Realtor calls new broker 'an idea whose time has come'

THE BUYER'S AGENT

May 02, 1993|By Ellen James Martin | Ellen James Martin,Staff Writer

When Jacqueline and Dennis Ottey were moving to Frederick County, they wanted an agent to do more than show them around -- they wanted an advocate who could get them the best deal on a new home.

So they went to Greg Hill -- a "buyers' broker."

Buyers' brokers -- sometimes known as buyers' agents -- are slowly becoming more common, so much so that big real estate companies like Coldwell Banker and Long & Foster are now training agents to represent buyers, not just sellers.

"It's an idea whose time has come," says Arthur Davis 3rd, president-elect of the Maryland Association of Realtors. While fewer than 5 percent of residential transactions now involve buyers' brokers, Mr. Davis predicts that that number could grow to 50 percent in five years.

Mr. Davis, president of Chase Fitzgerald, a Roland Park real estate firm, has represented buyers in several real estate transactions and has trained Chase Fitzgerald agents in the art of buyers' brokerage.

What's a buyers' broker?

Under the traditional system, realty agents -- even those who are most friendly to buyers during house-hunting expeditions -- are, nonetheless, legally bound to serve the interests of the seller.

And believing they have the loyalty of the agent, homebuyers often unwittingly give away information that weakens their bargaining position -- information that the agent is obligated to pass on to the seller.

Buyers' brokers, on the other hand, are advocates for the buyer.

For example, the Otteys hired Mr. Hill to help them find a home in Frederick County. They had recently taken a $30,000 loss on the sale of their New Jersey home, and wanted to push hard for a good deal on their next home.

So they hired Mr. Hill, an agent for RE/MAX Realty Plus in Frederick, who obtained for the couple a good price -- $200,000 -- on their four-bedroom colonial, as well as cash assistance toward closing costs from the seller.

"They didn't want to get burned twice," Mr. Hill said.

'Demand of consumers'

For a decade or longer, a few small companies and individuals operating in the Maryland market, such as Creative Real Estate Consultants of Columbia, have run boutique businesses to serve primarily or exclusively as buyers' brokers.

But now larger and better established companies are getting into the act because, they say, more and more buyers are asking for their own broker.

"What's really propelling this is the demand of consumers. As a whole, consumers are becoming much more educated on the home buying-selling process. They're realizing they could have an agent working directly for them," said Donna Heavener, a spokeswoman for the Annapolis-based Maryland Association of Realtors.

A push for greater disclosure by agents has put a greater spotlight on buyers' brokers. In January, the Consumer Federation of America and the National Association of Realtors, in a press conference, said that real estate agents should be required to disclose more openly to buyers that they work for the seller.

And buyers' brokerage was one of the major topics of discussion last week when the National Association of Realtors conducted its midyear convention in Washington. Only last November, the Realtors' group, a huge trade association, modified its code of ethics to clear the way for its agents to work as either full-time buyers' brokers or "switch hitters," notes Elizabeth Duncan, an NAR spokeswoman.

A "switch hitter" is an agent trained to represent either a buyer or a seller. Mr. Hill, for example, is now acting as a buyers' broker in a quarter of his real estate transactions. The rest of the time, he still acts as a traditional agent, legally bound to the seller.

Another switch hitter is James Bateman, who sells homes through the Coldwell Banker chain's Charles Street office in the Towson area.

"Our company has no problem with the whole concept," says the 41-year-old Mr. Bateman, who has sold real estate for 17 years but only recently learned the art of buyers' brokerage through seminars by the Greater Baltimore Board of Realtors.

The seminars focus on changing the attitude of brokers -- so they remember that they represent the buyer. Brokers also learn about federal and state laws that affect buyers' brokers, including rules about confidential information.

Lou Occhionero, the sales manager at Mr. Bateman's office, insists that Mr. Bateman is making a good career move. Buyers' brokerage is becoming popular among Maryland buyers, as it has long been in states such as California and Colorado, he says.

"It's very big on the West Coast and it's coming about more and more here on the East Coast," says Mr. Occhionero, who acted as a buyers' broker in several transactions before becoming a sales manager last August.

In addition to being a progressive area, the West Coast may have started the trend toward buyers' brokers because of the volatile real estate market there. In places where many buyers have lost on real estate, buyers may be especially careful about future investments.

Some reservations

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