| Featuring original
art by John Bennetts.
Most home buyers
cannot begin to conceive how the real estate industry functions, putting
buyers at a disadvantage. Even with new laws that appear to give home
buyers fair opportunities, agents with most traditional brokers cannot
and do not provide the protection buyers need when the agent attempts
to provide buyer agency service.
Buyers will continue
to be at a disadvantage and make poor choices until they learn the truth
about real estate laws.
Most home buyers
get caught in these illusions because they don't get the proper education
before they start the process. When buyers make the first call to the
listing agent who advertised the home, they are making their first mistake
and get caught in the illusion.
How Buyers Get
Caught in the Illusion
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Mary
Doyle has been searching newspaper ads, home buyer guides, and
the Internet with pictures of advertised homes. She identified
three homes in a good school district and decides to call the
listing agent.
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Mary
gives little thought to the agent's statement, "I represent
the seller" because she realizes the listing agent is working
for the seller. After looking at the home, she knows her husband
would not like it.
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The agent is friendly and appears to be trustworthy so Mary agrees
to look at the homes. Knowing that the other homes are not the agent's
listings, she assumes that he will be working for her.
Agents are required
by law to make a full agency disclosure at the time they give information
or provide a service to a buyer. The disclosure should inform
the buyer about the level of service provided by an agent who represents
the seller, a sub agent, buyer agent, designated agent, and transaction
broker. Exclusive buyer brokers, who provide the highest level
of service, are available in most major cities. However, traditional
brokers have the power to control the legislative process and prevent
laws that would require all agents to disclosure that exclusive buyer
agency services are available in their state. In addition the local
newspapers receive so much advertising revenue from the traditional
brokers that they will not publish press releases about exclusive buyer
brokers, for fear of losing that revenue. What you should learn through
these illustrations is that you are most likely going to be deceived
by the agent. You should not work with anyone who does not provide a
complete agency disclosure.
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Jack
and Judy have stopped at an open house. The tour of the house
elevates Judy's interest in the home.She approaches the agent
to ask several questions about the home and the neighborhood.
The agent, assessing Judy's emotions, asks....
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Judy
and Jack volunteer all information which the agent requested.
They told her about their professional jobs, salary history, savings,
and investment income.
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At
this point, Judy and Jack feel the agent is service oriented,
helping them determine the amount of loan they can qualify for.
Is this
service or a deceptive practice to learn about their finances?
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Revealing all their
financial information to an agent that represents the seller puts the
buyer in a weak negotiation position. The agent has an obligation to
report this information, as well as any other information that will
effect the price paid for the home, to the seller.
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Mary
and Tom have found a home they want and have joined the agent
at his office. This home is listed at $125,000. Mary has already
made it known how much she wants the home and Tom is set to negotiate
a good buy.
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The
agent delivers the offer to the listing agent and as required
by his duty to the seller, disclosed all the information he knew
about the buyers. That evening the following scenario unfolds
as the listing agent is presenting the offer to the seller.
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Tom and Mary
accept the counter offer at $121,950. They failed to understand
the implication of a clause in the written disclosure statement
that they had signed. The statement, Information given to the
agent by the buyer may be disclosed to the seller, should have
been a warning to the buyers.
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The agent carried out his disclosure requirement leaving the illusion
that he was doing his best to serve the buyers.
While the clause stated the information might be given to the seller,
it is the agent's fiduciary responsibility to give all the information
to the seller that will enable the seller to get maximum price for
the home.
Another deception
is the practice of agents with traditional brokers, those that list
homes for sale, asking buyer agents to submit a completed buyer qualification
form with the offer. Buyer agents that are carrying out their duty
to
a buyer will not reveal this detailed financial information as it
will put the buyer at a disadvantage in negotiations for the price
of the
home. When the traditional brokers have a policy that requires the
listing agents to collect this information, you can assume that their
agents
have not been trained to be buyer agents. These agents will claim
to represent you and then provide less than a full buyer agency service
to you.
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As
a warning if you are asked to complete a buyer qualification form
to be submitted with an offer, it is time to fire your buyer agent!
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Another
Illusion
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Even
though the agent's company lists property for sale, the agent
can work as a buyer's agent. An illusion exists when the agent
shows one of the company's listings and the buyer wants to purchase
that property.
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Kansas
and Missouri law allow the broker to designate one agent to represent
the seller and another agent to represent the buyer for an in-house
sale. In these transactions the broker becomes a transaction broker.
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As a transaction
broker, the broker has no agency responsibility to the buyer or the
seller. While the law allows these transactions to enable the company
to collect both the listing and selling commission, buyers should avoid
these situations. You most likely will be giving these agents the right
to switch to designated agency when you sign their buyer agency agreement.
Make sure
you know and understand what you are signing!
What the Traditional
Broker's Contract Allows the Agent to do:
- The agents can
switch their buyer agency status to designated agency and/or transaction
broker.
- Allows agent
to submit competing bids from other clients on the same property you
are attempting to buy. (Their is no way the agent can be working for
you, when competing against you!)
- Allows agent
to collect a selling bonus as an incentive to push a certain property.
KC METRO HOME FINDERS AGENTS WILL NEVER:
- Change agency
status to less than an exclusive buyer agency.
- Submit competing
bids.
- Allow an agent
to keep the selling bonus. The bonus is passed on to the buyer.
EXCLUSIVE BUYER
BROKERS WILL ENSURE YOU, THAT THEY WILL SERVE YOU AND "ONLY YOU"
100% OF THE TIME. THAT LOYALTY CAN'T BE MATCHED BY ANY AGENT WHO WORKS
WITH A COMPANY THAT LISTS PROPERTY FOR SALE.
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