Gilson Terriberry
REALTOR®
I firmly believe that an informed consumer is my best client.
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I firmly believe that an informed consumer is my best client. |
| Buyer's Information |
217-378-7483
| Just exactly what is a REALTOR®? Who does your "agent" really work for? What about properties listed by another agent or team in the same firm? Does this mean you have to sign a buyer's agency contract? What can your agent do, and not do, for you? What should you do in preparation for your home search?
Just exactly what is a REALTOR®? We use a lot of labels in this business, REALTOR®, Real Estate Salesperson, Real Estate Agent, Designated Agent, Broker, Licensed Assistant and more. While specific licenses are required to practice the various aspects of real estate, not all licensed real estate practitioners are REALTORS®. REALTOR® is a registered trademark of the National Association of REALTOR® (NAR), the largest real estate trade organization in the United States, and may be used only by professional members of the Association. While anyone who has passed the requisite courses and the state real estate salesperson's licensing exam may, under the sponsorship of a sponsoring Broker, enter the real estate profession and practice as long as they obey the applicable state laws, only members of the NAR who have voluntarily agreed to adhere to the NAR code of ethics may use the designation of REALTOR®. It really is a higher standard. All REALTORS® are either Real Estate Salespeople who have fulfilled the state requirements for a real estate salesperson's license or Brokers. Brokers are real estate professionals who have taken additional courses and passed a more comprehensive licensing exam. Brokers may operate their own real estate practices, although not all choose to, while real estate salespeople are required to practice under a sponsoring broker. Finally, some brokers practice as salespeople, preferring to work under another sponsoring broker. A real estate agency is a business with which you, as a buyer, may contract for services and assistance locating and purchasing real estate. In fact, the law today assumes that you have an agency contract with the real estate agency through which you buy property whether you sign papers to that effect or not and the agency must adhere to certain requirements of agency law. The real estate salesperson with whom you deal is an employee or, more often, a subcontractor of the agency designated as your agent in the transaction. If you have an issue with the performance of your Designated Agent the person to go to is the sponsoring broker. And this is where things can get sticky. Who does your "agent" really work for? Until recently, they did not work for you. Until recently, all agents worked for the seller no matter which side of the transaction they were on. This is no longer true. In fact, this arrangement, known as subagency, has been illegal in Illinois with regard to properties listed through any Multiple Listing Service (MLS) since 2000. However, the salesperson showing you a house may still not be entirely working for you. Consider the case of a house owned by a seller whose listing contract is with that agent. The agency relationship contains specific obligations including obedience and confidentiality as well as diligent effort in the best interests of the party represented. While dual agency when disclosed to both parties in writing is allowed in Illinois, you can see where this may place an agent in the awkward position of being unable to fully represent the best interests of either party. Today, Illinois recognizes three agency relationships in real estate. The seller's agent is pretty obvious, he or she listed the property and has a written contract with the seller. The buyer's agent, recognized buy Illinois law in 1995, is a tad less straightforward. He or she is presumed, written contract or not, to represent the buyer to whom the agent is showing properties, unless disclosed otherwise in writing. But what if the property being shown was listed by the agent showing it to you? The disclosed dual agent, who must be disclosed and consented to in writing by both parties, represents both buyer and seller. That written disclosure is intended to alert both buyer and seller that they may have to assume greater responsibility for the protection of their interests than they would if each were represented independently. The agent must reconcile how their duties to the best interests of the client, particularly duties like loyalty and the protection of confidential information (like the highest price you can afford to pay), can be fulfilled on behalf of both parties. I avoid dual agency. If you are not sure of your agent's relationship with you, ASK. What about properties listed by another agent or team in the same firm? This is where designated agency comes in. If every transaction required two firms, business would become quite difficult just because of the number of properties that may be listed by agents of any single firm. For that reason, Illinois recognizes a sponsoring broker's right to designate agents or teams to represent both parties (yes, a team is considered like a single agent). Under designated agency, the buyer and seller are each considered fully represented and each agent is obligated to fully protect the best interests of the party they represent. Designated agency does not mean you have to take whomever the sponsoring broker selects for you. It does mean that when you select the agent you want to work with that agent will be designated as yours in the contract you sign with the firm. Does this mean I have to sign a buyer's agency contract? No. But you should consider it. The agent showing you a property is presumed by law, unless otherwise agreed in writing, to be representing you. All of the duties required by agency are in force, contract or no contract. However, if you do have a buyer's agency contract you get a great deal more. Because the agent is also protected by the contract, you have his or her full attention and confidence, not just with regard to the property being shown but also on any other property that may interest you. That agent works for your interests, not just on the property being shown based on your inquiry but also in searching out additional properties and providing professional advice and expertise throughout your property search The relationship does not end until you have satisfactorily concluded your search or the contract terminates. Would you expect the same level of attention and service from an agent who knows you are talking with every other agent in town? What can my agent do, and not do, for me? You should expect your buyer's agent to listen carefully and understand completely your requirements and desires for your new home and search diligently for homes meeting your criteria.
You should not expect your agent to violate any laws including fair housing laws. Your agent cannot advise you about schools, steer you to or away from certain neighborhoods or discuss any aspects of the demographic makeup of any neighborhoods. You may, however, based on your own knowledge, request that any home search be focused in specific geographic areas as you desire. Illinois law says that the source of compensation for client services does not determine which party is represented. In other words, the agency relationship is not a function of who pays. Typically, real estate commissions are paid by the seller to the listing broker who then compensates the selling broker. Both brokers then compensate their designated agents based on whatever employment or subcontract agreement they have with them. The total commission is set in the listing contract and the "cooperating broker commission" is stipulated when the property is placed in the Multiple Listing Service. The seller pays the full listing commission to the listing broker whether that broker or any other agency brings the buyer. In other words, the seller pays while you get the full benefit of working with your own agent who exclusively represents you. What should you do in preparation for your home search? First and foremost, see your lender. A letter saying you are financially pre-approved for a mortgage amount can make the difference between an accepted offer and losing the home you want to another buyer who has such a letter. And make sure the lender understands that you want pre-approval, not just pre-qualification. The difference is that for pre-approval the lender will perform a credit history check and verify your stated income and liabilities, needing only the sales contract and property appraisal to complete a loan package. Pre-qualification is based on conversation and only states that you appear, based on whatever verbal claims you have made, to be able to borrow a certain amount. Some sellers will not even consider offers without pre-approval letters. You may want to shop lenders before selecting one to work with as some charge for pre-approval and some don't. Next, select an attorney. In Champaign County and most of Illinois an attorney is required to prepare the deed and conduct the closing. While some will claim that the seller's attorney can do all this, you will be entering into a contract when you purchase a house and the seller's attorney DOES NOT represent you. The fee is relatively small and you have nothing to pay if you do not make an offer on a house, but it is the best insurance you can buy if you do make an offer and there are problems. Finally, select a REALTOR® to work with. You knew I'd say that but it is true. Be as honest and forthcoming as you can about your wants and needs in a new home as well as your financial situation so that the REALTOR® can do his or her job locating and showing you properties that meet your specifications. Most home purchases require negotiation at some point, either in the offer phase or in the inspection phase after an offer is accepted and having a professional on your side can be comforting if things get sticky. Remember that your REALTOR® will do a great deal more than just find and show you properties. As necessary, you should get information about the state of the market and comparative property values. You should get assistance preparing and negotiating your offer when you find the house you want. Your REALTOR® will be there when the home is inspected and work with you, and your attorney if necessary, to get any unacceptable deficiencies that show up in the inspection process corrected or allowed for. Your REALTOR® should work diligently to insure that all contract dates and contingencies, inspection, appraisal, final loan commitment, etc., are met and fulfilled and your home closes on time. My commitment is that when you close on your new home I will have done all I can to ensure that you be satisfied that your desires were met and confident that your interests were well taken care of. I guarantee it. If at any point you are unsatisfied in any way with my services as a buyer's agent, tell my broker. If he cannot resolve the situation or find you an agent that does satisfy you, walk away. We'll tear up the contract. *** Copyright ©2004 Gilson
Terriberry. All rights reserved. Information contained herein is believed to be reliable
but is not guaranteed. |
