By Ellen Yan
RISMEDIA, August 18, 2008-(MCT)-A house listing used to be an agent’s best friend, but now a qualified buyer is a real gem. So before one gets away-along with a potential commission-broker Wayne Frankel wants buyer’s agent contracts signed, and he’ll give an agent one point toward a yearly prize for each loyal house hunter.
It’s like nabbing a house listing, except here, the contract sets up a fiduciary relationship between the buyer, who agrees to exclusive representation for a period, and the agent, who commits to the buyer’s interests.
“Sellers are a dime a dozen,” said Frankel, the broker owner of Exit Realty Premier in Massapequa Park, N.Y. “There are not enough buyers out there. Think of it like this: for every 10 homes, there are two buyers. No matter how well-priced the other homes are, eight of them are not selling.”
In this slower market, agents have seen the upside in buyer’s agent contracts, which have existed for decades but have not been the norm on Long Island partly because it requires more research into potential problems. Usually, the agent who brings a buyer to a house acts like a “sub-agent” for the seller and doesn’t have to point out defects that can bring down the price. Being a buyer’s deputy is a switch in mindset, as house hunters and agents figure out their rights and duties.
In the past, Huntington, N.Y.-based agent Cori Kaplan rarely needed to hustle for buyer-agent agreements-her house listings never expired. But these days, 20% of her listings are expiring, and this has pushed her to focus on what felt more natural: representing her buyers in a sale.
“If I’ve been taking someone out for three, four five months looking for houses, I have a relationship with them,” Kaplan said.
In the past 12 months, Bethany Marten, founder of the Baldwin, N.Y.-based Home Buyers’ Resource Center, said she’s been seeing more “phony buyers’ agents” who show homes from the best possible angle instead of pointing out defects.
“When they go to show a listing, for instance, they don’t even disclose who they’re working for. They act like they’re negotiating on behalf of the buyer, and if you ask ‘Who are you working for?’, they’re like ‘Uh, the seller pays me, right? Well I’m working for the seller.'”
Long Island Board of Realtors president Mohsen Zandieh said some buyers’ agents represent the buyer on one house and not the next. “You cannot change hats left and right,” he said.
For both sides’ sake, contracts should be written, not verbal, said Zandieh, broker owner of Arash Real Estate in Little Neck, N.Y. How the agent gets paid can be confusing, and the commission, along with other terms such as length of contract, varies from office to office, he said.
In July, musician manager and real estate investor Nino DiBenedetto signed a six-month buyer-broker deal with Frankel. He was tired of agents wasting his time. He trusts Frankel, but isn’t sure how much he’ll benefit from going with one broker.
“Will it necessarily give you a better price?” DiBenedetto asked. “I can’t say that for certain. But I can say a lot of the legwork gets taken away.”
Setting the Ground Rules
What to get in writing before signing a buyer’s contract:
– What is the agent’s commission? Will it be negotiated with the seller’s agent and wrapped up in the price of the house?
– How will problems with commission and other contract terms be settled?
– What happens if the seller and the seller’s agent disagree with the buyer’s agent commission?
– What research will the agent do on each house?
– How long will the contract last?
– Is there a nonrefundable retainer fee to the agent or broker for signing the contract?
– If a deal is struck on a house that the buyers find on their own, is the buyer’s agent owed anything?
– After the contract expires, what is the agent owed if there’s a closing or deal on a house first shown by the buyer’s agent during the contract period? How long after the contract expires will the buyer be responsible for paying agent’s commission if such a deal is reached?
© 2008, Newsday.
Distributed by McClatchy-Tribune Information Services.