Did you know that every listing agent (that’s the name on the sign outside the home) has a “fiduciary duty” to the SELLER and NOT to the buyer? So, why would a buyer call the name on the sign? That’s similar to going to court as a defendant but you are only represented by the plaintiff’s attorney! Who would do that? Will the other side argue for your case? Can you imagine a soccer game where the referee was only paid by one side? How many times have you bought a car and felt like the salesman and the sales manager were just trying to get the best price for the dealership not for you? Can you imagine the stock market if you gave all your hard-earned money to the seller of the stock rather than to a broker who watched the market and tried to get the best price for you?
Who is on YOUR side when you buy a home?
iCONNCT
Let’s return to the idea of fiduciary duty. Here is what “fiduciary duty” means:
In California, the agent who represents the seller has 6 fiduciary responsibilities to the SELLER – “obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care”.
The Listing agent (the name on the sign) has to disclose any conflict of interest (like trying to get the best price for the seller while representing the buyer at the same time), and the listing agent is responsible to negotiate in good faith. Listing agents only get paid if their SELLER is happy with the deal they bring to the SELLER. That doesn’t sound like the best deal for the buyer – does it?
Buyer’s agents have represented buyers for many years and their commission is fully disclosed to both buyer and seller. The commission has traditionally been paid by the seller. The seller absolutely has the right to pay that commission on behalf of the buyer although in the future that responsibility cannot be forced on the seller by the real estate community. It is possible in coming years that some or all of the buyer’s agent commission will be paid by the buyer which could dramatically affect the affordability of homes for many first-time buyers.
Home buyers need all the help they can get. Here are some important considerations for the home buyer:
1: Are the Seller disclosures about the property complete? These disclosures cover everything from changes made to the home, substances used in the home, the condition of every aspect of the home, the pets that have been in the home, whether someone has passed in the home, the position of the home related to future development or military installations, structural repairs made or needed, and a multitude of other factors. The Buyer’s agent is responsible to represent the buyer and make sure that the buyer makes a purchase with eyes wide open.
2: Does the buyer have the opportunity to look at any and all properties or will they be restricted to view only the property offered by the Seller’s Agent? Every buyer has a right to look at every property – the Seller’s Agent is paid by the seller to sell THAT home – buyers need a buyer’s agent to help them buy ANY home that they would like to offer on.
3: Is the buyer obligated to use the lender recommended by the Seller’s Agent who represents the Seller’s interests? Surely the buyer should have the right to choose their lender. Surely the home buyer should be HELPED to contact multiple lenders so that they are aware of all the options that are best for them not just for the seller. After all, the buyer will make the payment, not the seller.
4: Should the buyer be forced to pay the Agent representing the Seller? Well that’s a resounding “NO”. If the buyer cannot afford to pay a Buyer’s Agent then potentially they could be forced to be represented by the Agent representing Seller. This is not the case now and should never be in the future. The buyer must never be underserved for the benefit of the seller or the Seller’s Representative.
We believe in equal opportunity for ALL.
We recommend that every buyer has a frank and honest discussion with their agent as to who pays which agent and what that agent will do for THEM AS THE BUYER.
Ask your agent what they will do for you – here are some suggestions.
1: How available is the Buyer’s Agent?
2: Do you charge me fees up front or just when I buy a home and close escrow?
3: Who will pay the Buyer’s Agent commission?
4: What days do you work, what hours do you work, are you part-time or full-time? (Make sure the work ethic of the agent matches your needs as a buyer).
5: Do you work for buyers or sellers or both?
6: How many buyers have you or your team represented in the last 6 months?
7: Do you have a relationship with the seller of the home I want to buy? Are you working for them or me?
8: How many homes will you show me?
9: How often will you show me homes?
10: What lenders do you work with and why? Who should I call to discuss financing options? Are those lenders recommended by you or the seller?
11: What duties will you fulfill for me during the buying process – like setting up Inspections, explaining paperwork, resolving disputes with the seller, and protecting my interests.
iCONNCT will help hundreds of buyers get home every year. We look forward to representing your best interests as a buyer, and we appreciate the opportunity to be of service.
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