About Real Estate Agents

Hot Topic - The Issue Of Agency

There is a common misconception, amongst purchasers, especially first-time home buyers, that they will have to pay more, if they use a real estate professional, to purchase a house in Olympia WA. This couldn't be further from the truth. In fact, not only do you not pay the professional for their services, unless you've agreed to, the agent will, most likely, be able to save you money. This is not to say that the agent is working without pay, however.

What happens, is that a real estate agent lists a home for a seller. Almost 100% of the time, they then represent the Seller, not you. The Seller pays a fee (commission) to the listing office when the sale of the home closes. The commission is divided, usually 50/50, between whichever office sold the home, and the listing office. This is the beauty of the multiple listing service, almost every real estate company in the Olympia WA area is part of.

The respective offices then split the part they receive with the agent who was involved on the buying, and/or listing sides. So, typically, the fee that the Seller pays gets divided in four ways. In some cases, it can get divided even more, if another agent referred either the buyer, or seller, to the respective agent.

I hope that answers your question, as to how commissions work for purchasers. To further understand why it's important that you secure a top real estate agent, in the Olympia WA area to represent you, please read on.

Who Represents You?

One of the hot topics, facing the real estate arena right now, is the issue of agency. Some would have you believe that it really doesn't affect you, the purchaser, and that nothing much has changed. But they are wrong. The concept of agency is important to you because it answers the most basic, and fundamental, question that can be asked of any Olympia WA real estate professional: Who do you represent in this transaction? Until that question is uncovered, you may be left with the idea that all agents, who work with area real estate purchasers, actually represent those buyers, and that you have someone going to bat for you in this transaction. Well, the issue of agency is important, because without it, we can never be sure who represents who.

Here's the scenario:

You meet a really nice real estate professional at an open house named Debbie. Even though her house is not right for you, she tells you she has others to show you that fit your needs exactly. You spend an hour, or so, with the agent looking at a half dozen homes, and talking about your needs, and your desires. During the course of the conversation, you say that you have $300,000 cash to spend, and that you will not go over $300,000 sales price, no matter what. Then you find the perfect house. Asking price is $300,000, but you decide to offer $282,500, based on recent sales in the area. During negotiations, the seller asks their agent, directly, how much cash you have, and how high will you go? What does she say? Here's the answer: Unless you have signed a Buyer Agency Agreement with Bonnie, making her your buyer professional, she is most likely acting as a sub-agent to the listing broker who represents the seller. If that is the case, she has a fiduciary obligation to the seller to disclose to him any information she has that might promote, or protect, his interest in the deal. Guess what? She has that information. The seller, now having knowledge of your financial position, counters at a full $300,000. He knows you can afford it, and that this price falls within your desired range. He, also, knows that you have seen a number of other area homes, and that his is the one you want. Regardless of what eventually happens in this scenario, it can hardly be called an even playing field.

So, how can you protect yourself from a possible disclosure required of a seller's agent?

1. Never say anything, to anybody, unless you would be willing to have that information repeated into a seller's ear. Assume that everybody, and we mean everybody, is working for a seller, unless you have specifically hired them to work for you. During the second world war, the military promoted a phrase designed to stop idle gossip: Loose lips sink ships! You would do well to adopt that philosophy in your home-buying as well.

2. Make sure that the real estate agent, you are working with, has agreed, in writing, to represent you as a "Buyers Representative." This will mean signing a buyer agency agreement in which you promise to work only with that particular professional, for a specific period of time, often 90 days. It, also, means that you promise not to purchase from anybody else, even FSBOs, without involving your buyer's agent. In virtually every case, the fee will still come from the seller, but your agent must write the offer.