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YOU MUST KEEP IN MIND WHICH SIDE THE BROKER IS ON

Author: By Kathleen Howley, Globe Correspondent

Date: SUNDAY, December 14, 1997

Page: K1

Section: Real Estate

You've spent months looking at houses with a broker. She gives you advice. You told her how much of a mortgage you can afford. She knows what your timetable is. Sometimes, she feels like a best friend.

Well, she's not. Unless you've gone out of your way to sign a contract with a buyer's broker, you are probably using a broker who represents the seller -- a so-called ``traditional broker.''

That means she has a solemn responsibility to get as much money out of you that she can -- legally. Her client is the person who is selling the house.

It feels like she's working for you, but really, you are in an adversarial relationship. By state law, that fact has to be spelled out in your first meeting. It is called disclosure.

If you have an honest and competent broker, she asked you to sign a form that explains her role.

But, it's easy to forget, as the weeks pass, that the nice lady who is driving you from house to house, taking such an interest in your life and your problems, is actually an agent for the seller.

If you tell her, ``We have to move by the end of next month,'' that information can be used against you when it's time to negotiate a price. If the broker is doing her job, she might advise the seller to make a counter-offer at a higher amount, knowing that you have a looming deadline.

You may have divulged financial information, including how much cash you have for a down payment or how much of a mortgage the bank will approve. She can advise the owner to hold out for more money, if you're not at your top-dollar price.

``When you use a traditional agent, you are not a client -- you are a customer. It's as simple as that. You are unprotected. You are on your own,'' said Renate Millward, a buyer's broker and the owner of Advanced Creative Real Estate Specialists in Wellesley.

It's a difficult concept for most buyers to understand, she said.

Millward said she explains it this way:

``If you divulge information to a traditional broker, it's like you are going to the attorney for the other side during a legal action and divulging information that can be used against you. A traditional agent has to let the seller know anything that will help to get a higher price,'' said Millward, who has worked as a buyer's broker for eight years.

Of course, it doesn't always work that way. Sometimes brokers don't do what they are supposed to do. On occasion, brokers who legally represent the seller divulge information in the opposite direction -- to the buyer.

Anyone who has spent time working with a variety of brokers most likely has heard them say things such as: ``I know this is a very motivated seller.''

Whether the statement is guesswork or the use of inside information, it is a gross breach of trust for her to tell you.

Or, the seller's broker might freely tell you the life stories of the owners as she gives you a tour of the property, including any selling deadline they have.

It's good for you, the buyer, because you have just been handed information that you can use to your advantage. But, it's bad for the seller, who has just had his trust betrayed. Make a mental note to find a different listing broker when it's time for you to sell your house.

David Drinkwater, president of the Plymouth County Board of Realtors, said the best motto for a buyer working with a traditional agent is: keep your mouth shut.

Don't make statements such as, ``I've always wanted to live in this house,'' or, ``I would pay anything to own this,'' he said.

``If you don't want the seller of the house to know certain information, don't tell the seller's agent. A broker can't sift information, from an ethical point of view. It's against the law,'' he said.

Drinkwater, a partner in Coastal Countryside Properties in Cohasset, said buyer's agents were rare in Massachusetts a few years ago. Now, that's changing, he said.

``Five years ago, I never encountered a buyer's agent. Now, between 10 and 15 percent of the homes I list are sold to people who have a buyer's agent representing them,'' he said.

When deciding whether to use a buyer's broker or to find a house the old-fashioned way, Drinkwater said a lot depends on the buyer's sophistication.

``If buyers know enough about the marketplace that they don't need the extra level of hand-holding and guidance, if they don't need help in finding and negotiating a property, they can easily use a broker who represents the seller. But, if they don't have that level of knowledge, they might want to think about finding a buyer's broker,'' he said.

One challenge to using a buyer's broker is the question of compensation.

Legally, you are responsible for paying the fee of a broker who represents you, but usually sellers agree to pay the commission of a buyer's broker, he said.

``Just as listing brokers co-broke, or split a commission with other seller's brokers, they can share the commission with a buyer's broker,'' said Drinkwater.

Because it is a relatively new concept, it sometimes causes problems, he said.

``It's becoming more accepted, but until a few years ago the real estate community was completely seller-agent-minded, and some have had difficulty grasping a new concept,'' he said.

EDPAGE;12/11 CAWLEY;12/16,09:22 CONSUM14

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