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Do I Need A Real Estate Agent?

Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.  But a basic rule in real estate is that all properties are unique. No two properties — even two identical models on the same street — are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. No two transactions are alike.

In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with a professional who knows every aspect of the home buying process to serve as your team leader during the transaction. 

What Does Representation Really Mean?

As a licensed real estate agent, I am bound by Arizona law to uphold a Standard of Care, my fiduciary duty to you, my client.  It is a real CARLOAD:

  • Confidentiality 
  • Accounting – my responsibility to protect my client 
  • Reasonable care & diligence 
  • Loyalty 
  • Obedience to lawful instructions 
  • Accountability – for my actions 
  • Disclosure

This standard of care is set forth by the Arizoan Real Estate Commssioner and is reinforced through training, monitoring and disciplinary action for those who do not abike by the standard.  It is a very big deal to follow this standard for every client.

What Does A Buyer’s Agent Do?

As your real estate agent, I will assist you in searching for a home to best suit your needs.  Once you select a home, I will provide you with all the information necessary to make a good offer – that includes comparable sales, and disclosure of all material facts, including: existence of other offers, status of earnest money, seller’s financial condition, property’s true worth, and legal effects of important contract provisions.  I work with you to develop an offer and write it up in contract form.  Here in Arizona, we are blessed… or cursed… with the privilege and responsibility of being able to write contract language to a transaction. To my knowledge, Arizona is the ONLY state in the US that empowers licensed real estate agents with this component within the real estate transaction.  I negotiate with the Seller to arrive at mutually agreeable terms so we can execute the Purchase Contract.

Some people assume that the biggest job for the real estate agent is finding you a house to buy. That is a big part of what I do, but the biggest part of my job starts after the purchase cotnract is executed and escrow opens. The process of purchasing a home is filled with obstacles and challenges, and my job is to lead you through the process, direct you to the best professionals who serve you your team and take care of problems as they arise. These professionals include lenders, escrow officers, home inspectors, service providers such as roofers and plumbers, home warranty companies, etc.  No two transactions are alike, so my expertise and professional training is often put to good use to overcome obstacles and get the transaction closed.

Isn’t It Easier to Work with the Agent Who Is Selling the House?

In some states, both the broker who lists the property for sale and the broker who works with the buyer (sometimes called a co-broker) are paid by the seller and are the seller’s agent. Both brokers’ duty, loyalty and faithfulness are owed to the seller. They must reveal to the seller all of the important information they know that might affect the buyer’s decision concerning the sale of their property.

In Arizona, the agency relationship can be different. Buyers in Arizona have the option of being represented exclusively by their own agent. Sellers still pay the commission but it is paid to the brokerage of the listing agent. That brokerage in turn pays a portion of the received commission to the brokerage of the Buyer’s agent. The individual agent is then paid on whatever level has been agreed upon in their office contract. You have the choice.

It is important to understand, again based on the Standard of Care, what each agent in the transaction does to serve their client:

Seller’s Agent:  A Seller’s Agent acts solely on behalf of and has fiduciary duties to the Seller. By contractual agreement, the Seller becomes a client of the listing Brokerage firm (Seller’s Agent).  A Seller’s Agent, in performing their duties,  will present the listed business or property to prospective Buyers.  The Buyer’s are not represented by the Seller’s agent, but must be dealt with fairly and honestly.

Buyer’s Agent:  A Buyer’s Agent acts solely on behalf of and has fiduciary duties to the Buyer.  By contractual agreement, the Buyer becomes a client of the Brokerage firm.  A Buyer’s Agent owes undivided loyalty to the Buyer, but must deal fairly and honestly with the Seller.  The duties of the Buyer’s Agent should be clearly expressed in the contract between the Buyer and the Broker.

Dual Agent:  A Dual Agent acts as agent for both the Buyer and the Seller with mutual written consent from both parties.  Buyer and Seller must be aware that in a dual agency transaction, neither party has the undivided loyalty of the Broker, but, instead, the Broker must remain neutral.  Dual agency can usually be avoided and every effort should be made to do so so each party is clearly and completely represented.  Dual agency must be disclosed and agreed upon by both the Buyer and the Seller.

Let’s say you walk into Open House, fall in love with the property, and tell the listing agent the you would like write an offer.  Who is representing you?  No one.  

The listing agent can work with a Buyer, but has a fiduciary obligation to protect the seller’s interests.  The listing agent can help you write up the offer, but is still obligated to the Seller based on the Agency established when that agent entered into the listing agreement with the Seller.  If the Seller wants to negotiate your offer, if an inspection reveals a problem, in any such case, the Seller has representation, but you do not.

 The ultimate source of funds at the closing table is the buyer. Is it not, then, reasonable to think that one of the agents being paid should be your exclusive representative?

What If I Want to Buy  A New Home, Or A Home Sold By Owner?

A Buyer’s agent can assist you with representation with any property on the market, whether listed by another broker, for sale by owner or new homes being sold by the builder. Builders count on the real estate community to help sell their product since we sell almost 70% of their product. Whether you see an ad in the paper,drive by a “For Sale” sign,visit an Open House,hear about a home for sale through a friend ,or, want to build a new home, your Buyer’s agent will represent your interests in transaction. Just advise who you are speaking with that you are working with a Realtor to avoid problems.

What about new homes and new subdivisions? Yes, I represent the Buyer as well. The site salesperson represents the builder, so a Buyer should have representation. Unlike some areas of the country where builders do not cooperate with realtors, in the Valley, builders seek our assistance since we sell 70% of their product. Many times incentives are offered to realtors for their buyers.  There is NO additional cost to have representation when purchasing a new home.

The policy in Arizona is to have the realtor present when viewing the new homes. It is tempting when first arriving in the Valley to cruise the new subdivisions. In order to have Buyer representation, nothing must be registered or signed without your realtor. If you are just looking, say so, and you may not be asked to register yourself. If asked, state that you are working with a realtor and will return with that realtor if interested in that subdivision.

How Much Does A Buyer’s Agent Cost?

A Buyer’s Agent works for the buyer, protecting the buyer’s interests …. and all at no extra charge. The Buyer’s agent receives compensation through a co-broke agreement with the listing agent.  The is a separate contract outside of the purchase.

There are those that argue that the Buyer’s agent is still being compensated by the Seller and that the Buyer’s agent has no motivation to negotiate a lower price on your behalf.  But unlike the old days, before Buyer’s Agency existed, the two agents do work completely independently and are bound by the Standard of Care which defines their fiduciary duty to their respective clients.

Do I Need to Sign an Agreement?

At the time an offer is written, it is necessary to sign an Agency Agreement stating who I represent and with whom my fiduciary duty lies. The Agency Agreement becomes part of the offer. Agency representation is also in the verbiage of the purchase contract.  It will not be mandatory for the Buyer to sign this agreement with me at initial contact, although I would be happy to do so.

In addition, an optional Buyer’s Broker Agreement may be used to further define the responsibilites and obligations of the Buyer and the Buyer’s agent.   I only use Buyer’s Broker Agreements in specific circumstances to create a contract betwen myself and the Buyer.  I prefer to believe that because I extend much effort, time, expertise, loyalty and education to be singularly informed on behalf of my buyers,  that with such good service and representation, a buyer will be loyal to me.  I have found the a trusted relationship, rather than one built solely from obligation, serves us best.

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