By JEN SLAYDEN
Picture this: you are at the annual Brawl of the Wild with all your buddies who are die-hard Grizzly fans. The players barrel out onto the field, and the Bobcats are looking to take down the Griz. Head coach Bob Stitt is ready to make some big plays. But he is coaching both the Grizzly AND the Bobcat teams! What the heck?
Could he do a good job, and be completely unbiased on both sides of the stadium? Perhaps. But would you, as a avid Griz fan, feel as if your team was getting the best coaching? Maybe not.
Let’s put this example into Real Estate. Real Estate Agents can wear different helmets too. In the next few articles I will describe the most common types of agency. This time I will describe what comes into play in a buyer’s agency agreement.
University of Montana Grizzly Football, Missoula, MT
Some Realtors would call it the “good old days.” When a home was listed, a potential buyer would call the name and number on the for sale sign. That would be the real estate company and the broker or agent who were in contractual agreement with the owner who would like their property sold. The agent was a listing agent. The selling agent was the sub-agent of the seller. Much of the time it was the same listing agent who would also show and sell the property to potential buyers.
Just like Coach Stitts working on both sides of the football teams, you can see how this could create some problems. The buyers needed representation to ensure that due diligence was being met, and that they fully understood the liability involved. Hence, in the late 80s, buyer brokerage was developed in order to protect the buyers and make sure they weren’t blindsided by any material defects in the property they were interested in buying.
Montana statutory law states that “a buyer agent is obligated to the buyer to act solely in the best interest of the buyer.” MCA 37-51-313(4)(a)
There are many benefits to huddling up with a Buyer’s Agent. Here is a play by play of some of the key points of the buyer’s agency.
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It’s usually* free! Then how does the buyer get paid? The listing agent charges a commission to the homeowner. The listing agent will be obligated to pay the buyer’s broker from that commission. All agents work for a broker, so if an agent procures the sale, the broker then pays the agent from the commission he/she receives from the listing agent. *There may be times that a buyer wants to purchase a home For Sale by Owner, but wants the security of being represented by a buyer’s agent. In that case, sometimes the buyer will agree to pay a fee to that buyer’s broker, or the owner of the house will offer to pay a buyer’s commission.
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A buyer’s agent serves as the “head coach” for the buyer. They will walk you through each step of the transaction, from narrowing down specific wants and needs to negotiating price and contractual agreements. They can provide lists of referrals for inspections and other important due diligence matters in order to make a sound decision about this very important life event!
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Grizzly Football. Photo by Patrick Record for MakeItMissoula.com
The agent will want the buyer(s) to sign a buyer broker agreement which the Montana Association of Realtors defines as “a written agreement in which a prospective buyer employs a broker to locate real estate of the type and with terms and conditions as designated in the written agreement.” This contract ensures that the buyer is “ready, able and willing” to buy. Many buyer’s agents will require a signed agreement to establish a commitment from the buyer BEFORE looking at property. This agreement protects the agent from showing clients houses for months on end when they have no intention of buying. Remember, a buyer’s agent does not get paid at all for their time or expense until a transaction closes.
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A buyer’s agent has certain fiduciary duties under the law, all in which look out for the best interest of the buyer. They buyer’s agents is not just your coach, they are your biggest cheerleader! They want to see you successfully obtain the property you desire, and make the process as stress free as possible.
This is just a brief summary of many of the benefits of having a buyer’s agent on your side when you decide to purchase a home. If you have further questions, feel free to leave them below in the comment section, or give me a call.
Happy Nesting! (and GO GRIZ!)
Jen
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Jen Slayden wears many hats: Mother, Real Estate Agent with Main Street Realty, teacher for the non profit music program Center for Music, UM alumni, runner, and supporter of all things local. Her RealChange program dedicates a generous amount of her Real Estate commissions to be given back locally to organizations of her client’s choice. You can find her on Facebook, or give her a call at 406-370-0300.