 Article Archive
Differences in brokers
are crucial
By Jane Bryant Quinn
Responding to growing consumer
preference, real estate brokers are making their industry more hospitable to the
“buyer’s broker.” That’s a broker who works exclusively for the person
who’s looking for a house. Traditional brokers work for the seller, even though they
show buyers around. “Dual agents” claim to work for both of you, although many
agree that’s not possible.
The differences are crucial. A broker
who works for the seller is duty-bound to negotiate the highest possible price for the
house. Buyers often don’t realize this. As you chat in the broker’s car, you may
disclose which house you love and what you’ll pay in order to get it. That
information goes straight to the seller, undermining your bargaining position.
A buyer’s broker, by contrast,
works for you. He or she is bound to keep your confidences and negotiate with the seller
for the lowest possible price.
DUAL AGENTS
Dual agents supposedly don’t
reveal confidential information to either party. They say they just shuffle offers back
and forth. But brokers can’t truly serve two masters, says broker Saul Klein of the
D.F. Anthony Group in San Diego, “Dual agency is outmoded. It needs to be
eliminated,” he says.
The National Association of Realtors
(NAR) is studying yet another type of broker/customer relationship a
“facilitator” or “transactional broker.” Facilitators “don’t
have to disclose anything other than what they feel would bring a transaction
together,” says Earl Espeseth of United Real Estate in Madison, Wis., who is heading
the NAR study. Since facilitators do less, some brokers assume they may charge less,
Espeseth says, although that’s not necessarily so.
But what does
“facilitating” really mean? To do the deal, the broker might reveal to either
the buyer or seller exactly how far the the other party is likely to go. So facilitators,
too, aren't necessarily working for your interest.
Staring July 1, most multiple listing
services-on which brokers list all the properties they have for sale-formally recognized
the existence of buyer's brokers. Selling brokers must specifically note whether they'll
work with buyer's brokers and, if so, work for flat fees or at hourly rates.
In California and a few other states,
buyer's brokers have become a fixture but in many places they're still pretty new. What's
slippery is how fast buyer's brokers can ease into being dual agents.
PROBLEM
Say you've asked your broker to
represent you exclusively. Then you got interested in a house owned by a seller that your
broker represents. To bid for it, you may then agree to accept dual agency - but now, your
broker has confidential information form both sides. Supposedly, the broker agrees not to
reveal that information to either party, but you can't be sure of how well that works in
practice.
Some brokers ignore the question of
who they represent, but that's getting riskier to do so. A group of home buyers just won a
decision against Edina Realty Inc., in Edina, Minn., charging that they weren't adequately
informed that the broker represented the seller. That led them, they said, to pay more
than necessary for their homes. Edina Realty will appeal.
Rebecca Currie, who heads Purchasers
Representative in Atlanta and represents only buyers, says she has to
"reprogram" traditional agents when they come to work for her. "In real
estate school, you're taught that your allegiance lies with the seller," Curry says.
"the objective is to get to the closing rather than help buyers make informed
decisions."
By contrast, Steve Alexander of the
Steve Alexander Group in San Diego will act for either a buyer or a seller although not
both at once. "If a buyer is interested in one of our listed properties, we tell him
to get another agent," he says.
Alexander, president of the new
California Association of Buyer agents, notes a further refinement in the duties of a
buyer's broker. Many sellers today pay extra commissions to get real-estate agents to sell
their homes. "Any incentives should be disclosed when the buyer visits the property
and the money returned to the buyer at the sale," Alexander believes.
Before you start house shopping, ask
the broker whether he or she will work for you exclusively.
Telegram and Gazette, Tuesday, August 3,
1993
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