Are you planning to buy your dream home in Massachusetts soon? The process of home buying can be complicated especially if you are a first-time home buyer. Why am I saying so?
The United States Uniform Commercial Code (UCC) requires a written contract for real estate transactions for this reason. In addition, you must record your purchase with local government, so it becomes a public record.
Because these sales are such a big deal, it makes sense to have a real estate professional by your side. But the big question many home buyers ask is, who represent whom?
In the past, it was common for a real estate agent to put up a “for sale” sign, show the home, take in offers and close the deal. Many times, buyers were under the impression that the agent represented their interests, or was at least a neutral party. The fact is that agent used to represent the interests of the home seller, and only the seller.
However, this has changed over time and today, most buyers and sellers have their own representation. It makes sense because, the buyer’s goal (to pay as little as possible and get the best terms available) completely conflicts with that of the seller (to get the highest possible price and best terms).
In this post, we are going to have a look at the roles played by the listing agent and the buyer’s agent.
The Listing Agent
It is not uncommon for a homebuyer to contact a real estate agent directly in response to an online ad or a yard sign. When you’re the homebuyer, it’s important to understand that you are most likely contacting the listing agent.
The listing agent, also known as the seller’s agent, is a real estate professional legally obligated to protect the seller’s interest. He operates under the fiduciary commitment.
The listing agent’s primary role is to market the property, attract potential buyers, and work to get the highest possible price and the best terms for the home seller.
Responsibilities of a Listing Agent
As a listing agent, one is expected to perform the following responsibilities;
- Conducting Property valuation and price the seller’s property for sale
- Suggest necessary property repairs or improvements
- Develop and implement effective marketing strategies
- Present and negotiate offers on the seller’s behalf
- Draft counter-offers for the seller
- Help the seller complete state-mandated disclosures about the property condition
- Follow through on contract dates, events and contingencies
As a homeowner seeking to sell your property, the listing agent is your biggest advocate.
The 5 P’s of Real Estate
Have you ever heard of the 5 P’s of Real Estate? Am going to explain this to you in a very simple concept. Many listing agents will List Your House and then do 3 P’s of real estate which are;
- Place your house in multiple listing
- Place a sign in your yard
- Pray someone else will sell it
Personally, I do the 4th and 5th, which are
- Prospecting for buyers every day
- Price watch
This means that, as the market shifts daily, I will be interpreting the market and giving you feedback on what is happening. You do want me to keep in touch and give feedback, don’t you?
Let’s now have a look at the buyer’s agent.
The Buyer’s Agent
Thanks to the Internet and mobile devices, today’s homebuyers have unprecedented access to property information. In fact, the NAR reported that in 2016, about 51% of all buyers found the homes they bought online.
However, 90 % of buyers still chose to work with an agent to pull off the transaction. A buying agent is also known as the selling agent and they typically contracts to represent home buyer’s interest in all the real estate transactions.
As a rule of thumb, a buyer’s agent must put the homebuyer’s needs first. For example, he or she can’t tell the listing agent how much a client is willing to spend, how badly a couple wants the house, or anything else that would put the property buyer at a disadvantage.
Buyer Agent Responsibilities
The buyer’s agent should:
- Pre-view properties to find homes that meet the clients’ needs.
- Show or arrange for property viewing.
- Provide information (when legal) about neighborhoods, schools, local trends and more.
- Develop a competitive market analysis of the property.
- Draft offers and counter-offers for the buyer.
- Counsel and negotiate on behalf of the buyer.
- Monitor and advise on all pertinent contract dates, events and contingencies.
Homebuyers do not have to pay anything to have an agent work on their behalf. The seller traditionally pays the real estate commission in the U.S.
Real Estate Agent Dual Agency: Catch 22
Catch 22 says that there is no way to fully protect the interests of all parties, no matter how ethical the agent is. As a real estate agent, you work is to always advise, advocate and negotiate for your client.
The term dual agency in real estate means you can no longer do this. You are just passing information.
Now that you have understood the difference between the listing agent and buyer’s agent, let’s summarize it by a quote by Zig Ziglas that says “The most important persuasion tool that you have in your entire arsenal is integrity”.