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Unwrapping the Gifts of a Buyer's Agent
As the holidays are upon us, we at HomeTraq are reflecting on a year filled of significant change in the real estate landscape. The recent federal jury ruling against the National Association of Realtors has sent ripples through the industry, bringing to light practices that have not been as buyer-friendly as they have been presented over the years. As we bid farewell to this transformative year, HomeTraq, a trailblazing technology startup specializing in no-commitment, on-demand home tours, is here to....
Unwrap the 3 simple truths about real estate transactions:
1. Forced Commitments are Not Consumer Friendly.
Forcing consumers to sign Buyers Agency Agreements to simply tour for sale homes is not buyer-focused by any means. HomeTraq boldly declares that the era of compelling buyers to sign binding agreements before even stepping foot in a potential home is
outdated and counterproductive. This practice has been a barrier for many buyers, deterring them from exploring available homes freely. We believe in empowering buyers with the freedom to tour homes without unnecessary commitments.
2. Conflicts of Interest are Clear & Present.
Alternatively, forcing consumers to coordinate home tours directly with the listing agent is not buyer-friendly either, and more concerning it creates a complete conflict of interest challenging the fiduciary responsibility and duty of agents.The potential
conflict of interest when buyers coordinate tours and questions directly with listing agents is alarming. A buyer's agent should act as a dedicated advocate for the buyer's interests, free from conflicting allegiances. This declaration sheds
light on the importance of maintaining the fiduciary duty of agents to ensure a fair and transparent real estate process.
3. Commitment is a Two-Way Street.
When a consumer is ready to make a commitment to work with a specific real estate agent, a Buyer’s Agency Agreement is vital to detail what services consumers are provided and what the buyer agent receives in compensation from their client. Clarity
in commitments should be complimented with clarity in compensation. When a buyer is ready to engage a specific real estate agent, a Buyer's Agency Agreement becomes crucial. This agreement establishes clarity on services provided
and the compensation structure, fostering a transparent and mutually beneficial relationship.
The services provided by a buyer's agent have never been performed for free. The real estate industry, however, has long perpetuated the notion that buyers' agency comes without a cost to the homebuyer. In response, the recent legal developments are begging the question... What does a buyer's agent actually do in a real estate transaction? With this in mind, HomeTraq is here to unwrap another set of presents...
The 9 gifts of a buyer's agent:
1. Representation and Advocacy.
A buyer's agent serves as a steadfast representative, communicating and advocating for the buyer's needs with all parties involved in the home purchase process, including seller’s agents, mortgage lenders, attorneys, inspectors, and title
representatives.
2. Finding Home Matches.
Through various channels, including text, email, phone calls, and online home search portals, a buyer's agent suggests homes and neighborhoods that may align with the buyer's needs and preferences.
3. Tour Coordination.
Takes the lead in coordinating and scheduling home tours for properties that match the buyer's interests and needs.
4. Facilitating Additional Service Providers.
Educates, coordinates, introduces, and facilitates additional service providers necessary for a successful home purchase, such as mortgage lenders, title companies, attorneys, home insurance providers, inspectors, contractors, municipal inspectors, and appraisers.
5. Market Guidance.
Provides crucial guidance on current market trends, offer contingencies, and contract clauses that influence the attractiveness of purchase offers.
6. Contract Facilitation.
Structures, drafts, and coordinates the facilitation of contracts and paperwork to successfully submit the purchase offer to buy a home.
7. Negotiation Skills.
Negotiates and communicates with the seller’s representative during the contract offer and negotiation phase to ultimately facilitate acceptance from all parties involved.
8. Concession Navigation.
Negotiates and navigates potential seller and buyer concessions and requirements arising from the home inspection and discovery process.
9. Closing Assistance.
Assists and coordinates the closing process to ensure a smooth transition from offer acceptance to homeownership.
The federal jury ruling against the National Association of Realtors has stirred discomfort in the industry. While the upheaval may be challenging, it appears to level the playing field, providing much-needed clarity into the financial aspects of a real estate transaction. As we unwrap the true gifts of a buyer's agent this holiday season, HomeTraq stands committed to transparency, empowering buyers with freedom, and fostering mutually beneficial relationships that enrich the real estate experience for all. In the spirit of the season, may the truth about real estate transactions bring joy and enlightenment to buyers and sellers alike.
Importance of a Real Estate Buyer's Agent: Recent Lawsuits Sheds Light
In the ever-evolving world of real estate, it's crucial for homebuyers to have a trusted advocate by their side throughout the home buying process. The recent $1.78 billion verdict in the Sitzer/Burnett v. The National Association of Realtors (NAR) class-action lawsuit focuses on unfair "cooperative compensation" practices in real estate, but it also brings light to the significance of the duties performed by agents involved in the real estate transaction.
This lawsuit begs the question, why does a homebuyer even need a buyer's agent? Here are some reasons why a real estate agent representing a homebuyer plays a critical role in ensuring that the buyer's best interests are protected:
The Listing Agent Represents the Seller, Not the Buyer: One of the most fundamental reasons for enlisting the services of a buyer's agent is the inherent conflict of interest in real estate transactions. Listing agents, affiliated with the seller, are primarily focused on securing the highest possible price for the property they represent. This means that when a prospective buyer approaches a property, attends an open house, or expresses interest in a listing, the listing agent's primary duty is to the seller. They're not looking out for the buyer's best interests whatsoever.
The potential consequences of relying solely on listing agents is a huge concern in the real estate industry right now, as there are many lawsuits now being filed which challenge the status quo of how the real estate industry has operated for over 100 years. While lacking real solutions to some long-term problems, these cases highlight the industry's need for transparency and unbiased representation.
Buyers Need Their Own Advocate to Navigate the Home Buying Process: The home buying process can be a complex, daunting, and sometimes an extremely overwhelming journey. From property selection and negotiation to inspections and closing, numerous steps require careful consideration. A buyer's agent serves as an advocate, offering expert guidance every step of the way. They bring experience, market knowledge, and negotiation skills to ensure buyers make informed decisions.
These lawsuits have the potential to rewrite the entire structure of the real estate industry in the United States, by lowering the cost of moving homes by reducing commissions, but at the same time underscores the importance of homebuyers having an advocate in the real estate transaction. This case serves as a reminder of the need for unbiased representation, especially when significant financial investments are at stake.
Contractual Commitments Effect Service Levels: Once a consumer signs a commitment (Buyer's Agency Commitment) to work with a real estate agent, it's essential to understand the legal binding nature of the agreement. Committing via a signed representation agreement with a real estate agent truly can be perceived as a "double-edged" sword. While many agents are committed to serving the interests of their clients as best they can throughout the home buying and selling process, there are instances where expedited service levels taper off once a contractual commitment is signed. This happens because the agent may perceive they no longer have to go "above and beyond" to earn their clients business, simply because the commitment has already been executed. In such cases, it's essential for all parties to remember that the buyer has the power to make what choices are in their best interest. Buyer's Agency Commitments in most cases can be voided by request of the buyer, but often only happens in extreme cases of malpractice.
The Financial Commitment to Hire a Real Estate Agent is Substantial: Typically, the home seller pays their listing agent via their listing agreement, then the listing agent splits the commission with the buyer’s agent. Traditionally, that works out to a 5%-7% commission split roughly evenly between the buyer’s and seller’s agents. While the primary focus of the pending lawsuits is on the commission and costs associated with buying a selling a home, it's essential that buyers and sellers alike know, they have the ability to ensure their interests are well-represented. Additionally, as the lawsuits claim, the commissions paid to real estate agents are negotiable, despite what may perceived as industry standard practices.
These Lawsuits Serve as a Reminder of the Critical Role Buyer's Agents Play in the Real Estate Transaction: The listing agent primarily represents the seller's interests, and a buyer's agent is essential to ensure the buyer's best interests are protected throughout the process. While contractual commitments exist, it's important to remember that both the buyers and sellers have the power to make decisions that align with their goals.
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