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Buying House

 

Buying A Home? Who Is Representing Your Best Legal And Financial Interests?

by Jim Hart
 
Thinking about buying a home? Who is going to represent your best legal and financial interests? If you are counting on the real estate agent to make sure you are doing things right, you better stop and think again. Why? Because real estate agents legally represent sellers and not buyers and many home buyers are either ignorant of this fact or ignore it and it costs them money whether they realize it or not.

But what about buyer brokers you ask? Buyer brokers are a scam set up by the real estate industry to capture commissions on both sides of the equation. Agents get listing contracts and commissions from sellers when the home sells and buyer representative contracts and commissions when a buyer buys, depending on the language of the buyer contract. What’s wrong with this you ask? Here’s what’s wrong with it: It is a conflict of interest. There is no way an agent or agency can both list homes under contract to represent the best legal and financial interests of a seller and a buyer simultaneously. And this is especially true when a realty agent and their realty company is both listing and selling the same home.

It is theoretically impossible for a real estate company or their agents to represent the “best interests” of both buyers and sellers due to the nature of contract law. When a home seller enters into a listing contract with a realty company, the real estate agent and company has a legal or “fiduciary” duty to represent the seller. If the same company also enters into contracts with buyers to represent their “best interest” this automatically creates an inherit conflict of interest. Why? Because it is virtually impossible to represent the “best interests” of both parties under “contract” when considering issues like disclosure of financial and other proprietary and confidential information. The very act of negotiations involved in the transaction requires the disclosure of certain strategic information from the buyer to the buyer-rep. And this information can be easily divulged between agents without the buyer’s knowledge. This is especially true when considering that the agents will get a “commission check” from such a transaction. The commissions check (typically paid by the seller) and in any case, will create an automatic bias in the agent toward a transaction that will result in a commission check to their benefit. Human nature dictates this bias will tend to impact the representation of the transaction in some capacity resulting in the highest possible commission in favor of the agent and their company. This is a conflict of interest.

The only exception to this rule is IF the buyer broker real estate Company does NOT list homes for sale with sellers and represents buyers exclusively. And even then, one should use great caution.

Buying a home is the single largest investment of a lifetime for most and it is a BIG business deal composed of people, emotions, contracts and cash. These are all the ingredients for legal and financial pain if you don’t know what you are doing and most people don’t.

Here’s something agents won’t tell you: Before you sign a purchase contract (or any contract), make sure you write, above your signature, “subject to buyer’s attorney’s approval” then, sign the contract. By doing so, you can get out of the deal if it is not in your best interests.

Remember real estate agents are LICENSED in real estate and trained in real estate principals, practices, law and some financing… how much real estate training have you had?

SBS has a TON of information products that cover home buying and selling that will show you how to be an extremely smart buyer or seller…we tell you “everything a real estate agent doesn’t want you to know”. Check us out….

Copyright © 2006 James W. Hart, IV All Rights reserved

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