In about 30 minutes I’m going to look at a house that’s for sale across the corner from where I live. It’s listed with a Real Estate company. If I decide to make an offer, what do I need to do to make sure I’m covered (legally, etc.)
When I bought a house 6 years ago, I had a company-supplied realtor show me houses, and then handle the details. Now I’d like to make sure I don’t get screwed without spending any more money than possible.
Thanks
You can engage your own “buyer’s broker” representative to represent your interests, and they can arrange to split the commission (paid by the seller) so there will be nothing out of your pocket, but that would best be done before you go over, as the listing agent will be kind of aggravated to have another agent introduced into the transaction* after * they show you the property.
Unless this is super time critical wait until tomorrow, then call up some local RE companies and get an agent with good reputation who has experience with buyer brokerage.
If you want you can also simply have your attorney draw up the contract and represent your interests, but not all attorneys are equally savvy about Real Estate transactions, so choose carefully as there are often lots and lots of details to be attended to and things that have to be done (and agents are familiar with these) to make sure the transaction goes smoothly.
As an additional alternative the on site agent will be more than glad to make your offer to the seller *and they get both sides of the transaction) but be aware that dual agency can sometimes be tricky.
Dual Agency Definition
The trick is finding someone who is selling without a realtor. The realtor is the agent of the seller. Even if you go to a different realtor, and ask his assistance, (which he will happily provide, since he gets a slice of the pie for doing it) both realtors are legally agents of the seller. The seller has a contract, and is obliged to give the realtor(s) their fees whether or not you use their services. You will still need some professional assistance, for deed transfer, title search, and a number of other niggling details like inspections, occupancy permits, and a few other things.
Tris
That was the case years ago. These days there are about as many “buyer broker” agents as they are seller representative agents. In fact some RE firms specialize just in buyer brokerage.
IAARealtor[sup]TM[/sup], but my experience is in only one state, and there could be differences between my state and yours.
If the house is already listed with an agent, that is most likely an exclusive listing and gives that agent the right to be the sole rep of the seller. So your going to the seller and trying to bypass the agent (if that is what you were thinking) isn’t going to work for either of you. Whether you approach the agent with the listing or another agent first won’t cost you anything unless you enter into a buyer’s agent agreement with one. That is, all commissions are normally paid by the seller.
If you want to engage an agent as your buyer’s agent, you will have to sign an agreement that makes you liable for any commission only if none is otherwise forthcoming, or if what is forthcoming is inadequate according to the terms of the aggreement. Example: a FSBO seller would not automatically offer the agent a commission like an MLS listing does.
Most areas of the USA have MLS (Multiple Listing Services) which most agents belong to. Any listing by any member agent must be posted in the MLS within a short time, and the posting automatically creates a binding offer of compensation to any other member agent who procures a buyer.
Not necessarily, and some states now have a “designated agent” option for the buyer even if the buyer is not under buyer agency contract. This makes things fairer for all sides.
You may indeed need those services, but we Realtors will arrange for those tasks to be done unless you wish to. The buyer may choose which firm(s) to use or give the authority to the agent. Unless you are an experienced buyer, it is probably best to leave it up to the agent, and certainly less hassle.
“[M]ay … need those services”? There’s no doubt that he’ll need at least 3 of the 4.
I suggest that you hire a lawyer, and not someone referred by a broker. Relying on referrals (closing attorney, home inspector) from someone who only makes money if the sale closes is a bad idea. Sometimes a thorough home inspection or legal review reveals things that would make a buyer, if fully informed, walk away from the deal. In other words, sometimes it’s in the buyer’s interest to kill the deal and find another house.
Home inspectors and attorneys who find these kind of problems tend not to get broker referals
That’s why I said “may.”
Agents don’t “refer” a buyer to a specific service provider. For ethics reasons exactly as you are worried about, if asked, we give a buyer a list of competent services in the area, at least two names for each service requested. The buyer may pick one or give the authority to the agent to do so; it’s his choice.
It is wise for a buyer to write into the contract the conditions that allow him to cancel the deal if found (leaking basement, faulty well, clouded title, easement, whatever). The contract should specify what constitutes an acceptable situation, what does not, and what will be accepted if repaired, and at whose expense. A good contract leaves nothing out, and that is exactly what agents are trained to write.
A buyer always has the option to use an attorney, but it will be at his expense, as attorneys are not automatically offered compensation thru MLS as an agent is.
I have quite a bit of experience with attorneys, and while I’m sure their general legal knowledge is greater than mine, I often find their real estate knowledge to come up short, even those that claim to handle real estate transactions. A typical agent probably handles a lot more of those and the specialty can be important. I have been amazed at attorneys who violate the most basic rules in writing contracts or who are puzzled by some clause that we are quite familiar with. (Not all attorneys, but a few!)
Another consideration, at least in my part of the world: we have specific problems in our area due to geology and we write specific clauses into contracts to handle these (thin soils and bedrock near the surface makes for tricky sanitary problems). Attorneys from elsewhere may not be familiar with these situations, and leave something out that an agent might include.
If a transaction is extremely complicated (Starker exchanges, multiple properties at once, inheritance ambiguities, etc.), an attorney might be a good idea, but for typical residential properties, rarely needed.
It is a very good idea for the buyer to have an agency agreement with an agent, and there is very little downside, so seriously consider this. It doesn’t preclude the buyer using an attorney as well.