Probably the biggest advantage in using a broker is that he
knows what is available in which price range. This can save you time, money, and
trouble. Another advantage is that he knows the financial market¡ªwhat kinds
and types of mortgages are available and whether the house you want can produce
the financing you need. He will know where the nearest schools are, the location
of main and secondary store centers, how far it is to the hospitals, and so on.
If a broker tells you that you must use a particular provider
for any service, that broker has broken the law. He may recommend but not
insist. His recommendations must be in good faith and must reflect his
experience in the field. The main problem is that buyers who work with brokers
think that the agent represents them or is a neutral intermediary. He represents
the seller. Except in rare instances, it's the seller of a property who pays the
agent's fee. The broker has been hired by the seller and has fiduciary
responsibility to him. This special legal relationship is one of trust. It
includes the obligation to be loyal, to obey the seller's general instructions,
to inform and account to the seller, and not to be negligent. In the past, the
only duties the broker had to buyers were to deal in good faith and not commit
fraud. But, lately, consumer pressures have forced the courts to expand this
responsibility. In most jurisdictions, the agent must also be "fair and
equitable" to the buyer. You, the buyer, must get a truthful answer to any
relevant question. You are legally entitled to a straightforward answer to this
question: "Are there any hidden defects in this property I should know
about before I decide to buy?" Make sure you ask that question before you
buy. Make sure you get an answer in writing.
A growing movement across the country is the emergence of
buyer's brokers. Buyers pay them a retainer and a flat fee. They are obligated
to put the interests of the buyer first. Such brokers must make their position
clear to all parties. They usually don't share in the seller's commission.
Consider hiring a buyer's broker if you are a first-time income property buyer.
Locate a broker who specializes in income property. He will
have a more exclusive file than an ordinary broker. Try to deal directly with
the listing broker as he has more influence over the seller. If you make an
offer to a broker with an open listing, you run the risk of having the seller
use your offer to increase the price another interested prospect may have
submitted. You can get a good idea of what agency to use by driving around the
neighborhood. If you see a lot of "For Sale" signs belonging to a
particular firm, that agency is probably having the most success in that area.
Observe certain standards of conduct when dealing with a
broker. While you can consult more than one broker, it's unethical to let
another broker show you a property that you've already visited with a
competitor. Once a broker shows you a property, he has the right to the
commission if you buy.
If matters get to the point where you are bickering over
terms, keep the broker informed as to what you have been discussing. Reject any
suggestion that you and the seller collude to dupe the broker out of his
commission, splitting the difference between you. The broker can sue for his
commission. Most brokers won't hesitate to do so.
Buyers should be quiet as to how much money they have and how
much they are willing to spend. If the broker knows you have a lot of loose
cash, the owner won't do you any favors on the price. The broker will try every
sales trick in the book to pressure you into meeting the seller's price. Perhaps
the best way to keep your interests paramount is to keep in mind these
aphorisms.
We are most credulous when we are most happy. There's a sucker born every
minute.
