According to the National Association of Realtors (NAR), 88% of homebuyers Â use a real estate agent when purchasing a home.
Buying a home is complicated. TheÂ 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 salesÂ are such a big deal, it makes sense to have a professional in your corner.Click to see today's rates (Jul 22nd, 2017)
In the past, it was common for aÂ real estate agent toÂ put up a "for sale" sign, show the home, take in offers and closeÂ the deal.
Many times, buyers were under the impression that the agent represented their interests, or was at least a neutral party.
In fact, that agent represents the interests of the home seller, and only the seller.
Today,Â 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 the United States, each state has unique rules for real estate transactions. Standard purchase contracts, closing procedures, and the duties and titles ofÂ everyone involved can vary a great deal.
Real estate listing information is shared by agents using multiple listing services (MLS). Consumers can access similar information using various online real estate sites.
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 agents must be licensed to represent buyers and sellers. The licensing laws and education requirements differ from state to state.
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'sÂ important to understand that you are most likely contacting the listing agent.
The listing agent, also known as the sellerâ€™s agent, is a real estate professional legally obligated to protectÂ the sellerâ€™sÂ interest.
The listing agentâ€™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 seller.
The listing agent's responsibilities include:
As a homeowner seeking to sell your property, the listing agent is your biggest advocate.
Thanks toÂ the Internet and mobile devices, todayâ€™s homebuyers have unprecedented access to property information.Â In fact, the NAR reported that in 2016, Â 51 percent of all buyers found the homes theyÂ bought online.
However, 90 percent of buyers still chose to work with an agent to pull off the transaction.
Also known as the selling agent, the buyerâ€™Â s agent typically contracts to represent the buyer'sÂ interestÂ in a real estate transaction.
A buyerâ€™s agent must put the homebuyerâ€™s needs first.Â For example,Â he or she can't tell the listing agent how much aÂ client is willing to spend, how badly a couple wants the house, or anything else that would put the buyer at a disadvantage.
The buyer's agent should:
Some agents represent themselves as "buyer's agents" exclusively, and they work only with homebuyers. They don't list property at all. In many cases, however, a real estate agent can be a buyer's agent or a seller's agent -- just as an attorney can represent a plaintiff or defendant in a lawsuit.Click to see today's rates (Jul 22nd, 2017)
From time to time, an agent or brokerage will represent both the buyers and sellers in a home transaction. This is known as "dual agency."
Among agents, it's informally known as "double ending," because the agent doesn't have to split the commission with another representative.
Dual agency is illegal in some states, and widely discouraged by consumer advocacy groups.Â That's because there is no way to represent both parties to the fullest extent.
For example, suppose anÂ agent discoversÂ that the sellers are getting divorced, and are extremely motivated.
A buyer's agent should disclose it to the buyers, who may feel then that they can offer less. But if the agent also represents the sellers, disclosing this harms them. Not disclosing harms the buyers because it could cause them to pay more.
There is no way to fully protect the interests of all parties, no matter how ethical the agent is.
Some brokerages or agencies avoid the dual agency problem by working in teams or groups. If you see a house you like, perhaps on an agent's Web site, you may be assigned a "buyer's agent" on the selling agent's "team."
The team works together, with one agent representing the buyer and another representing the seller, to conclude the deal, and the commissions are split.
A recent case in California's Supreme Court illustrates the concerns some have about teammates being able to protect the buyers' and sellers' interests concurrently. The Court ruled that when the buyer's and seller's agents work for the same office, the seller's agent also has a fiduciary duty to the buyer.
Dual agency is less of an issue in statesÂ that require sellers to disclose a lot of information to buyers. "California law already requires the disclosure of all material facts that affect the value and desirability of a home to the buyer. This simply upholds that," claims Steve Thomas of Reports on Housing.
Dual agency can get very complicated. For example, a sequence of events like this:
Although this type of representation is not uncommon, it may be difficult for agents to adequately represent either party and remain neutral when conflicts occur between buyer and seller.
For this reason, both buyer and seller must agree to dual agency in writing. It means they are knowingly giving up their right to their agentâ€™s undivided loyalty.
When you buy or sell, current mortgage rates affect what you can pay (and perhaps what you can get) for a home.
Get todayâ€™s live mortgage rates now. Your social security number is not required to get the ball rolling, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Jul 22nd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)