Does Your Home Real Estate Agent Really Work For You?

If you are thinking of buying a new home, it is in your best interest to know the difference between seller, buyer and dual real estate agents. Using the wrong type of agent could affect the cost of the house you buy and have important legal implications. Read on to arm yourself with an understanding of the difference and how to use it to your advantage when buying a home.

There has been frequent discussions over the past few years about buyer's agents and seller's agents. Real estate law has evolved to require that an agent list who they are representing. This is normally done early in the process through a formal disclosure document that you must sign that clarifies whether the agent is representing the buyer or seller. A seller's agents represent the seller. Most real estate agents who show and market houses are seller's agents. They may be friendly to you as a potential buyer, escort you around town to show you multiple homes and help you through the offer process. However, the agent is more often than not working for the seller and looking out for the interests of the seller. On the other hand, buyer's agents actually work for the buyer and have an obligation to look out for the interests of the buyer. There are also dual agents, but we’ll come back to that in a moment.

Typically, this has nothing to do with who actually pays the agent. Why should you be concerned about this? If you are the buyer, you should seek a good buyer agent because of the financial, legal and ethical implications. A seller's agent has a fiduciary responsibility to the seller not to you as the buyer. Accordingly,during the negotiations a seller's agent will be aligned with the seller. Here's a real life explanation to help clarify. Suppose an agent learns that the seller must relocate for a new job, has become highly motivated and is now willing to accept $25,000 under the home's list price. If the agent is a buyer's agent - working for you - he/she will be obligated and probably excited to tell you this data. However, if the agent is the seller's agent aligned with the seller - he/she does not have to convey this information to you and may keep secret the message initially in an effort to get the best offer from you.

So then, what is a dual agent? Now and then your will find an agent that says they are acting in a dual role; meaning they are acting as a buyer and seller agent. Be careful in this situation. As a buyer you may want to stay clear of a dual agent. Realistically, the dual agent cannot fully support the buyer's interests without adversely affecting the seller and visa versa. There are some exceptional agents that can operate effectively in the dual role. However, as a buyer, you should be cognizant of the possible conflict. If you want the lowest price on a home, seek a creditable buyer's agent whose loyalties are aligned only with you.

You may be curious about who really pays for a buyer's agent. Normally the selling agent lists the property in the MLS ("multiple listing service") and shares the commission with the agent who brings the buyer. Frequently, the seller's agent and the buyer's agent divide the real estate commission 50/50. This means that although the buyer's agent is working for you, the seller is funding the commissions to the buyer's agent. On occasion you may find a house where the selling agent does not agree to split the commission with the agent who brings the buyer and in that case you would have to settle who will pay for the buyer's agent.

Knowing the financial, legal and ethical implications of buyer, seller and dual agents is important to you as a home purchaser. Prior to engaging in any real estate transaction as the home buyer, find yourself a good buyer's agent with at least 10-12 years of experience in your market. They will have a fiduciary responisibility to act in your best interest and have the experience to help you negotiate the lowest price for the home.

Kristi Cole is a real estate and home improvement expert at www.inhomeimprovements.com