What is an Buyers Representative and why should you care? 

The purchase of real estate is usually the largest financial transaction you will ever be involved in.  It involves legal contracts, bank mortgages, return on investment, home inspections, financial appraisals and a myriad of other complicated processes and jargon.  Did you know that before the early 1980's buyers were never represented?  Sellers had agents to list their properties and negotiate the contract with all the expertise of professional Realtors and buyers were at a disadvantage in every transaction.  From that imbalance evolved the Buyer's Representative or the Buyer's agent.

I am an Accredited Buyers Representative (ABR, an accreditation approved by the National Board of Realtors) with the extra resources to support both the buyer and seller through a smooth and legal transfer of title to the new owner.  Our company and most of our agents choose to work mostly with buyers.  For sellers, we know what buyers are looking for, what attracts them and what kinds of financing is risky and should be avoided.  For Buyers, we have specific expertise to find the right property for you, negotiate the best deal, and even help you find the right financing!  We know sellers are represented by professional Realtors, why wouldn't you want to be represented?

Without getting too deep into what agency is, any listing on the Realtors' multiple listing service (MLS) tells you the seller is represented by a professional Realtor.  The Realtor has signed an exclusive listing agreement with the Seller and has the fiduciary (another big word that means all the financial and negotiating responsibility) duty to put the Sellers' interests first at all times.  The Seller negotiates with their agent as to what commission they will pay and the agent decides with the seller's consent, how much of that commission will be offered to the agent that brings in a buyer (the cooperating broker commission). 

Point number one:  As a buyer, a buyers representative's (or buyer's agent's) expertise and services usually don't cost the Buyer anything (unless the Seller is paying a ridiculously low co-op and then you'd make up the difference of what your agent and you had agreed upon).

When you go to open houses you are dealing with the Seller's agent or their representative.  In Hawaii, open houses are still a good way (but not the best) to market a property.  Seller's put the sign up and hold open houses to secure more listings in that area.  That's their goal and since that's what we do for a living, absolutely nothing wrong with that.  The agents sitting the open house (unless it is a high end property the listing agent usually doesn't sit the open) are usually less experienced agents from the sellers' agent's office (agency).  They are their looking for buyers to represent.  If they are any good, they'll have other properties available to show you similar to this one if this one is not specific to your needs.  Once again, smart move on their part. 

But how about if you like this house and want to make an offer?  At worst you are dealing with the Seller's agent whose total responsibility is to the Seller - they've signed the agreement that way.  If they write up the contract for you, they must get the Seller's permission to be a dual agent and will treat you as a customer (responsible for fair and honest treatment but not necessarily to put your financial interests before those of the sellers') while the Seller is a client with the full fiduciary responsibility and protection of the original contract with the Realtor.  You will at least have someone write up the (very complicated, and new in Hawaii as of June 2007, Purchase Contract) for you but you are not equally represented, and in some cases not represented at all in this transaction. 

At best, the Seller's agent would turn you over to another agent in the Agent's office (or to the other agent who sat the open), and even if you sign an exclusive buyers agreement with that agent, you are in a dual agency situation where your agent must consider equally your and the seller's position.  In neither case, is it likely that you will get a through market analysis of the properties in that area in order to make an informed decision as to what price you should offer (the list price is seldom the price that you should offer), nor someone to negotiate that price, the conditions and terms of the contract, and the myriad of other parts of the transaction in your favor.

Point number two:  Don't get  an agent by default.  You may only be partially represented and at worst not represented at all.  You will not get a lesser price by bypassing representation, the Seller knows the bottom price they are willing to accept and your bypassing knowledgeable representation only puts you at risk. 

Assess and select the best agent to fully represent you and your interests before you start looking at properties.  This is what I do for a living and I want to bring all my expertise and market knowledge to bear in one of the most important transactions in your life!!

Point number three:  If we agree to represent you in a transaction involving a listing listed by my agency, we will insist that you sign an exclusive Buyer's Representation form so that we may properly represent you.  We seldom agree to do this, and only for agents for whom I have the utmost respect.  If you are already a client of ours (having already signed the Agreement), we will fully inform you of any conditions it imposes on our representation and refer you to another agent outside our office if you are not comfortable with our abilities to serve you.  (So far, we've never had to do this as most of my clients are satisfied with my abilities to serve them beyond their expectations)

But market analysis for the price to offer, neighborhood knowledge to meet your criteria, process expertise to smoothly sail you through a transaction set up to protect your best interests are not the only considerations.  What if you are driving around or looking in the newspaper for open houses and you come across a FSBO (for sale by owner). 

The seller may or may not have the expertise to close the transaction and transfer title to you successfully.  Is the seller prepared to open escrow?  Does he understand the Purchase Contract?  Do You?  If he is not using the Realtor's Purchase Contract (scrutinized and approved by all the legal beagles and the Honolulu and National Association of Realtors) What kind of contract is he using?  Does he have a way to transfer the title to the property cleanly? (Without a clean registration of the title transfer in either the Regular or Land Court or both, you do not own the property no matter how much money has been exchanged).  Worst case scenario - nobody is represented and all sorts of legal red flags are flying!

Point number four:  If I represent you and you fall in love with a FSBO, I will inform you if you will have to pay my commission in order for me to represent you in the transaction.  FSBOs sometimes offer cooperating broker fees and sometimes they do not.  It is more work, as the seller doesn't have an agent to manage their side of the transaction, but if you are my client (with a signed agreement) and not just a customer (no agreement), my job is to find you the home of your dreams and close your successful transaction!

So use the internet to refine your search for a property, learn about the neighborhoods, and develop your criteria; but before you go - select an Buyer's Representative to be your agent.  Going it alone or flitting from agent to agent only increases your risk of not getting what you want - a new home that meets all your needs.

Sign up at www.hawaiirealestateonline.com , onlinehawaiiproperties.com,  or http://bestoahurealestate.com and let us show you what we can do for you!