- Looking for the right skills and qualifications
- What is “buyer’s broker” and “agency”?
- Professional designations and licensing
Select a real estate professional, as you would any professional such as an accountant, attorney or doctor. Basic considerations should be a minimum of three years full-time housing-market experience and a minimum of 10 to 12 residential real estate transactions in each of last three years. Good communication, negotiation and computer skills are a must. Ask for client references and check them, and also ask your family and friends if they can recommend someone.
The way an agent communicates is another important consideration, especially when you prefer to exchange information with him in various ways, such as by e-mail, telephone and text messaging. It can be very frustrating if you can’t communicate easily with your agent.
Some agents will ask you to sign a Buyer’s Representation Agreement the first time you meet with them. This agreement outlines the duties the agent will perform and will commit them to receive a commission when you purchase a home. If you are unsure about the agent, don’t sign the agreement until you’re comfortable with him.
Buyer’s broker and agency
A portion of agents is what is termed “buyer’s broker.” These agents only work with buyers and typically look to be compensated by the buyer at closing or escrow; the amount is normally a percentage of the home’s price. In some situations, though, the seller’s broker compensates the buyer’s broker, which is customary. If you decide to work with a buyer’s broker, ask up front about who will be compensating him when you purchase a home.
In most states, the relationship you create and have with the agent is called “agency.” Agency means that the principal — the buyer or seller — gives the agent the right to act on the principal’s behalf. How agency develops between a home buyer and their agent vary widely and you should understand how this relationship is created in your area. Agency can be created simply in some areas by walking over a front door threshold in a prospective home you want to view, or it is only created when you sign a purchase contract and the agent is listed as your representative.
Your agent has certain obligations to you in the real estate transaction. He should work in your best interest and typically have a fiduciary responsibility to you and should consult with you before delivering counteroffers in negotiations and contract-related communications. While an agent is your representative, he should obey your requests. When an agent represents both the seller and the buyer in a purchase contract, this is called “dual agency”. Laws in most states severely restrict what a dual Agent can do. In most situations, it’s a good idea not to have a dual agent.
Home buyers should be aware of the difference between professional designations and real estate license levels. The top three professional designations according to industry sources are the Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), and the Graduate Realtor Institute (GRI). Real estate license levels vary by state law. Broker and Salesperson are typically the two levels of real estate licensure. Most states have a renewal period where licensees meet mandatory education requirements.
Take the time to select your agent. When you find the right one, he or she will have a profound impact on your home buying experience.