OH GOD OH GOD, the NAR had better mount an education campaign ASAP because this would be such an obviously breach of fiduciary duty. Any agent who engages in such practice is violating the law of agency, and any member of the public who believes this is how we work is woefully uniformed.
Never claimed to be a Knight in shining armor, but thanks. And no, I don't mind if a client wants to fly Stephen Hawking in (although he's probably not a licensed and certified inspector)...
"The problem" is your suggestion that simply because I gave the client a list of inspectors to choose from, that somehow I have an ulterior motive, (and am in collusion with the inspector) which is solely to line my own pockets as quickly as possible, probably to my client's detriment.
If you truly believe that's how most agents (and inspectors) work, I suddenly understand why you have such an ill view of the industry, and clearly, I won't be able to change your mind, so I'll stop trying.
The listing agent contractually represents the seller, and cannot advise you in any useful way. The listing agent is unlikely to share any of his "new found booty" (the extra commission) with you, since his contract for commission is with the seller.
If you feel comfortable handling all the aspects of the transaction (contract, negotiation, inspection, credits & repairs, tax proration, escrow, walk-through, closing), then it might be worth your while to take the risk and plow forward.
But advantages???? Zero.
I have no problem if a client wants to bring in an inspector they found themselves (that purportedly has no ties to me... but chances are good that I've worked with them before).
I don't agree with your statement that we (Realtors) try to bring in the inspector that will find only "some" stuff. It's to my client's best interests... AND MINE... to find as much as possible... that allows us to not only know what the buyer is up against, in home-ownership, but to negotiate any of the repairs or credits required.
If the inspector should find "terrible" things (ie: a major foundation or structural issue) that makes the house a bad purchase, it gives us the option of pulling out of the deal. I know.. you're going to say that goes against a Realtor's logic... but follow this to it's conclusion.
One day (maybe a year, maybe five years from now), that buyer will become a seller... and they're going to call me and ask me to help them sell that home. I want my client to buy/own a home that I'll be happy to list. NOT a home with a major structural issue... so this is also in the best interest of the Realtor (since I know you won't accept that the Realtor is truly interested in the best interests of the client).
tman, I know you're not our biggest fan, but I didn't think you were one of the "aluminum hat" brigade that thinks that inspectors (independent ASHI, NASHI certified business folk) would collude with Realtors to mislead their clients and overlook major defects .... purposefully!.
it may be difficult to find an inspector that the Realtors don't use... we use them all!!
I'll go a step further, Mary. If you don't really trust your Realtor, you shouldn't be using him/her. This is too large a decision to be using someone you don't implicitly trust.
Personally, I find this overly paranoid. When I recommend an inspector (as a buyer's agent), I usually give the client 3 names of ASHI or NASHI certified inspectors. I am usually present at the inspection, and can help my client understand the inspectors finding.
Inspectors are independent business people, not "beholding" to Realtors. It is not in their best interest (or the interests of their clients and their insurance) to overlook inspection issues!
If your inspector DID overlook a serious structural issue, that's what their insurance is for. You should contact the inspector, and if you can't get a satisfactory response, you may have to take him to court.
I've worked both sides of many deals and never done it as a dual agent. My seller client would have to agree that I would represent neither party, and act as a mediary. They're paying me so they want me to represent THEM not no one.
I should find an inspector with experience and a good reputation that no one uses? How did they get this stellar reputation if no one uses them? After about 5 closings I probably started running into the same inspectors over and over. There are only so many inspectors. And as I said, I don't pick them and I rarely get asked for names.
Correct, and my clients expect me to be there.
Ethics-wise questionable behavior. Otherwise, stupid of the agent. Why would I encourage you to bid as low as I knew the seller would go? #1, I am employed to sell this house for as much as I can, and #2, If I let YOU come up with the bid, it might be considerably higher. You may think you got a great deal, and maybe you did. Certainly the listing agent was acting in YOUR best interest, not in the seller's. I wouldn't take your experience as typical. I'm sure the seller would love hearing about this, though.
Interesting take on what I said, Joep.
What I actually said was that I wanted the inspector to find any potential problems, so they could be fixed, since it also serves my own interests in case I'm called upon to list the house somewhere down the line.
tman then accused me of being a drama-queen, and now you're accusing me of badmouthing the competition and claiming I have the best product. I don't know where you guys get this stuff.
In my area, it's tough to be a home inspector. There are 2, just 2 that I know of that speak Spanish. I speak Spanish too. I often have buyers who are more comfortable with Spanish speaking attorneys, home inspectors, lenders, etc. If they don't know of a Spanish speaking professional, is it OK if I give them the names of those I know? Or should tell them to find their own?
Ridiculous! The seller is paying the entire commission either way: if you don't hire a buyer's agent, or if you do. You can't "save the buyer's commission fee." You can't put in an offer that says "Seller, sell it to me for less since you are not paying the buyer's commission fee." The listing brokerage gets the entire fee regardless of whether you are represented or not.
Bottom line, either you hire a buyer's agent to help you (who gets paid 1/2 the listing commission) or you buy it through the listing agent. If you have a buyer's agent, you get knowledge and experience and he/she gets 1/2 the commission. If you don't have a buyer's agent, the listing agent makes the entire commission. You can't offer a lower price or save yourself any money by not hiring a buyer's agent; you just cheat yourself out of someone advocating for your interests.
Again it all comes back to this: IF YOU DON'T TRUST YOUR AGENT, GET A NEW AGENT.
My buyers are always free to use whomever they want for inspectors, lawyers, mortgage brokers...but the deals are ALWAYS less stressful when they use people I recommend. Because they're in my pocket and put my clients best interests at risk just to close the deal? No...because they are honest, trustworthy people who are available when you need them. That's why I recommend them.
Who is going to be present at this inspection? No one except the inspector and the buyer? This is ridiculous.
It doesn't matter what list I have inspectors on. The buyers pick them, usually on the advice of friends or their own attorney. I've RARELY had a buyer ask me to suggest someone. And I never give one name.
Territory and Ryan are right on.
Having been burned once (as you say), you are going right back to stick your hand in the fire again. It sounds like you are about to get burned twice.
It's like the old saying "never bring a knife to a gun fight". Your buyer's agent is your protection, your gun!
Always have your own agent.
Are you hoping that by only working with selling agents you might run into another unethical one who will cheat with your bid, allowing you to get you the property in the face of several offers?
We were heartbroken for a very long time about losing that property.
Now, we come to Trulia, find out the listing broker's name, and go to them directly. We've still had to go in with an agent to some showings because that agent was the listing broker for another property that we found through their agency, but we certainly do not feel the agent represents anyone but the seller in any potential transaction.
"Wow" I cannot believe what my eyes are reading! Peter you do not make a strong case for any buyer to want to work with you to purchase one of your listings. Your profile says it all.
"I Represent Seller(s)' Exclusively.Getting My Seller's The Most Amount of Money and the Best Terms is What I Specialize in.I Have Never Acted as A Buyer's Agent as I Do Not Believe in "Buyer Agency".
But any situation where it's a typical seller and listing agent.... there's no reason for you not to have a buyers agent.
Having said that, you need to temper that advice with the traditions in your part of the country. Here in NM, there is no cost to a buyer to have their own representation. The Seller pays the commission which is then split between the two agents. The buyer bears no cost. If that is not the case in your area, then cost might influence your decision.
HOWEVER, just because you can identify the property does NOT mean you know the property, the area, the comparables, the appropriate price. It does not mean you have the ability to protect yourself with the appropriate contractual paperwork, inspection procedures, negotiation "fine points".
That is where a Realtor shines and, in my opinion, provide much more in guiding and protecting than we could ever earn! And my clients all agree with me!
The real estate agent’s recommendation, why question your agent’s recommendation of an inspector? M-O-N-E-Y. The real estate agent only makes a commission if you, the buyer, actually purchase the house. This can, and does cloud their thinking. While there are many honest and conscientious agents in the real estate world, there are too many unscrupulous agents. Pay careful attention to why and how you stand to be duped and otherwise harmed by the agent’s actions. What follows is list of ways ‘your’ agent will ‘lead’ you to a particular inspector that will ‘help’ the agent to convince you to actually purchase the home after it is inspected. The agent simply says “Call this inspector, he is really good” or “I use him all the time”. When you rely solely on this recommendation, you are putting your trust in the person who only makes a commission ($) if you buy the house.
Or…the agent gives you a ‘list’ of 10-20 inspectors for you to choose from. This is fine if the city or town you are purchasing a home in only has 10-20 inspectors. If the city has 100-150 inspectors and you are being given a list of 10-20 inspectors, be very concerned. No matter whom you choose on the list, that inspector is one of a group that the agent wants you to choose from. The list of inspectors may have a disclaimer on it that says ‘This is not the complete list of inspectors available in this area’ or something similar. However, make no mistake, you are being steered to one of the inspectors on the list. Why? There are many reasons why. We’ll talk about a few of them here. It could be that the inspector, without premeditation, performs a sub-standard inspection. He/she is just not experienced or lacks the skill-set to perform an inspection that protects you, the homebuyer. It might be that the inspector is an ‘agents’ inspector. This is the inspector who performs a minimal inspection and verbally downplays their findings so that they can continue to get recommendations from real estate agents. There may be a subtle, yet substantial, financial benefit to the agent. Agents have often recommended an inspector or provided a list of inspectors that have
errors & omissions insurance (E & O). This is a clever way for the agent to recommend a poorly performing inspector that won’t ‘kill their deal’ and then be able to say “Call your inspector, he’s got insurance” when the inspector does, in fact, do a lousy job at the inspection. What your agent won’t tell you is that many inspectors carry E & O insurance that protects the agent in the event of a lawsuit. How does this work? If you ‘choose’ an inspector who has an E & O insurance policy and the policy has a ‘rider’ or provision that pays for the agent’s E & O insurance or deductible, the agent can recommend an underperforming inspector and know that in the event of a lawsuit against the agent, for recommending the inspector and causing you, the buyer, to be led down the path that resulted in you buying a house with defects, there will be no costs, no financial penalties for having steered you to a particular inspector.
Yet another way agents steer homebuyers to or away from a particular inspector is to make verbal comments that the inspector is “not very good”, or “doesn’t know what he/she is doing”, or “he/she is an alarmist”. If you ever have your agent tell you this, ask for them to put this in writing and to give you the name of one or more of their past clients who actually hired the inspector the agent states is “not very good”.
How to Deal with Difficult Realtors and the Requirements of Disclosure
by Justin Watts of American Dream Home Inspection
-- Some realtors do not understand that we are doing our job as home inspectors to disclose defects we encounter and to educate our clients on a properties condition is our duty. Home inspectors do not kill deals, buyers and sellers failing to negotiate the terms of the sale is what kills the deal.
As a home inspector in Southern California, it is in the nature of our profession to encounter difficult realtors, the ones that do not believe in full disclosure when it comes to discovering defects on a property. It is important to educate realtors on the ethical and legal requirements to disclose defects when we are inspecting and reporting them to our clients. Many realtors do not understand the legal ramifications for not reporting defects when observed, and real estate is a very litigous business. There are constructive methods with handling difficult realtors, here are some examples and actual conversations with some realtors....
-- Realtor's question: "The Sellers House was constructed in the 1950's and GFCI outlets were not a code requirement then, why are you stating in your report they should be installed?"
My answer: My clients' safety is my number one priority, and although a home inspection is not a code-compliance inspection, I always recommend the latest new construction code safety requirements including GFCI's on every property and year of construction. It is my duty to inform my client of these safety features, so they can make their own decisions.
-- Realtor's question: Why are you reporting on moisture stains on the garage ceiling that appear to old and are dry and this is going to cause problems for my deal?
My answer: It is my duty to my client and the buyer to report moisture stains that could imply a previous roof or plumbing leak, and they should have any suspicious stains further evaluated by a licensed specialist or obtain information from the sellers regarding any previous repairs, etc. It is my job as a home inspector to observe and report. Stains on drywall may also require destructive testing, meaning removing the drywall to determine the cause of the leak and additional moisture intrustion damage or mold could be present.
-- Realtor's question: You stated in your report, that all the Asbestos ducts confirmed tested and present should be removed from the home and be replaced with newer ducts, this is going to kill my deal!
My answer: My clients safety is my priority, and because asbestos is such a litigous issue, I always recommend that they be futher evaluated by a licensed asbestos abatement contractor. The Environmental Protection Agency states that if asbestos is not damaged or duct material is not friable then it (may) be safe. Since I am not a licensed asbestos contractor, I am unable to make this determination and it is my opinion as a home inspector to recommend the replacement of asbestos ducts for obvious safety reasons. It is my clients discretion and choice to decide what should be done.
In summary, always advise realtors that the buyer is also your client and you have a duty to protect them and protect "everyone" in the transaction. Failure to disclose defects plagues the real estate industry with lawsuits that will result in costly damages that can far surpass any commission. Choose to do business with ethical realtors, ones that prefer full disclosure and whenever in doubt... Just remember these magic words... Disclose, Disclose, Disclose!
Justin Watts, owner and inspector of American Dream Home Inspection based in Rancho Santa Margarita California has inspected over 10,000 properties since 1997 as a City Building Inspector and private Home Inspector. He is certified with the National Association of Certified Home Inspectors and is an ICBO Certified Building Inspector. Justin has also testified as an Expert Witness in home inspection standards of care cases. His motto is, "Inspection For Your Protection". Visit his company website athttp:// http://www.americandreamhomeinspection.net
Please, lets stop the drama class ... worrying about a potential "maybe, perhaps, could be" buyer in 5 years is going to be one of the very last things on an agents mind .l.o.l.. they're looking at the calender and seeing when their mortgage payment is due..
So they're thinking the fastest and easiest way from point "A" to point "B" ..
How fast can they get to closing ... they don't want the deal held up for 5 minutes, let alone another 5 days waiting for the right inspector with the "right" information - and possibly throwing the dice because something was found - and something needs fixed ...or... the buyer gets cold feet.
If you're this Knight in shining armor, you won't care if your buyer has Stephen Hawking flown in to do the inspection - yes.?
If there is no problem, then whats your point..?
This has nothing to do with a "fan thing", never has .. it's a reality thing.
Most realtors keep home inspectors in a pecking order ...
Some home inspectors will see "some" things -- and some, will see a lot more.
Agents like to keep the "some" things inspectors on the "A" list ...
The ones that see a lot .. well, ah, let's just say their number gets missed a lot because they see a lot.
Excellent point ..
Home inspectors vary in quality like Alaska varies in weather... find the one with the most experience, best reputation that the agents - "don't use".
My past experience greatly influences my position on this, but regardless, doesn't it seem logical?
You've gotten mostly good advice here--with Peter's being a glaring exception. Listing agents ALWAYS have a legal responsibility to represent the seller's interests above all other interests. All agents--seller's agents, buyer's agents and transaction brokers-- have a responsibility to disclose known material facts about the property. That is only the beginning of what a buyer's agent is required to do, however. Since Peter admittedly does not specialize in buyer's agency, perhaps he doesn't know any more about that process than he does about proper punctuation!
Buyers and sellers have two totally different needs - (Hello, one wants the highest and best price and the other wants the lowest and best price. Not to mention buyers need someone who is good at data analysis, identifying market trends, a fantastic negotiator, and someone who can identify property faults and is an effective buy-side consultant ... and SOMEONE NOT MOTIVATED JUST TO SELL THE PROPERTY. The seller needs a great marketer, someone great at staging and pricing, and an effective salesperson) - and therefore a buyer should hire someone who is an expert in that side of the transaction who is not looking to steer the buyer into a sale for the good of his/her seller client and/or to collect full commission. If you're a buyer why risk that? If the buyer is looking to get the lowest and best price why would they hire someone legally bound to the seller? It is not logical.
Honestly, there are NO advantages to buying w/o representation. None. Even Rob's claim of a financial benefit is dubious, since buyers w/o representation typically pay more for their homes. W/o a buyer's agent--at least in NY--the buyer has no representation.
BTW: By forefeiting your right to representation, agent fees/commissions--all of which come out of your purchase funds--are allocated to the seller's side. Can you see why sellers and their agents love unrepresented buyers?
CBRsource.com has a nice write-up on the benefits to buyer client representation.
I agree with the other answers and would just like to add some additional comments. In Massachusetts, agents are required to present what's called "Agency Disclosure" at the first face-to-face meeting regarding any particular property. With that, this is when an agent needs to disclose who they are representing. If you decide to go into a transaction with a Sellers Agent, just make sure to always keep in mind that they, in fact, represent the Seller. It's very easy to get comfortable with someone and potentially disclose information about yourself, financial situation, etc. that could possibly affect negotiation. I have been in this situation and it is very difficult. I alway remind a buyer that I represent the seller at every conversation in order to keep that at the forefront. The only other comment I have is that a Buyers Agent can (and should) recommend home inspectors, lenders, and attorneys that we have worked with in the past and have had good experiences with. The home inspection in particular is such a key piece of any transaction. Good luck with your endeavor. Contact me any time!
We actually accepted the offer of the agented buyer because they gave us the highest price (they were desperate to avoid eviction from their apt. and we were willing to close very quickly because we had already arranged a rental home through my husband's work where we could be tenants-at-will for as long or as little as we need). In our negotiations however we were definitely considering the realtor commission (we were offering 2% to buyers agents). Therefore we considered lower offers from the unagented parties because ultimately that would net us a higher profit on the sale. This is where being an unagented buyer can really help you. Yes, it's the seller who is responsible for paying the realtor's fee, but ultimately that fee is connected to whatever price a seller would accept. In our case, the unagented buyer was bidding around $6500 less than the agented buyer.
I can assure you that in the course of showing our house, I came across a lot of incompetent realtors. Many brought buyers by for whom our house was clearly wrong. One agent, after hounding me for a week about how badly I needed representation, arranged to bring a buyer by. Well, the agent showed up but the buyer never did. We rescheduled. At the second appt. the "buyer" showed up expecting to see a RENTAL house. This is an example of how well realtors can vet potential buyers??? Yeah right. And as far as the buyer's agent involved in the sale of our home? He actually complained to me saying that it wasn't his responsibility to be chasing the buyers down to get their signatures on the P&S. WHAT??? Are you kidding me???
Our situation was special. I am currently an at-home mother and was able to be home to do showings. Obviously I was careful about it. I never showed my house alone. At open houses I am sure we were more vigilant than any realtor would have been as people moved through the house. Many realtors who brought clients by complimented us on how well we showed the house. Yes, because we know it better than anyone. As far as marketing the home we took out a $200 Run-It-Till-It-Sells ad in boston.com, we took out Sunday ads in the Globe, we paid $195 to get listed on the MLS (an entry only agency), we printed listing sheets (much better in layout and information provided than your average MLS listing sheet), we listed on Zillow and craigslist, and we placed a sign in the yard. Oh, and I should add that we hired a real estate attorney to handle the paperwork, etc. for us ($700 fee). We didn't have any trouble separating ourselves from the house emotionally. I suppose if that is an issue for you, I would recommend using an agent. We had the time and motivation to do this ourselves and it paid off. We saved about $10,000 by not using a seller's agent. And did I mention we sold the house for only $900 under our asking price? : )
As we search for a home to buy, we are NOT going to use a buyer's agent. Regardless of the party line that realtors here are touting, an unagented buyer IS more appealing to a seller's agent. Yes, they have a professional responsibility to their clients, but agents are human. They don't get paid if they don't sell houses. If two potential buyers are competing for a house and they both come in with similar offers, and both are backed with solid financing etc, which one is the agent going to favor? Um, the one who is UNAGENTED because that 5% commission all goes to the seller's agent and his/her company. The seller's agent makes TWICE the commission if the buyer is unagented. Simple math, people.
Sorry if I've offended any of the real estate professionals here. I'd definitely employ a buyers agent if I were making a long distance move or if I had to find a house fast. I'd use a seller's agent if I or my husband didn't have the time to commit to the process. Personally though, we preferred to be actively involved in the process of selling our house and ultimately, even in this lousy market, it paid off.
Another good article: http://realtytimes.com/rtpages/20070627_secondscam.htm
# Don't buy anything site unseen. No matter what someone tells you, you have to inspect the property with your own two eyes and have it professionally inspected (by an independent home inspector), prior to closing. It's like buying a car, you have to kick the tires.
# Hire your own people to check it out. Never rely on the seller's agent, appraiser, inspector, loan officer, or title company to make sure everything is legitimate. If the seller is a con artist, these people are probably accomplices or at least willing to look the other way.