Working With A Pro
If you’re going to be a professional
investor in property, you will need to have professional advisors
working for you. Choosing a professional Realtor is a great start, but
you want to be sure the Realtor is working for you and not the seller.
That means understanding the difference between a Seller’s Agent and a
Buyer’s Agent.
A Seller’s Agent works for the
Seller of a home (the home owner). The Seller’s agent has a
responsibility to represent the best interests of the Seller and to
negotiate the best deal for their client, the Seller. As a Buyer, you
become a Seller Agent’s customer, not their client. This is a subtle
but vitally important difference. The Seller’s Agent has a
responsibility to tell the Seller everything they know about you, the
buyer, that might help them to negotiate a higher price. Seller’s
Agents still have a duty to be fair and honest when dealing with Buyers,
but they owe undivided loyalty and fiduciary responsibility to their
client, the Seller.
A Seller’s Agent can assist a Buyer in
finding a new home, and many do. However, they are working for the
Seller of each home they show to a Buyer. Even when the home is listed
with another broker; the Agent becomes a sub-agent of the listing
Broker, working on their behalf to sell the home for the Seller to the
Buyer.
Because many Buyers like to work with a
single Agent, often someone they know, Buyers may presume the Agent is
working for them and not the Seller; particularly when the agent takes
the time to show them around many different properties listed with
multiple brokers. Beware; a Seller’s Agent is always working for
the Seller and not the Buyer.
Sometimes a Buyer will let the Seller’s
Agent prepare an offer to purchase for them. This is the equivalent of
asking the seller to prepare the offer to purchase for the Buyer. Most
Buyers wouldn’t dream of asking the seller to prepare a legal contract
for them, but they have no hesitation in asking the Seller’s Agent to
do this, even though the Agent is representing the Seller.
Buyer’s Agents represent the
Buyer; they have a duty to provide the Buyer with undivided loyalty and
confidentiality, and they have a fiduciary responsibility to represent
the best interests of their client, the Buyer. The Buyer’s Agent has a
duty to tell the Buyer everything they know about the Seller that might
be helpful in negotiating a lower price or securing a piece of property
ahead of other buyers. Buyer’s Agents will often research properties
for clients that are not listed on the Multiple Listing Databases used
by Brokers. This might include looking for distressed properties, homes
for sale by owners, homes not presently for sale, new construction and
foreclosures.
A Buyer’s Agent will often research the
title of a property before putting together an Offer To Purchase or a
Purchase And Sale Agreement; they will typically try to find evidence of
any encumbrances and easements on the property. When preparing legal
documents, the Buyer’s Agent will draft documents that often lean in
favor of the buyer as opposed to the seller, and they will advise their
clients to seek appropriate professional advice in respect of legal
contracts, home inspections, loan financing, and other aspects of the
home purchase.
Does it cost more to use a Buyer’s Agent?
Buyer’s Agents can be
compensated in many ways, sometimes even being paid out of the proceeds
already allocated by the seller to the listing broker. A professional
Buyer’s Agent may offer multiple payment options to their clients,
explaining each one in turn and allowing the client to select the best
option for their needs. Buyer’s Agents can sometimes help to negotiate
a lower price on a property, or they may advise their clients to offer
above asking price in order to secure a property that is under priced
and subject to multiple offers; the goal of a Buyer’s Agent is to help
their client (the buyer) to secure a contract for the property they want
to purchase on the most favorable terms possible for the Buyer, and
where practical, to uncover information relating to the property before
purchase.
The question of whether it costs more to
use a Buyer’s Agent is similar to asking whether it costs more to
engage your own attorney; it’s not strictly necessary but highly
advisable. Buying an investment home is typically the single biggest
investment you will make in your life (and as investors, you will do
this multiple times), so it makes sense to have a professional advisor
working for you and representing your interests and not those of the
seller.
If I work with a Realtor as a Buyer’s Agent, can they also sell my
properties as a Seller’s Agent?
Yes, Realtors can work as both a Buyer’s
Agent and a Seller’s Agent for the same client. This means you can
develop a long lasting relationship with a professional with expertise
in investment properties who can help you both identify potential
investment properties and also sell the properties in your portfolio
when it comes time to cash-out or trade up. However, some agents only
work as a Buyer’s Agent or Seller’s Agent. Most Home Investor
Specialists can work for you as both a Buyer’s and Seller’s
Agent.
My friend is a Realtor; can she help me as an investment advisor?
Possibly, yes. If your friend has
expertise in buying and selling investment homes, there is no reason why
she cannot help you. An alternative to consider would be talking to your
local Home Investor Specialist to see if he/she can offer you
more expertise in property investing than your friend. If you are
serious about investing in property to create wealth, then it is
important to have the best professional expertise you can get.
Home Investor Tip
Not all salespeople are Realtors®. A Realtor is a member
of the professional Board of Realtors; they work to high
professional standards and a strict code of ethics. Always use a
Realtor.
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What about doing it myself?
Anybody can purchase Real Estate without using the services of a Real
Estate Professional to represent you. There are plenty of eager Real
Estate Salespeople looking to “sell” you a piece of property,
particularly those hard-to-move sub-standard homes that need “TLC”.
If you decide you want to work on your own,
without a Buyer’s Agent, try to find a good, reputable, and
trustworthy Seller’s Agent that you can work with on a regular basis
to help you to locate good investment opportunities. Remember, no matter
what is said, the Seller’s Agent has a responsibility to the Seller to
disclose as much information about you as possible in order to give the
Seller an advantage in negotiations, so don’t tell the Agent anything
you would not tell to the Seller directly.
You can also opt to work with a number of
different agents rather than any one individual. The disadvantage of
this approach is that you are not likely to build an ongoing rapport
with the Agent, and the Agent will not easily learn the type of homes
that best meet your requirements.
When it comes to purchasing Real Estate
Investments, we suggest you have your own Real Estate attorney and your
own Home
Investor Specialist™ or Buyer’s Agent working for you as part of
your team.
Opting to work with a Buyer’s Agent
will not always save you money as a Buyer (although they frequently
can), but a good Buyer’s agent will typically become your best friend
when it comes to finding, negotiating and closing on solid investment
opportunities. Once you start working regularly with your own Buyer’s
Agent, you will learn to delegate much of the legwork involved in
purchasing investment properties to your Agent. |