Wise Buyers Ask These Ten Questions
Signing a contract with a real estate agent is like hiring a person to work for you. Just as you would interview a potential employee, it’s always a good idea to find out about the agent you are considering.
During a basic interview or conversation, you will find out how long they have been a professional in the area where you are looking; who their references are; and how you will communicate (email, pager, etc.).
Once you have identified an agent that you feel comfortable with, you need to understand the type of agreement you are making. To make it easy for you, here are ten questions to ask an agent before you sign a contract.
1. Are you a buyer's agent or do you represent both buyers and sellers?
If you are not familiar with the terms seller's agent, buyer's agent and dual agents, they simply describe a real estate agent's role in a home sale. Some agents will represent only the buyer or seller in a given transaction, often specializing in that role, while other agents will at times act as dual agents representing both buyer and seller (note that certain states do not allow dual agents). If you are buying a house, one of the best supports would be to find a buyer's agent whose loyalty is to you, the buyer, and not to the seller.
2. Is this an exclusive contract?
Exclusive means that you, the buyer, agrees to work only with this agent and no one else. This means you can’t call up sellers on your own, and you allow the agent to make all the contacts. A non-exclusive contract means you can work with other agents who are either buyer or seller agents.
3. What is the length of time for this contract? What happens if I am not satisfied?
Typically, on an exclusive contract, the length of time is three months or more. Non-exclusive contracts are usually shorter, from a week to a month or two. You should be able to end the contract if you are dissatisfied.
4. What are your rates? What am I obligated to pay you?
Normally, the buyer agent receives commissions from the seller. There are situations, such as For Sale By Owner, where you as the buyer might be obligated to pay. Find out how these are handled.
5. How do you handle visits to open houses?
Some buyer agents encourage clients to go to the open houses of their choice. Others want to accompany you to every open house. Find out what your agent wants and see if that works for you.
6. Is your agency also a buyer's agency, or does it also list properties for sale?
It is possible to sign a buyer's agreement with an agent who works for an agency that also lists properties.
7. If your agency lists properties, will you be showing them to me as well?
If the agency represents both buyers and sellers, there can be subtle pressure on your agent to sell the properties listed by the agency. If you don’t want to have this happen, you can ask for a "single agency" contract that does not allow them to show you the agency properties. However, this can work against you as you may miss a good property.
8. Does this contract cover other geographical areas?
If you are looking in several areas simultaneously, you will want to have an expert for each area. If this contract is exclusive and precludes your working with an agent in another area, you need to negotiate the contract.
9. How will you find the properties that meet my criteria?
Find out what the contract says regarding the effort the agent will make on your behalf. Does your agent have access to the MLS? Does he or she have other ways of finding properties before they even get on the market? What other services will your agent offer you?
10. How much time do you have to work with me, given my time frame for finding a property?
Get a realistic assessment of how accessible and available this agent is. What does the contract say about this?
Be sure you know the answers to these questions and read the contract before signing. Then you can know you are in good hands.