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Federal Trade Commission - Survey Results

FACTS FOR CONSUMERS - Federal Trade Commission On Home Buying

If you are buying a home, you may believe - as many consumers do - that the broker you have chosen legally represents your interests.  While this may be the case, it is not necessarily so.  Real estate brokers may represent the seller, the buyer, or both.  However, according to most Multiple Listing Services [MLS], any broker assisting the buyer usually works under the seller’s broker and owes primary allegiance to the seller rather than the buyer.

If you want to be sure that the broker represents your interests as a homebuyer, it is advisable that you obtain a written agreement or letter from your broker spelling out that relationship.      

Whom the broker represents can be important to youFor example, if a broker showing you homes legally represents the seller, he or she is obligated to seek the highest possible price for the seller and thus may not be able to advise you, the homebuyer, what approximate lower price the seller may be willing to accept.

Or if, as a homebuyer, you tell a broker the true “top price” you are willing to pay for a home without having an agreement of confidentiality, such information might be passed on to the seller without your knowledge or approval. That could result in the seller’s insisting upon that higher price and your paying more than you other wise might have paid.  As a homebuyer, therefore, you should carefully consider whether you want to disclose confidential information to a broker who has not agreed to represent you.

Any broker may agree to represent you, as the homebuyer, and some brokers are beginning to specialize in legally representing buyers.  Having a “buyer’s broker” may offer you some advantages.  For example, a buyer’s broker may be more motivated to spot problems with a home you are considering and may be able to obtain more favorable purchasing terms.  Buyers’ brokers may or may not charge you a fee.   This is because a buyer’s broker can legally share in the commission paid by the seller, as long as you (the homebuyer), the home seller, and the seller’s broker agree to this.

Bureau of Consumer Protection                               Office of Consumer Business Education

(Note: Emphasis added.)

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 Passaic, Somerset,  and Union County

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