-What do Realtors do for buyers?
Using a Realtor to aid in the buying process is a huge advantage for buyers. They get the help of somebody who knows the local market, who has been in many of the homes for sale, and has a feel for what homes are priced well and what homes aren’t. A good buyers agent gains a feel for what the buyer is really looking for, and can often find properties for the buyer that they wouldn’t have even considered through their own efforts.
A buyers agent is also valuable in negotiating the offer, and in ensuring that the buyers interests, and earnest money, are protected in the real estate transaction. Good buyers agents are also familiar with the best lenders, home inspectors, and title companies, and can help them save money in those ways by recommending the best professionals involved in the other parts of the real estate transaction.
The buyers agent keeps track of due diligence deadlines, and makes sure that if problems arise with home inspections, or financing, that the buyer is able to back out of the real estate purchase contract and retain their earnest money. Good buyers agents essentially have a team of professionals that know how to work together and overcome challenges that may arise in the real estate transaction.
The best benefit of using a buyers agent is that they get all of these services and usually don’t have to pay anything for them.
-What are the responsibilities of the agent with the buyer?
The agent is responsible to represent the buyer and look after their best interest during the real estate transaction. While the most time consuming duty is usually showing houses, the most valuable duties are assisting with writing offers and negotiating contracts.
-Describe the “application process” (signing up with a realtor)?
Real Estate agents are full commission sales people, so applying to work with them is very easy. Real estate agents are always seeking new clients. Essentially, all you need to do is call a Realtor up, and tell them you want to see a house for sale.
Because Realtor’s don’t want to waste their time with people who aren’t going to actually buy real estate, they will often ask that potential buyers get pre-qualified for home loans before they will show houses. An agent doesn’t want to spend time showing houses that people aren’t going to be able to buy.
Before an offer is actually written, state law requires that buyers sign agency with a Realtor. This commits them to use that particular agent. Some real estate agents require that buyers representation is signed before they will show homes.
-Commissions: who pays who, and what percentage is designated to whom?
When a home is listed by a real estate agent, the seller and the listing agent agree on a commission. They also agree that a portion of this commission will be paid to a buyers agent who provides a buyer. So, as long as the house is listed by real estate agents, buyers don’t have to pay any commissions. If a buyer who has signed representation with a buyers agent actually buys a for sale by owner home, and the fsbo seller isn’t willing to pay a buyers agent commission, then the buyer may be required to pay a commission.
The total commission sellers pay real estate agents is usually between 4-7%. 2.5%-3% of this commission is generally offered to the buyers agent. In the current market, with so many more Logan homes for sale than buyers, buyers commissions are up. It’s not uncommon to see 4-5% commissions offered to buyers agents to entice them to show certain properties.
All commissions are actually paid to the real estate brokerage, who then pay the real estate agents. After taking out fees, advertising expenses, and errors and omission insurance, real estate agents typically get 50-85% of the total commission the brokerage received. These commissions vary based on the brokerage the real estate agent is with and their experience.
-What is Limited Agency?
Limited agency is when a real estate agent represents both the buyer and the seller. In these instances, the agent can’t really represent either side, because they can’t reveal anything that would damage the other parties negotiating ability. With limited agency agents can’t provide a lot of advice to the buyers and sellers, and must let them make decisions on their own. Many of the problems and legal issues that happen in real estate transactions are a result of limited agency. In some states “limited” or “dual” agency is illegal.