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BUYER AGENT VS. SELLER AGENT
THE PUBLIC WONDERS: "WHAT DO I GET FOR MY MONEY?"
Author: By Tina Cassidy,
Contributing Reporter
Date: Sunday, April 2, 1995
Page: A1
Section: REAL ESTATE
When Julie Bell VanLaanen and her husband moved
from Germany to Shrewsbury about 18 months ago, they hired a
buyer agent to find a reasonably priced home in the right
location.
Their agent not only found them the perfect home in about
four months, but when she told them they could get the house
for several thousand dollars less than they had offered, she
was right.
She steered the couple away from condominiums at a time
when the market was still unstable. And the buyer agent
negotiated with the sellers to fix the pipes, after she
discovered problems with the plumbing.
"Our experience was so positive," said VanLaanen, 33, who
is originally
from Colorado, where buyer brokerage has been entrenched and
embraced for years.
The number of buyer agents in this state has increased
dramatically during the past three years, from virtually
none to thousands, though no exact figures are
available.
The National Association of Realtors, and large local
firms such as DeWolfe New England, have embraced buyer
agency, while a number of local real estate boards have
supported it.
For example, the Massachusetts Association of Realtors
this summer will offer a certification program for brokers
who want to learn how to exclusively represent buyers.
"A lot of people are interested in working that way, and
we want to be able to offer them some educational
programming," said Angela Portosa, MAR's director of
education.
Meanwhile, consumers here are becoming more familiar with
the stories about buyers using agents who help them
negotiate their real estate transactions, rather than the
traditional real estate agent, who represents the
seller.
"The word is out," said Leo Berard, president of the
National Association of Exclusive Buyer Agents. "The demand
is really growing very, very rapidly."
But that doesn't necessarily mean consumers fully
understand the roles each kind of agent plays, what services
should be expected, and why in some instances tension still
exists between the "opposing" agents.
Understanding the difference between buyer agents and
traditional real estate agents is akin to mastering the
subtle difference between defense and prosecuting attorneys.
Their jobs essentially are the same. The people they
represent are not.
Their relationship often appears adversarial, although
they usually insist they work toward the same goal: justice
in a court of law, or in the case of real estate agents,
closing the sale of a home at a fair price.
And, as is occassionally the case with lawyers, both
types of agents are usually paid out of the settlement, or
sale of the house, although the amount and terms are
negotiable upfront.
For example, if a buyer agent's client pays $100,000 for
a house, traditionally the seller pays a 6 percent
commission from that price to pay his or her listing agent
-- although, there are no formal guidelines dictating the
amount of commission, which is fully negotiable.
The commission, however, is almost always evenly split
with a buyer agent involved in the sale.
In other circumstances, a buyer might negotiate a flat
fee up front for services, perhaps $3,000, no matter the
price of the house.
How buyer agents are paid has been a source of sometimes
heated contention between agents on both sides.
Buyer agents assert that traditional real estate agents
are often reluctant and sometimes refuse to share their
commission with a perceived adversary.
Some seller agents say the buyer should pay for
representation directly, not out of the sale of the
home.
It was a point of dispute between VanLaanen's agent and
the seller's broker.
"There was," she said, "a problem with money."
Interestingly, in a recent survey done by the
Massachusetts Homebuyers Club, 40 percent of consumers who
recently purchased residences said they feel agents are
overcompensated.
And, by a two-to-one margin, said they would rather pay a
flat fee than a
commission, based on the sale according to the survey .
Until recently, nearly all of the real estate agents in
Massachusetts represented the seller. Then the state
required that they disclose that fact to buyers before
showing property.
The Massachusetts Consumer Protection Act mandates that
traditional agents must still act fairly, honestly and
ethically with buyers they bring to the table.
They must also inform buyers of any known defects the
property contains.
That is why traditional agents, while conceding that they
work for the seller and with the buyer, see no problem
helping those looking for a home as well.
"My job is to be your lead marketing agent," said Karen
LaChance, president of the Greater Boston Real Estate
Board's Residential Association of Realtors. "Once a buyer
is attracted the Realtor walks the buyer through the process
on behalf of the seller and makes sure inspections are done
in a timely manner."
Still, buyer broker advocates say they can provide a
broader range of services than traditional agents.
"You could, for example, actively pursue a
for-sale-by-owner or do a cold call," said Sandra L. Hudson,
director of educational and professional services for
DeWolfe New England. "A buyer agent is not just a hired gun
who is out to get the lowest price . . . but to get the best
home at the best price."
Then there is the lesser known distinction of dual
agency, whereby an agent broker represents the buyer and the
seller in the same transaction.
Many in the real estate industry, however, feel no ones's
interest is best served in this instance.
"What concerns us most . . . are the people who are
trying to do both," said David King, spokesman for Carlson
Real Estate/Better Homes and Gardens. ''Dual agency is like
buttering your bread on both sides. It tastes great, but
it's going to leave a mess on your hand."
Advocates for buyer agents say they look beyond the
Multiple Listing Service to find homes for their clients,
looking at foreclosure lists, or perhaps even knocking on
the door of a house that is not for sale to see whether the
owner might have a change of heart.
That compares to traditional agents, who have a
particular listing they are trying to sell.
So if a potential buyer walks in off the street and asks
to see homes for sale in that town, the broker will likely
show their own listings first.
CASSID;03/07 NIGRO ;04/05,15:01 BROKERA02
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