A home is often the biggest purchase in a lifetime, and any mistakes made during the purchase process can be costly, especially when one realizes that New York is a buyer beware state when it comes to real estate transactions. That’s why home buyers must understand their rights — and what they are actually being told.
(PRWEB) July 14, 2006 — Imagine you work with a real estate agent to help you during the home buying process. Now imagine that you feel a strong comfort level with the agent and freely discuss your budget, concerns, mortgage and other personal and financial information. Sounds like a typical part of the process, right? Wrong.
Have you asked the agent who s/he is representing? If you work with agent that also works on behalf of home sellers, the likelihood that the agent is fully representing you and your interests as a homebuyer is low. However, if you had discussed with the same agent prior to disclosing your personal information that you wanted 100% loyalty throughout the process, chances are that the agent would have presented you a NY State Agency Disclosure form as required by NY State law. With that form, you would have a clear understanding of your rights.
The process of buying a home is complicated enough, without having to translate all of the legalese regarding contracts, clauses, titles, differences between mortgage brokers and mortgage bankers. The list goes on.
A home is often the biggest purchase in a lifetime, and any mistakes made during the purchase process can be costly, especially when you realize that New York is a buyer beware state when it comes to real estate transactions. That’s why home buyers must understand their rights — and what they are actually being told.
Understanding the differences
First and foremost, it is imperative to understand the different types of agent representation. True buyer’s agents from an exclusive buyer’s agency represent only home buyers- never home sellers. The agency and its agents never list property for sale. Never listing property means the company - by law - fully concentrates on the needs and goals of home buyers on any property 100% of the time. That means the agent finds the best home, negotiates for the lowest possible price at the most favorable terms, and discloses the positive and negative points on any home.
Part-time buyer’s agencies can also serve as a seller’s agency, which means that the agent can work for a company that lists property for sale. Therefore, 100% company loyalty, disclosure and advocacy cannot be provided on any property listed by that company. This type of agent is also referred to as a dual agent.
“Traditional” refers to a seller’s agency, which, by law, represents the interest of the home seller.
Buyer Beware
With that understanding, the first “right” step to buying a home is to identify a company to represent you — as a homebuyer. Listing a home on the MLS (Multiple Listing Service) will generate phone calls to the listing company/agent, but buyers can save a substantial amount of time and money by working with a company who represents them - not the seller. Buyers are strongly advised not to call the listing agent or listing company on any home of interest listed for sale.
Of course, until a buyer and an agent (i.e.: the company) agree to work together, a buyer should not disclose any personal information about financing, income, assets, buying motivations, work status, etc. Without a signed agreement stating that the agent represents only the home buyer, personal information will be provided to the seller which will diminish the buyer’s negotiating position. If the buyer agent and the seller agent work for the same organization, that organization is considered “dual agency” and presents a conflict of interest. However, exclusive buyer’s agents will never disclose any of the aforementioned information to the seller agent, because by law, they are not permitted to do so.
New York State is a buyer beware state in which homebuyers must conduct extensive research into all of the elements involved in the home buying process. Many homebuyers who fail to understand disclosure and representation often can be mislead. In a buyer beware state, homebuyers must be especially careful about who they choose for representation in order to avoid potential misrepresentation. Unrepresented buyers working with traditional seller’s agencies are responsible for verifying any information on any listed property.
If a home buyer opts to work with an agent whose company also lists homes for sale, it is the buyer’s responsibility to ask that agent what kind of representation will be provided. Specifically, a buyer can ask, “Will you and your company represent my best interests 100% of the time on any home?” The answer will almost always be “no.” In that case, the agent is really representing the best interests of the seller.
Know the law
New York State’s Department of State provides a disclosure form in which it states: “Before you enter into a discussion with a real estate agent regarding a real estate transaction, you should understand what type of agency relationship you wish to have with that agent. New York State law requires real estate licensees who are acting as agents of buyers or sellers of property to advise potential buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates.”
The law also states that an agent and buyer must sign a Buyer Agency Representation Agreement which establishes allegiance to the buyer. Without a signed Buyer Agency Contract, the agent is still considered a seller’s agent and will not work on behalf of the buyer to negotiate the best price and terms.
If a buyer and a seller jointly agree to dual agency representation, they give up their rights to undivided loyalty. That is, the agent becomes a little loyal to the buyer, and a little loyal to the seller, but is mostly loyal to the interests of his/her company. For detailed information regarding dual agency, visit the New York State Department of State website at http://www.dos.state.ny.us/cnsl/dualagcy.html.
Be certain to hire someone to help you along the way. Remember that companies which list homes for sale represent the seller’s interests by law; not those of the buyer. Seek out an exclusive buyer’s agency, which will work 100% on the homebuyer’s behalf to find the best home. This includes evaluating property conditions, verifying property taxes, square footage, providing fair market value appraisals, disclosing what is right and wrong with any property of interest and helping you negotiate price and terms — all while keeping your interests confidential.
By Gary Herbst
Gary Herbst is principal broker of Buyer’s Edge Realty in Tarrytown, New York. He can be reached at 914.332.7100 or via e-mail. For more information, please visit www.buyersedgerealty.com.
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