Mary is extremely knowledgeable about real estate in the Silicon Valley. She found a home for my family in a neighborhood I wasn’t even aware of, but that suited my family’s needs perfectly.
Your home is sold and you are ready to buy your next place: congratulations!
Now that you are under contract with a buyer, it’s time to find your new Silicon Valley home. Perhaps you’ve been looking already, checking out homes on the internet or going to open houses. But although you know to use a Realtor® to sell your home, now that it’s your turn to buy, do you plan on using your own Realtor®? Or go it alone?
If you are like many sellers, you may be anxious to find your new home, so you have been calling on ads or for-sale signs, going to open houses and talking to agents to whom you have been referred. But generally, you have avoided committing to one, usually on the basis that you don’t want to be pressured—especially if you haven’t yet sold your home. But why play the field? You’ve already found a great Realtor® to sell your home, and maybe he or she can help you buy a new one.
Naturally, if you had a good experience with your real estate agent in the sale, you would want to consider the same person to help you buy your new home. Not all Realtors® represent both buyers and sellers, but it’s always a good place to start, especially if you are moving in the same area – somewhere in Santa Clara County or Silicon Valley generally.
If you are working with one Realtor® who knows you won’t hop around from one to the next, they will become as committed to you as you are to them. They will become “your” Realtor®, and they will be working for you. They will likely work to help you get qualified for financing, and when that “hot” property comes on the market, guess who they’re going to call? Believe me, it won’t be the person who happened to stop in for an hour last weekend, it will be the buyer to whom they are committed—it will be you. After all, you are giving them a substantial amount of business and they will want to bring to your attention any property they can find that fits your needs. If it’s a great deal, all the better.
We’ve sold numerous properties where our buyer was the only person to see the house. We try to check new listings regularly, network with other agents, and also watch the newspaper classifieds for homes being sold by owners. Sometimes we see a property that is obviously underpriced, or perhaps “priced for a quick sale.” It then becomes imperative to get our buyer into the property before anyone else sees it, because we know it will go fast. We’re off with a quick call to the buyer to let them know, “We’ve got one.” We can usually write an offer to purchase or a contract that same day. We know the timing of your sale and we know when you need to find that new home.
We don’t get paid until we produce a sale. There is not a lot of loyalty in this business, and there are a lot of short-term thinkers—people who will unknowingly lose thousands of future dollars to save a thousand today. You will find that two-way loyalty pays off. The key is selecting the right agent.
But what if you are moving to a new area and need to find a home? Obviously, you need to find someone who can represent your interests as a buyer. Well, we have some suggestions. One good bet is to look for a Realtor® who holds the designation of a “buyer’s agent.” If your own listing agent can’t represent you because you are looking in another area, your Realtor® should be able to recommend a top-notch professional in your target area. Your local Realtor® can interview a prospective agent there and they will know what to ask to find you the right match!
Usually when you enlist the services of a buyer’s agent, you will be working with a Realtor® who will represent your interests as a sort of personal representative. This is known as an agency relationship.
When you work with a buyer’s agent, you will often enter into a buyer’s representation contract. A buyer-agency contract is a contract between the buyer (you) and the Realtor®, and it works two ways. First, the Realtor® becomes your agent and is obligated to represent your best interests. Second, the contract represents your commitment to the Realtor® and says that you will work exclusively with them. This agreement means that when you see a sign on a property, you will not call the listing agent yourself to negotiate a deal, nor will you go into a property that is for-sale-byowner to do the same. Instead, you will call your agent and ask them to get you information on the property. You now have an agent; use them. The whole purpose of this exercise is to get you the best deal possible. If you have selected a good agent, you should recognize they have the experience and the skills necessary to represent you effectively. It takes a modicum of trust to see that play out, and now is when your Realtor® earns their commission.
There are a few items you should pay particular attention to in a buyer-agency contract. In some states, most are already part of the standard contract, but elsewhere, this may not be the case. Before you sign, at least discuss the following topics.
If you are to be represented effectively, it is imperative that the agent keep confidential any information they learn about you. In particular, your financial situation, willingness to accept concessions and motivating factors for the purchase should not be revealed, except as a valid negotiating tool with your prior consent.
In addition, you have a right to be assured that confidential information remains confidential even after you have bought your home or after your contract with the agent has expired or been terminated in any way. If you make an offer on an in-house transaction (where the seller is also represented by the brokerage representing you), your information should remain just as confidential as when negotiating for a property listed by another firm.
Scope of Work
The contract will contain a description of what type of property your agent is instructed to seek for you. Make sure the description fits your needs. If you are looking specifically for a residence, make sure the language limits the search to that. Do not accept language that says “any property.” If you are considering purchasing a home from a family member or friend, you may ask to have that property excluded from the contract; however, you may want to ask your agent what they would charge to handle that transaction for you. Pitfalls can still exist and in fact can be more serious and more heart-wrenching when dealing with someone close to you. Many close relationships have been damaged or ruined when friends and relatives have done business together. It’s usually not because of a lack of good intentions, but when objectivity is lost, personal feelings get exaggerated and hurt and the process erodes. We’ve worked on numerous deals where family members and close friends were involved, and we have found that it becomes vitally important to ensure a win/win deal for everyone involved.
Many buyer agents typically write contracts for six months, which is a long time. Often we work with buyers of second homes, and the process involves communicating while they are in another city or state. We will coordinate property showings with their vacations to the area, and sometimes they buy properties we’ve recommended sight unseen. Even when working with locals, using a six-month representation period makes sense.
This long period can be scary. What if you decide you don’t like your agent? What if your plans change? The simplest answer is to ask for a cancellation clause. Always include a clause that says that either party, the buyer or agent, may cancel the contract for any reason whatsoever by providing written notice to the other party. While they may ask for ten-day advance notice, people who are not compatible should not have to work together. If your Realtor® is willing to give you this “out” in your contract, you can bet they are confident in their ability to represent you effectively. Keep in mind that you are not able to cancel a contract for a property on which you are already negotiating, and every contract will have what is called a “holdover” clause that entitles your agent to a commission if, after your contract has terminated, you buy a property the agent showed you.
The entire contract should be designed to be fair to both parties. It is fair to be able to cancel a contract when two people cannot work together. It is not fair to have someone do a lot of work for you and then cancel. You should be able to determine in the first or second meeting with your Realtor® whether or not you are compatible. Don’t spend several weeks or months together and then decide to go with someone else.
Again, the bottom line is that if you do the same research to find a buyer’s agent as you did to find your seller’s agent, you should have the right person to help you find your next home (again, refer to the credentials mentioned in Chapter 2). If you are moving in the same area and can rely on the relationship with your present Realtor®, you are in a great position, but a buyer’s agent is still the next best thing.