Traditional agent is on the seller's, not buyer's, side

LOOKING OUT FOR THE BUYER

January 05, 1992|By Alyssa Gabbay | Alyssa Gabbay,Special to The Sun

When they set out to buy their first home last August, Caroline and Paul Noonan didn't take any chances.

Rather than depend on a traditional real estate agent, the young couple decided to use a buyer's agent to help them find a home in Ellicott City.

"Once we found out that the typical agent really represents the seller and doesn't necessarily have the buyers' interests at heart, we knew this was something we wanted to do," said Ms. Noonan, a 25-year-old engineer with Computer Sciences Corp. in Greenbelt.

At the end of December, she and her husband settled on a Cape Cod that they found with the aid of Realtor John Toner.

Widely popular in California and Hawaii, buyer brokering is now beginning to crop up elsewhere. In Maryland, about 35 brokers are now registered with the Single Agency Realty Association Inc. -- nearly double the number of 1988, according to Bernadette McTighe, executive director of the Rockville-based, non-profit trade association.

Many consumer advocates welcome the larger role that buyer's brokers are playing in residential real estate.

"It makes absolutely no sense for a buyer to be working with someone who doesn't represent his interests," said Stephen Brobeck, executive director of the Consumer Federation of America. Calling buyer brokering the "wave of the future," he predicted that by the end of the decade, most buyers will be working with buyer's agents.

As Mr. Brobeck explained, in the typical transaction, the real estate agent may appear to represent the buyer, but his client is actually the seller.

When the realty agent truly represents the buyer, however, he is required to act solely in the buyer's interests, negotiating the most favorable price and terms possible. In industry lingo, the buyer is the agent's client, rather than his customer.

Still, there may be some disadvantages to hiring a buyer's agent. Some, for example, require a deposit before beginning to search for homes. Buyers also may have to pay a commission to the agent.

And distinctions between buyer's brokers and standard agents are not clear-cut. Many agents, while legally representing sellers, establish close relationships with buyers. They can be very helpful in the give-and-take of negotiations, too.

"After working together for a long time, agents and buyers usually develop quite a friendship," says Donald Grempler, a co-owner of Baltimore-based Grempler Realty Inc. "By all reasonable measurements, the agent ends up becoming at least partially [the buyer's] advocate."

Like traditional agents, buyer's agents often receive their payment by splitting sales commissions with the listing agent. Others charge the buyer a flat fee, an hourly rate or a percentage of the sales price of the home.

A few, including John Toner of Toner Realty, a Columbia-based buyer's agency that was founded in 1989, require a deposit of a few hundred dollars before the buyer begins to look for a home. The sum is refunded after the buyer finds a home. If a home is not located in four to six months, the agent may keep the deposit. This provision weeds out the window shoppers from those who are truly bent on buying a home, Mr. Toner said.

Some buyer's agencies also require clients to sign an agreement stating that if the buyer purchases a house within a certain time period, he will pay the agent a commission, according to Sandra Blaker, a broker at Homebuyer Advocacy Group, a Columbia-based buyer's agency.

Many agents who have turned to buyer brokering say this type of transaction permits a greater openness between agent and buyer.

"I've never been comfortable working with a buyer as a customer," said Michael Morin, a buyer's agent who recently joined Susan Rosko & Associates, a residential and commercial brokerage with offices in Linthicum and Glen Burnie. "When you're doing that, you're starting to get to know them and build a relationship, but it remains that you're working for the seller, and that's always felt less than honest to me."

Among other services, buyer's agents attempt to ensure the most favorable terms for their clients' contracts of sale. For example, Mr. Toner adds a home inspection clause to each contract stating that the buyer may cancel the contract if the house doesn't pass inspection.

Many contracts lack such a clause or, if they have one, it frequently doesn't provide the buyer enough latitude to escape the contract, said Mr. Toner. "We actively help the buyer get out of the agreement and start over again, or we get the seller to fix things we don't like," he said.

As far as finances are concerned, a buyer's agent is required to tell his client if he is offering too much for a home and to try to negotiate the best possible deal for his client -- something a traditional agent is forbidden to do.

"You can go in and look at half a dozen things on financing, points and seller assistance with the closing cost, and you can structure things so that it's best for the buyer, and the seller is still able to get what he wants," said Mr. Morin.

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