As Georgia real estate laws have changed and expanded over the last few years, the true value of using a “buyer’s agent” has become increasingly more evident. While there are no disadvantages to a utilizing a buyer’s representative, the benefits can be considerable, and I consistently see more home buyers electing to have a Realtor® represent their interests during the home buying process.
In almost all cases, the commission paid to the buyer’s agent is paid by the seller. This amount is determined in advance (at the time the property is listed) and is paid to the listing agent’s broker or real estate company. A portion that fee is then dispersed to the buyer agent’s real estate company at closing.
As the commission amount is pre-determined, it is easy to see why taking the buyer’s agent out of the equation will generally save money for neither the buyer nor the seller. However, doing so leaves the buyer completely unrepresented while making one of the most important investment decisions of their life.
Your Realtor® Should:
· Have a thorough understanding of the real estate industry
· Have extensive education and a proven track record backed by real life experience in the real estate business
· Be knowledgeable of the local market as well as the specific neighborhood in which you are looking for a home
· Be a good communicator and communicate in the manner that you prefer – for example email, texting or phone calls
· Have exceptional negotiating skills
· Be able to deal with challenges as they arise in a calm and mature manner
· Have exceptional interpersonal skills, allowing them to work well with you as well as any cooperating agents involved in the transaction
· Be accessible and available to you for any and all questions or concerns
· Have a good reputation in the industry and be able to provide you with references from previous clients
According to the National Association of Realtors®, when a buyer uses a Realtor®, when buying their home they generally find the home an average of one month faster and have access to far more homes than those who do not use a Realtor®.
Options for Agent Representation
‘caveat emptor’ – let the BUYER BEWARE
Georgia law requires that the relationship between the buyer and the real estate agent assisting them is spelled out clearly. Here is a brief description of each type of agency allowed:
No Agent Representation:
Yes, you can actually choose to have no representation at all. Many buyers believe that they will get a “better deal” by working directly with the listing agent of a property. However, that is generally not the case. The commission amount is pre-determined by the listing agreement which spells out what the seller will pay in commission whether there is one agent involved or two.
In this case, the listing agent has a written agreement with the seller and, while the law states that they must deal fairly with all parties, they represent only the seller’s interests. As a buyer, it only makes sense that you need your own professional representation and counsel.
Hint: Think of it this way, you’d never hire your spouse’s attorney to represent you in a divorce. The listing agent is the seller’s representative. You deserve to have someone looking out for you!
Agent Representing Buyer as a Customer:
In this case, the buyer will work with an agent other than the listing agent, but does not want to use this agent as their exclusive buyer’s agent. This greatly limits what the agent can do in terms of providing information, helping you to determine a price and negotiating. In this case, the agent can simply open the homes and complete the contract paperwork based on information provided by the buyer. The agent cannot assist the buyer in determining the offer price. In this type of representation, a buyer will be asked to sign a GA real estate form called the Agreement to Work with Buyer as a Customer.
Agent Representing Buyer as a Client:
In this case, the buyer will have a written Buyer Brokerage Agreement with an agent who agrees to fully represent the buyer’s best interest at all times in regard to:
· Protection of the Buyer’s private information
· Coordination of the lenders and other service providers as needed
· Research and assistance in structuring an offer (reasonable price, terms and conditions)
· Negotiating favorable contract terms for the buyer
· Share all material facts they may be aware of regarding the seller’s circumstances and the property’s condition.
Hint – Using the trusted professionals recommended by your agent (lenders, closing attorney’s, etc…) offers you the greatest possibility of completing your transaction in a timely fashion with less risk of errors or surprises. A seasoned agent would only recommend a service provider with a proven track record for success. In addition, service providers who have a history of working with your agent understand that future business is on the line which gives your agent more leverage should a problem arise. On the other hand, a “one off” service provider, who knows that it is unlikely they will receive future business from the agent, feels less pressure to perform.
Designated Agency occurs when a Buyer’s agent sells an in-brokerage listing. This is not an unusual situation. In this case, one agent will solely represent the seller and the Buyer’s agent will solely represent the buyer. The agents must keep the transaction at “arms length” and may not share information between the parties without prior written permission.
Dual Agency occurs when a listing agent sells their own listing and attempts to represent BOTH the buyer and seller. As I feel that it is impossible for me to impartially represent the best interest of two separate parties at the same time, I do not practice dual agency.