Are you about to engage an agent to help you search for a house? Do you believe the agent who will ferry you about will be your ally alone?
Then in all probability, you are wrong.
Although there are an increasing number of "buyers' agents" in the realty field, 95 percent of American agents are still part of the traditional system.
And traditional agents -- even those who are most friendly during house-hunting expeditions -- are nonetheless usually bound legally to serve the interests of the property seller.
"When a buyer is working through a traditional agent, it's just as though he's sitting in front of the seller. There's a pipeline, and that pipeline goes directly from the agent to the seller," says John J. Long, a buyers' broker for Creative Real Estate Consultants in Columbia.
Maryland, as do most other states, has a law requiring that traditional agents disclose their loyalty to a prospective homebuyer with whom they work. Recently,
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leaders of the Consumer Federation of America and the National Association of Realtors announced a joint campaign seeking stronger state disclosure laws to protect home buyers.
"Confusion about whom a real estate broker or agent represents in a home sales transaction needs to be totally eliminated," says Almon "Bud" Smith, executive vice president of the Realtors' trade group.
If you're a buyer who spills the beans to a traditional agent about your financial position before you realize your information could be conveyed to the seller of a home, you could weaken your bargaining position and spend more than you need to, cautions Stephen Brobeck, the executive director of Consumer Federation of America.
Must you work with a buyers' broker to protect your bargaining position in the home-buying process?
Not necessarily, say real estate experts. As long as you understand who's who and what's what, you can do very well with a traditional agent, they say.*
The experts offer these pointers:
* Give the agent only as much financial information as necessary.
An agent who works with a buyer is entitled to know that that buyer is capable of buying the sort of homes he's being shown. After all, agents aren't tour directors. Still, it's prudent for the buyer to place restrictions on the amount of financial data he gives the agent -- to keep his bargaining position strong.
"Just give the agent a broad view," recommends Ruth Rejnis, author of "You Can Buy a Home," a Longmeadow Press paperback.
Generally, the agent needs to know that the buyer has enough income to support the property he is seeking and that his monthly debt load is not excessive, says Mr. Long of Creative Real Estate Consultants.
Still, Mr. Long says, the agent doesn't need to know that the prospect has more wherewithal than is essential to support the kind of house he's seeking. Indeed, if the buyer lets it be known that he's flush with extra cash, the traditional agent is obligated to convey that to a property's seller. The result could be a weakened stance for the buyer.
"If I want to buy a $300,000 house, it's nobody's business that I have $2 million in the bank. And really, it's going to jeopardize your bargaining position if I tell that," Mr. Long says.
He argues against the buyer telling a traditional agent about any excess cash, assets or income that he has that are over and above what he needs for a proposed transaction.
"If I'm rich, and you know I'm rich, you're not going to bargain as well with me. You're less likely to be willing to come to your lowest price," Mr. Long argues.
* Have a mortgage company prequalify you rather than the agent.
Most realty agents have been trained to assess a buyer's financial status to purchase a home. They have the forms and the calculators to do the job.
But the real professionals at the art of "prequalification" are mortgage lenders.
A smart buyer will call or visit a friendly mortgage lender prior to a home search and have the lender do the financial workup. The result should be a "prequalification letter" that demonstrates the buyer's borrowing capacity.
Your agent should be "happy as a clam" that you're carrying the lender's letter, says Ms. Rejnis, the real estate author.
Not only is the agent spared the chore of qualifying you, but he knows for certain that you're capable of buying a home. Another advantage is that the worry about financing is also taken off your shoulders, allowing you to relax and look at property.
Remember, however, that you shouldn't "tell all" in your prequalification letter any more than you should blurt out statements to your agent about the upper limit you'd pay for a property in the course of negotiations with the seller.
Your lender's letter need only indicate you're qualified to obtain a mortgage sufficient for the property you're seeking, not beyond.
"You're best off getting prequalified right from the beginning," Ms. Rejnis says. "Going to the lender first is like taking the express train instead of the local one."