Differences In Brokers Are Crucial
Jane Bryant Quinn
(Telegram and Gazette)
"Responding to growing consumer preference, real estate brokers are making their industry more hospitable to the 'buyer's broker'. That's a broker who works exclusively for the person who's looking for a house. Traditional brokers work for the seller, even though they show buyers around. 'Dual agents' claim to work for both of you, although many agree that's not possible.
The differences are crucial. A broker who works for the seller is duty-bound to negotiate the highest possible price for the house. Buyers often don't realize this. As you chat in the broker's car, you may disclose which house you love and what you'll pay in order to get it. That information goes straight to the seller, undermining your bargaining position.
A buyer's broker, by contrast, works for you. He or she is bound to keep your confidences and negotiate with the seller for the lowest possible price.
Dual agents supposedly don't reveal confidential information to either party. They say they just shuffle offers Back and forth. But brokers can't truly serve two masters, says broker Saul Klein of the D.F. Anthony Group in San Diego, 'Dual agency is outmoded. It needs to be eliminated', he says.
The National Association of Realtors (NAR) is studying yet another type of broker/customer relationship a 'facilitator' or 'transactional broker'. Facilitators 'don't have to disclose anything other than what they feel would bring a transaction together', says Earl Espeseth of United Real Estate in Madison, Wis., who is heading the NAR study. Since facilitators do less, some brokers assume they may charge less, Espeseth says, although that's not necessarily so.
But what does 'facilitating' really mean? To do the deal, the broker might reveal to either the buyer or seller exactly how far the other party is likely to go. So facilitators, too, aren't necessarily working for your interest.
Staring July 1, most multiple listing services-on which brokers list all the properties they have for sale-formally recognized the existence of buyer's brokers. Selling brokers must specifically note whether they'll work with buyer's brokers and, if so, work for flat fees or at hourly rates.
In California and a few other states, buyer's brokers have become a fixture but in many places they're still pretty new. What's slippery is how fast buyer's brokers can ease into being dual agents.
Say you've asked your broker to represent you exclusively. Then you got interested in a house owned by a seller that your broker represents. To bid for it, you may then agree to accept dual agency - but now, your broker has confidential information form both sides. Supposedly, the broker agrees not to reveal that information to either party, but you can't be surf of how well that works in practice.
Some brokers ignore the question of who they represent, but that's getting riskier to do so. A group of home buyers just won a decision against Edina Realty Inc., in Edina, Minn., charging that they weren't adequately informed that the broker represented the seller. That led them, they said, to pay more than necessary for their homes. Edina Realty will appeal.
Rebecca Currie, who heads Purchasers Representative in Atlanta and represents only buyers, says she has to 'reprogram' traditional agents when they come to work for her. 'In real estate school, you're taught that your allegiance lies with the seller', Curry says. 'the objective is to get to the closing rather than help buyers make informed decisions'.
By contrast, Steve Alexander of the Steve Alexander Group in San Diego will act for either a buyer or a seller although not both at once. "If a buyer is interested in one of our listed properties, we tell him to get another agent," he says.
Alexander, president of the new California Association of
Buyer agents, notes a further refinement in the duties of a buyer's broker. Many sellers today pay extra commissions to get real-estate agents to sell their homes. 'Any incentives should be disclosed when the buyer visits the property and the money returned to the buyer at the sale', Alexander believes.
Before you start house shopping, ask the broker whether he or she will work for you 'exclusively.
Telegram and Gazette