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Some
home buyers work exclusively with a buyer's broker, specifically
hired to represent them. Some work with sellers' brokers. In
either case, choosing the right REALTOR® is a crucial first
step in the home buying process. In making this important decision
you should understand:
- Who
is a REALTOR®
- Using
an agent and the obligations that are owed to you
- The
difference between a buyer’s and seller's broker
- How
to evaluate an agent.
Who
is a REALTOR®?
The terms agent, broker and REALTOR® are often used interchangeably,
but have very different meanings. For example, not all agents
(also called salespersons) or brokers are REALTORS. Learn who
is a REALTOR®and the reasons why you should use one.
As
a prerequisite to selling real estate, a person must be licensed
by the state in which they work, either as an agent/salesperson
or as a broker. Before a license is issued, minimum standards
for education, examinations and experience, which are determined
on a state by state basis, must be met. After receiving a real
estate license, most agents go on to join their local board
or association of REALTORS and the National Association of REALTORS
(NAR), the world's largest professional trade association. They
can then call themselves REALTORS. The term "REALTOR®" is
a registered collective membership mark that identifies a real
estate professional who is a member of the National Association
of REALTORS and subscribes to its strict Code of Ethics (which
in many cases goes beyond state law). In most areas, it is the
REALTOR® who shares information on the homes they are marketing,
through a Multiple Listing Service (MLS). Working with a REALTOR®
who belongs to an MLS will give you access to the greatest number
of homes.
Using
an Agent and the Obligations That are Owed to You
An agent is bound by certain legal obligations. Traditionally,
these common-law obligations are to: Put the client's interests
above anyone else's; keep the client's information confidential;
obey the client's lawful instructions; report to the client
anything that would be useful; and account to the client for
any money involved. NOTE: A REALTOR® is held to an
even higher standard of conduct under the NAR’s Code of Ethics.
In recent years, state laws have been passed setting up various
duties for different types of agents. As you start working with
a REALTOR®, ask for a clear explanation of your state's
current regulations, so that you will know where you stand on
these important matters.
The
Difference Between a Buyer's and a Seller's Broker
Suppose you sign an offer to buy a home for $150,000. You really
want the property and there's a chance other offers are coming
in, so you tell the broker that "We'll go up to $160,000 if
we have to. But of course don't tell that to the seller." If
you're dealing with a seller's agent, he or she is duty-bound
to tell the seller that important fact. The seller's agent doesn't
have any duty of confidentiality toward you. Honest treatment
might require that the agent warn you that "I must convey to
the seller anything that would be useful so don't tell me anything
you wouldn't tell the seller."
TIP: If you're dealing with seller's agents, it’s
a good idea to keep confidential information to yourself.
These days many home buyers prefer instead to hire a buyer's
broker, one who owes the full range of duties, including confidentiality
and obedience, to the buyer. A buyer's broker is often paid
by the seller, regardless of the agency relationship.
How
to Evaluate an Agent
In making your decision to work with an agent, there are certain
questions you should ask when evaluating a potential agent.
The first question you should ask is whether the agent is a
REALTOR®. You should then ask:
- Does
the agent have an active real estate license in good standing?
(to find this information, you can check with your state’s
governing agency)
- Does
the agent belong to the Multiple Listing Service (MLS) and/or
a reliable online home buyer’s search service? (Multiple Listing
Services are cooperative information networks of REALTORS
that provide descriptions of most of the houses for sale in
a particular region.)
- Is
real estate their full-time career?
- What
real estate designations does the agent hold?
- Which
party is he or she representing--you or the seller? The discussion
is supposed to occur early on, at "first serious contact"
with you. The agent should discuss your state's particular
definitions of agency, so you'll know where you stand.
- In
exchange for your commitment, how will the agent help you
accomplish your goals? Will (s)he show you homes that meet
your requirements, and provide you with the list of the properties
he or she is showing you?
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