November 14, 2011

Are you a Represented Buyer?

What is Buyer agency?

Buyer agency is designed for your protection when buying a home. Colorado is a buyer agency state. By being a buyer agency state, you have a choice. You can hire an agent as a buyer agent, or as a transaction broker. Buyer agency is for your own protection. Unlike dealing with a car salesman, who works for the dealer, you can discuss confidential matters with a buyer agent without the risk of that confidential information being passed along to the seller. As a buyer agent I would lose my licence for disclosing any such matters to a seller. By signing a buyer agency as early as possible with your agent, you are ensuring that they are working solely on your behalf from that point forward.

Does buyer agency cost me anything?

No. Buyer agents are paid by the seller of any home you purchase, so there is no cost whatsoever to you. (This is also the case with newly constructed homes and For Sale By Owner homes too!)

If I sign a buyer agency, does this obligate me to buy a house?

Absoluely not! By signing a buyer agency agreement, you are only agreeing that you will use the designated agent if you purchase a home. If you never end up buying, you never end up paying anything.

I’d rather just drive around on my own. Why should I bother with a buyer agent?

Driving around and looking at houses from the curb is one thing, but if you actually want to see the inside of homes, it is FAR less time-consuming to use a Roots Agent to set up all of your showings with one call vs. calling listing agents one by one and setting individual appointments. A buyer agent could show you about 3 or 4 times as many homes in the same amount of time you would spend setting up individual appointments directly with the listing agents.

Ask yourself, how will the sellers agent help you in the following cases? (remember, they are looking out for the seller):

  • What if the seller doesn’t honor the terms of the contract?
  • What if substantial items are found wrong with the property after you write an offer?
  • What if you decide to terminate the contract and the seller doesn’t want to give back your earnest money?
  • Are you sure the seller will be able to help you asses the true value of the home when writing an offer?

I’d rather save the money and deal directly with the agent selling the home.

A seller-agent represents the seller exclusively, and you have no representation whatsoever by dealing direcly with the seller’s agent. In fact, the listing agent is prohibited by law from assisting you at all with negotiations about price, terms, or anything that could be considered a conflict of interest. The little discount or rebate you may receive is far outweighed by having a buyer-agent fighting to get the lowest price possible for you.

What is the difference between a buyer agent and a transaction broker?

Unless you sign a buyer agency, your working relationship with a Realtor is a transaction broker relationship. By being a transaction broker, there is no contractual relationship between you and your agent. A transaction broker does not actually act as your agent, but only to assist in coordinating the purchase of your home.

Why should I sign a buyer agency at all?

You don’t actually have to sign a buyer agency. If you don’t however, your agent is only a transaction broker. The agent’s responsibility to you is far greater if you sign a buyer agency. A buyer agent acts in YOUR best interests, is able to help you negotiate the transaction, is able to assist so you have as smooth a transaction as possible, and most importantly, a buyer agent is held responsible for his actions, and therefore must represent you with utmost good faith and loyalty.

What if I find a brand-new home? Am I allowed to use you as my Realtor?

Of course!! In fact, I guarantee you won’t pay a dime more than if you had dealt directly with the builder with no Realtor representation. The important thing to note is that you don’t save any money if you deal straight with the sales office. Remember, the sales agent at the construction site represents the interests of the seller and NOT yours. Only by working with a Buyer agent — do you have someone other than you watching out for your interests. I am very familiar with the new-construction process and know the pitfalls to avoid. I can help save you a lot of time and headaches with the process of buying your new home. The most important thing is to bring an agent along on your first visit. (If you don’t have a Roots agent with you on the first visit, having us represent you might be difficult.) 

To download a blank sample copy of my buyer agency agreement, click here. 

To discuss signing a buyer agency, or if you have any further questions about buyer agency, please feel free to call me (Kenny Layton) at 970-590-3201.