Let us start with a review of some simple, but very important definitions. Sure you know this, but let’s just make sure:
- Customer: You are a customer, or consumer of real estate services, to all the 1000+ agents out there in our area.
- Client: You become a client to an agent if the agent has a legal, contractual obligation to you. You may be unaware that you have transitioned from a customer to a client. It is unethical, and even sometimes illegal, for any agent to interfere with a client relationship of another agent. This article is all about you being aware of who represents you.
- Seller’s Agent: An agent having a legal, contractual relationship with a seller of real estate. The agent must represent only the best interests of their client, the seller. Sometimes this agent is called the “listing agent.” The relationship is usually in writing as part of a listing contract.
- Buyer’s Agent: An agent having a legal, contractual relationship with a buyer of real estate. The agent must represent only the best interests of their client, the buyer. The relationship may be in writing, but this contract is often informal and not in writing.
- Dual Agent: An agent that represents both the seller and buyer at the same time. This relationship is often informal, but it must be approved in writing by both the seller and buyer before any possible transaction.
Ok, let us review how real estate agents are paid in the vast majority of cases. In terms of money, real estate agents work on a commission – a commission paid by the seller of the home as a marketing expense. All the brokers and agents, with very rare exceptions, get paid from this seller’s marketing expense only after the sale is completed. The buyer of a home does not pay their agent or broker for being represented in the transaction. If a buyer is not represented at all, the sales commission to the seller is the same except in rare cases. Much of the work of a typical agent, then, is unpaid. Customer service is extended as part of the job, but an agent only earns a salary if some of the customers served become clients that buy or sell a home with the agent.
So as a customer, how do you “buy” the very best customer service if it is essentially free? There are several ways, and they begin with honesty and openness–and loyalty. As you come in contact with agents as a customer, and while they are providing you with “free” customer service, you are, of course, “interviewing” them; and they are also “interviewing” you. Looking at homes with an agent is certainly a common way to meet agents. Remember, you are just looking, right? Well, there is a trap. If you are shown a house by an agent, then you have already “hired” the agent, at least for that house. Whether you wanted to or not, whether you were working with another agent or not, the agent that showed you the house will normally get the sales commission if you buy that house. There is a good reason for that. The agent is required to assume that you are a client when showing you a home to insure all buyers get professional representation whether or not they have actively picked an agent to represent them. If you have already chosen a buyer agent, and you should, you must clearly communicate that your chosen agent represents you. To avoid conflicts and confusion, you should always have your agent present when viewing a home.
So, you want an agent that is honest, someone you trust, that will be loyal in representing only your interests. What is the agent looking for in a potential client? The agent is seeking the same three things. Is this customer being honest, can I trust this person and do I think this customer will be loyal to me? Think about this for a moment. A customer calls an agent, wants to see a house immediately and asks the agent to meet them at the house. Let’s see, a 120 pound female agent is going to meet a total stranger in an empty house in a strange neighborhood. Right! See where the trust comes in? And consider priorities. Real estate agents are business people, they have to pay their bills every day and make the best use of their time. For agents, active clients come first, customers next and my Aunt Susan (who just likes to look at homes) needs to be last. Aunt Susan is a very important customer, but in terms of time, she is at the bottom of the list, and sometimes needs to be considerate of an agent’s priorities.
So what what’s all this mean? Well, for one thing, this system sure puts consumers in the driver’s seat. In the old days, it appeared that all agents really worked for the seller. Today, buyer representation is a real and important part of the industry. Realtors take buyer representation very seriously (and there is an important difference between just a licensed agent and a Realtor!) As a consumer, so should you. There are a whole lot of advantages to you in being professionally represented, not just as a seller, but as a buyer – from the very beginning. It is to your advantage as a buyer to actively choose the Realtor that best represents you.
Just looking? That’s great, but actively choosing the Realtor that represents you as a buyer is important. Let’s talk about how to actually hire an agent. (CLICK – HIRE YOUR AGENT)
