Home Buyers
Is Buyer Broker Necessary?
By
Feb 22, 2006, 20:21

Probably the biggest advantage in using a broker is that he knows what is available in which price range. This can save you time, money, and trouble. Another advantage is that he knows the financial market¡ªwhat kinds and types of mortgages are available and whether the house you want can produce the financing you need. He will know where the nearest schools are, the location of main and secondary store centers, how far it is to the hospitals, and so on.

If a broker tells you that you must use a particular provider for any service, that broker has broken the law. He may recommend but not insist. His recommendations must be in good faith and must reflect his experience in the field. The main problem is that buyers who work with brokers think that the agent represents them or is a neutral intermediary. He represents the seller. Except in rare instances, it's the seller of a property who pays the agent's fee. The broker has been hired by the seller and has fiduciary responsibility to him. This special legal relationship is one of trust. It includes the obligation to be loyal, to obey the seller's general instructions, to inform and account to the seller, and not to be negligent. In the past, the only duties the broker had to buyers were to deal in good faith and not commit fraud. But, lately, consumer pressures have forced the courts to expand this responsibility. In most jurisdictions, the agent must also be "fair and equitable" to the buyer. You, the buyer, must get a truthful answer to any relevant question. You are legally entitled to a straightforward answer to this question: "Are there any hidden defects in this property I should know about before I decide to buy?" Make sure you ask that question before you buy. Make sure you get an answer in writing.

A growing movement across the country is the emergence of buyer's brokers. Buyers pay them a retainer and a flat fee. They are obligated to put the interests of the buyer first. Such brokers must make their position clear to all parties. They usually don't share in the seller's commission. Consider hiring a buyer's broker if you are a first-time income property buyer.

Locate a broker who specializes in income property. He will have a more exclusive file than an ordinary broker. Try to deal directly with the listing broker as he has more influence over the seller. If you make an offer to a broker with an open listing, you run the risk of having the seller use your offer to increase the price another interested prospect may have submitted. You can get a good idea of what agency to use by driving around the neighborhood. If you see a lot of "For Sale" signs belonging to a particular firm, that agency is probably having the most success in that area.

Observe certain standards of conduct when dealing with a broker. While you can consult more than one broker, it's unethical to let another broker show you a property that you've already visited with a competitor. Once a broker shows you a property, he has the right to the commission if you buy.

If matters get to the point where you are bickering over terms, keep the broker informed as to what you have been discussing. Reject any suggestion that you and the seller collude to dupe the broker out of his commission, splitting the difference between you. The broker can sue for his commission. Most brokers won't hesitate to do so.

Buyers should be quiet as to how much money they have and how much they are willing to spend. If the broker knows you have a lot of loose cash, the owner won't do you any favors on the price. The broker will try every sales trick in the book to pressure you into meeting the seller's price. Perhaps the best way to keep your interests paramount is to keep in mind these aphorisms.

We are most credulous when we are most happy. There's a sucker born every minute.