Understand the Real Estate Game - Home Buyers
Purchasing or selling real estate can be an emotional experience with major implications on your life. You can best protect yourself by making sure that the experts you are depending on (real estate brokers, attorneys, accountants, home inspectors, etc.) are obligated to work in your best interest and that they will commit to this in writing.
Protect yourself by interviewing agents. Make sure they all provide you with agency disclosure. Agency disclosure defines what role the broker will play, should you decide to work together. This disclosure is now required by law in nearly every state, and it should be discussed prior to your revealing any confidential information to a broker.
As a buyer, you have the option of working with seller agents or buyer agents. Be an informed consumer and know the differences in services offered.
Real Estate Games Brokers Play With Buyers - Beware!
Game One - There are agents who avoid making agency disclosure until just before the buyer is ready to make an offer. The buyer then realizes that the agent who so cheerfully assisted him is a seller's agent. This agent must by law negotiate in the seller's favor and disclose information about the buyer to the seller that would enhance the seller's negotiating position.
Game Two - There is another more subtle game. In this case, a broker will reassure you that a buyer doesn't need his own agent because all agents are obligated to treat the buyer and seller "fairly." This type of broker gives the impression that he is a middleman who is protecting both parties. During the search process, this type of agent will act as though he is sharing inside information with the buyer, and he may actually disclose information he shouldn't. This behavior is undisclosed dual agency and it is illegal in every state.
Game Three - You may encounter an agent who points out that buyer representation will "cost extra." If buyers think about this argument, it doesn't hold up. In terms of time, expertise and negotiating power, a buyer will almost certainly save money by using an experienced and professional buyer's agent, a fact that is supported by recent studies.
Game Four - Another common game is for agents to give you the impression that a buyer cannot talk directly to a seller. There is absolutely no reason why a buyer or seller cannot talk or negotiate directly. Obviously, they cannot eliminate the brokerage fees by doing this, but they certainly are entitled to communicate with each other if it is mutually agreeable.
Game Five - Although it's not common, there are agents who will tell a buyer they will not submit the buyer's offer. This is illegal. All offers and counter-offers must be presented.
Game Six - There are agents attempting to represent buyers when they are not qualified do so. If you hire an agent to represent you, determine if he has the expertise and knowledge about the area and category of property you want to buy. He should be willing to provide you with references and demonstrate why he is qualified to represent buyers.