that you are newly preapproved”. Be sure that the bank you are working with will lend on the property you are seeking to buy (many institutions are refusing to lend on certain types of condos). If you are able, find a local lender to work with as the larger banks seem to be in a state of disarray that would make the NFL negotiations look promising.
2) Property pricing. Or should I say relisted ( or still listed) properties. With the slow market last Fall and Winter many properties did not sell and are being extended or relisted on the market. Watch for the original prices, the price reductions and the days on the market to more fully understand the current pricing and the situation of the sellers.
3) Wear and Tear. Or should I say damage. This past Winter was a tough one and may leave some telltale signs of its impact on the property you are viewing. Be sure to check single and multi family homes for signs of ice dams, (like fresh paint on several ceilings), water in the basement, falling gutters etc. Be sure to check condos for any recent repairs or special assessment for repairs as a result of the recent storms.
As long as you are prepared, this is – pardon me while I sound like a Realtor here – a great time to buy. Inventories are high, sellers are looking for buyers, and rates are fairly low. Just be prepared, keep your wits about you and of course, work with great Buyer Agent an Avenue 3 Real Estate Agent!
Published by Karen Lilley, Principal, Avenue 3 Real Estate
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