Homebuyer's Need to Know Their Options

Before they go house-hunting with a real estate agent, consumers should be asked this question: "Mr. and Mrs. Buyer, do you want me to work for the Seller, do you want me to work for you, or do you want me to just be neutral?" This is one way of calling attention to the fact that in a typical home purchase transaction, both agents historically represent the best interests of the Seller.

This includes the "listing" agent who contracts with the Seller to market the home and whose name appears on the for-sale sign, as well as the "selling" agent, who has been working with the prospective buyers, driving them around, showing them homes and helping them prepare offers. The common misconception among both buyers and sellers is that the selling agent is working not only with the buyers, but also for the buyers.

The State of Colorado is among many other states to recognize that agency disclosure necessary to protect buyers as well as sellers in a real estate transaction. Homebuyers now have the right to select their own agent to represent their interests when purchasing a home.

How Do You Attain Client Status?

A buyer seeking client status needs the services of a competent, concerned agent who will spend as much time as is needed to determine specific housing needs and financial aspects of the situation, as well as providing counseling on the increasingly-complex sales process. The agent you select will suggest that you employ the firm as a Buyer's Broker, and an Employment Agreement will be executed.

Now you have broken the traditional pattern of being a customer and have attained client status. Your agent's efforts are directed to benefit and protect you, and to get the right property at the right price and terms for you. Customers usually see only listed properties, but the entire marketplace opens up for a client who has employed a Buyer's Broker. The benefit of access to all properties is important to both homebuyer's and to investors.

Who Pays the Commission?

An agent's commission or fee is built into the retail price of the property being purchased. Where two real estate firms are involved in the transaction, the commission is usually divided between the listing and selling office. The IRS and most mortgage lenders, incidentally, consider the fee, part of the cost of the property. The commission is usually paid at closing, ostensibly from the seller's proceeds, which are usually a combination of the buyer's down payment plus a new loan secured by the buyer.