Massachusetts Real Estate, Worcester County Ma

Before You Buy

BEFORE YOU START YOUR HOME SEARCH, FIND OUT WHAT YOU NEED TO KNOW ABOUT REAL ESTATE AGENCY:

Traditional Sales

You may know that in Massachusetts, and most other states, the majority of home are bought and sold with the help of real estate professionals. What you may not know, however, is that most of these professionals are contractually bound to work exclusively for the home buyer.

As a matter of fact, if you personally meet with a licensed real estate person in Massachusetts, they are legally required to have you sign a "disclosure form" that specifically states who they represent.

The Biggest Purchase Of Your Life

The process of home buying can involve a confusing array of specialists, including mortgage bankers, attorneys, home inspectors and home appraisers.

While a good real estate professional may help guide you through the process, it is important to remember that many of them are legally bound to get the very best deal for the home SELLER and not you, the home BUYER.

Ideally, you would want your own advocate, someone who has seen thousands of homes, and who has worked with hundreds of families to get them the best home at the best price.  

An Advocate Who Works Only For You  

Until recently, as a typical home buyer, you were truly at a loss. The seller had their own agent to help them through the process, but the home buyer had no such advocate; it was for this reason that exclusive buyer agency was developed.

Why Use a Buyer's Broker?  

Merely having an ally in the process to find and negotiate a home might be reason enough for you to consider a buyer's broker. However, your advocate also offers services that you may not realize. Consider the following:

• Most real estate agents will show you listings from the MLS ( Multiple Listing Service), but they may not show you properties that are "for sale by owner", bank or government owned.
• Most agents will set up house showings for you, but they may not guarantee to be with you at all showings and possibly even counsel you against buying a property if necessary.
• A buyer's broker can recommend those specialists (mortgage lenders, attorneys, home inspectors, etc.) who have not only the most competitive rates but have also demonstrated a history of being both fair and efficient with other home buyers. In fact, by Massachusetts Law, Buyer Agents are the only type of agents who can legally recommend a home inspector.

What Traditional Brokers May Not Do  

Not only will a buyer's broker "broaden" the traditional role of a listing broker, there are also a number of services that are important to the home buyer but are rarely supplied by a traditional agent.
After searching the entire housing market and working with you to find the right home, the buyer's broker will then:

• Use a variety of sources and consult with you to determine the fair value of the property.
• Prepare an "Offer to Purchase" that is written to protect the interests of you, the buyer.
• Negotiate for you not only the best price, but also the best terms and conditions for your home. (Since your buyer's broker is contractually working for you, the home buyer, the agent will never release any information about your thoughts or finances without your expressed approval).
• Accompany you for your entire home inspection, explain the process and work with you to compose a list of items that you many want to have addressed prior to closing.
• Renegotiate the terms of the home purchase, if necessary, after the home inspection.
• Accompany you at your final "walk through" and your closing.  

How Real Estate Agents Get Paid  

At this point, you will naturally be wondering what it will cost to work with your own exclusive buyer's agent. The simple answer is that there is generally NO additional cost to use your own agent!

In a "traditional" home sale, a listing agent will have a contract with a home seller and the seller will agree to pay a percentage of the total sale price of the home to the listing agent.

In many cases home buyers are found by a second agent (called a sub-agent) who will often split the total commission for the home sale with the listing agent. However, bear in mind that a "sub-agent" is legally working for the listing agent, and thus for the home seller.

If you hire your own buyer's agent, you usually also agree to pay your agent a percentage of your home’s sale price. This is almost always the portion of the commission that "sub-agent" would have received, and that agent would not have legally represented you at all!

Before you select an agent to work for you, be sure to ask them whom they legally represent. Ask them if they will be with you at every step of the process: at all home showing, home inspection, walk through and you closing. Choose an agent who will work for YOU!

AN IMPORTANT MESSAGE FOR HOMEBUYERS!

DON'T GIVE UP YOUR RIGHT TO CHOOSE YOUR OWN BUYER'S AGENT

Have you "signed-in" and toured homes during open houses?
Have you called real estate licensees for information about listings?
Have you toured one or more homes with one or more salesperson or broker?
Have you provided your e-mail address over the Internet to receive listing
updates?

Then you may have, unknowingly, made it difficult to have your own buyer agent represent you later!!

Unbelievable you say? Well, it's true. If you make contact with a real
estate salesperson or broker who supplies you with information about a property or who shows you a property, they can make a claim to be paid a commission even though you purchase that property through someone else.
Can anyone stop you from using your own buyer's agent to represent you and help you buy a home? No! But, they can make it difficult for your
buyer's agent to be paid. An agent that you had contact with in regard to a particular property can make a claim, after you close on that property, against your buyer's agent demanding that your buyer's agent pay them a commission. How do you think a buyer agent might feel about working for you when there is a possibility that they may not get paid for their services?

How can this be, you ask? Most real estate licensees are members of a
REALTOR® Association and/or a REALTOR® run MLS (Multiple Listing
Service). As such they have to abide by the REALTOR® Code of
Ethics. This isn't a bad thing, really, in that you should want to do
business with a real estate licensee who is professional and ethical and
who agrees to practice according to a strict Code of Ethics.

However, this same Code of Ethics makes it mandatory for members to
arbitrate "business disputes". The NAR (National Association of
REALTORS®) Code of Ethics and Arbitration Manual, Article 17, states: "In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS® (principals) associated with different firms, arising out of their relationship as REALTORS®, the REALTORS® shall submit the dispute to arbitration in accordance with the regulations of their Board or Boards rather than litigate the matter."

When dealing with disputes having to do with real estate commissions, the method of determining who is entitled to the commission is a concept referred to as "Procuring Cause". Or, in other words, who started the series of uninterrupted events that led to a successful transaction, i.e., a real estate transaction that closed?

OK, so what? How does that involve me? Isn't this a REALTOR®
thing? Well, not really, because....

(1) You may not be able to find a buyer agent of your choice to represent you because of the possibility that they may have their compensation taken away from them after the closing.

(2) You could be obligated to pay your buyer agent twice, if the previous licensee you contacted is awarded your buyer agent's compensation through
REALTOR® Arbitration.

(3) Currently this arbitration system is stacked against true buyer
agents.....

First, a contractual relationship that you have with a buyer agent is but
one factor among dozens that a hearing panel is supposed to consider. No preferential treatment is given to such a relationship or contract. Yet, by means of such a contract a real estate licensee has agreed to be your agent, has agreed to provide you with specific duties and client level services, and you have agreed to compensate your agent in return. This is a contract between you and your agent. No other real estate licensees are
party to this agreement. What right does another real estate licensee
have to come in after the closing and make a claim on the money that you
paid to your buyer agent by means of fulfillment of the terms of an
employment contract between yourself and your buyer agent?

Under common law, another licensee generally would not have the right to
do that because it could be considered interference with a contract. But under the REALTOR® Code of Ethics, another licensee can make a claim that they were the "procuring cause" of the transaction because they first introduced you to the property.

Second, traditional agents who most often don't understand true buyer
agency practice and who will most likely side with the traditional agent
who is making the claim, are typically the ones who are on an arbitration hearing panel. Numerous such arbitrations have gone against true professional buyer agents, resulting in the buyer agent spending valuable
time and money, only to lose the very compensation that they earned and were paid by a buyer just like you.

What Should You Do?

First, you really must decide if you are going to use the services of a
professional buyer's agent to help you purchase a home. Because if you
are, you absolutely should start doing so as early in the process as
possible to prevent problems for that agent in working for you. A
professional buyer agent can help you get pre-approved for a loan, review the home buying process with you, get you information about the current market and homes for sale, view homes with you that are of interest, negotiate on your behalf, and follow-up with the details so that you get into your home on time and with less hassle.

Second, if you have already had contact with one or more real estate
licensees, and now want to use the services of a professional buyer's
agent, make sure that you fully disclose the extent of any contact or
relationship that you have had or have with any other real estate
licensee. It is important for your buyer agent to know whether or not he
or she may have a problem with regard to a particular property that you may be interested in purchasing if you found out about it or obtained
information about it or was shown it by another real estate licensee. There are steps that your buyer agent may be able to take that will reduce the risk of another real estate licensee making a claim that they are due a commission. However, in order for the buyer agent to take the proper steps they need full disclosure from you with regard to past contact with real estate licensees.

Third, if you do plan on being in contact with several real estate
licensees follow these guidelines.

(1) Share confidential information about you and your ability to purchase a home only with the licensee whom you choose to represent you as a buyer's agent. If you share this information with other real estate licensees, they potentially could use this information against you if they represent the seller of a home that you want to buy.

(2) Don't get too involved with any real estate license until you are
sure that is the person you wish to use to represent you in purchasing a
home. The more deeply involved you get and the more homes you see with one real estate licensee, the easier it becomes for that licensee to claim to be the "procuring cause" on a future purchase by you of a property that you learned about or saw through that licensee.

(3) Don't sign any written documents, except mandatory agency disclosures, with any real estate licensee except the one you choose to be your buyer agent.

(4) Make it very clear from the beginning that you are interviewing
several agents before deciding to use the services of one exclusively. Sellers generally interview 2, 3, or more listing agents
asking for proposals and marketing plans before they choose which agent to use. You can do the same, as long as you do so cautiously.

(5) Don't leave your e-mail address, phone number, or mailing address
with any real estate company or licensee. To do so invites more aggressive and potentially irritating marketing efforts by such companies or licensees and potentially begins the process of a real estate licensee
being able to claim "procuring cause". If you are asked to "sign-in" at an open house, give your name, but don't leave your address or phone number. Take the licensee's business card and say that if you are
interested further you will contact them.

(6) Don't continue or encourage the development of a relationship with a
real estate licensee unless there is the potential that you may hire that
agent to represent you. If you are contacted by a real estate licensee
that you are pretty sure you don't want to use as your buyer agent,
politely but firmly ask them to stop contacting you. Ask them to remove
your phone number or e-mail address from their records. The more you
encourage the development of a relationship with one real estate licensee, the more difficult it becomes for you in the future if you decide to hire another licensee as your buyer agent.

Here is an article for you to consider some aspects in your home search