Would-be buyers need to know how the system works

March 26, 1995|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

For the homebuyer, it sounds like a deal, hiring a real estate agent who looks out for buyers, not sellers, and having the seller pay.

Buyers need someone on their side when making what's often the biggest purchase of a lifetime, agents who represent buyers advise.

But real estate brokers warn that buyers first should understand the contractual obligation they're creating.

For instance, if a client hires a buyer's agent, then finds a home to buy on his own, he still owes the agent a commission.

Exclusive buyer's agents or brokers do not list homes for sale and only take buyers as clients. Other agents, typically those who work for large companies, work as buyer's agents in some sales and seller's agents in others.

Services typically include helping a buyer find the home that best suits his needs for the lowest price, offering advice on bidding for the home, negotiating the contract and assisting through settlement.

Contracts are negotiable, so terms can be flexible. For instance, a buyer might hire an agent to represent him only on homes shown on a given day.

Some charge retainer fees, ranging from about $100 to about $500, as a way to screen those not serious about buying. Others charge no upfront fees.

Most buyer's agents, like seller's agents, work on commission. But the seller, not the buyer, typically pays.

Sellers usually agree to pay because they consider commission a cost of selling their home. They pay commission to their listing, or selling agent, who in turn splits it with an agent who finds a buyer.

In some cases, that co-operating agent works for another real estate company but still works in the interest of the seller. In other cases, the co-operating agent is a buyer's agent.

Sometimes homeowners selling on their own -- without listing with an agent -- agree to pay the buyer's agent's commission. They might allow for that expense in the sale price of their home. If a homeowner refuses to pay the commission, the buyer would have to pay.

"Most people want to sell their house, so most sellers are willing to pay either way," said D. R. Grempler, president of Towson-based Coldwell Banker Grempler Realty Inc. "If they're not willing to pay, the buyer would [agree to] pay if he wants to look at the house. But some buyers won't look at the house if a seller won't pay commission."

Jeffrey L. Underwood, a buyer's broker who owns Home Buyers Agent in Columbia, charges fees based on the price range in which a home sells. That eliminates any appearance of conflict, because fees are not tied to commission, he said.

If a client wants to cancel a contract, he must do so before the agent finds a suitable house. Most agents ask from one day to 30 days' written notice for cancellations.

Georgianna Tyler, a buyer's agent with Georgianna Tyler & Co., says people too often view an agency relationship as something forced upon a buyer or seller. Communication is the key to finding the right agent and developing a comfortable working relationship with that person, she said.

"I haven't met a buyer or seller who allows me to grab his hand and force him to sign papers," Ms. Tyler said. "Buyers know how much they're willing to buy a property for, and sellers know how much they'll sell a property for."

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