You are currently browsing the tag archive for the ‘hamptons investment advice’ tag.
Why should a Buyer be Represented ?
Looking at a transaction from the Buyer’s side:
· The buyer brings the money to the closing table!.
In a typical real estate transaction involving one or more brokers, the buyer pays a total acquisition cost to buy the property. This is known as the “gross” purchase price. The gross purchase price includes the seller’s net proceeds, closing costs, taxes and fees and the brokerage commission. Thus, from the buyer’s point of view, the buyer is financing both the seller’s money and the brokerage commission in a total gross purchase price. In the case of two brokers being involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
Looking at a transaction from the Seller’s side:
· The seller brings the product to the closing table!.
In a typical real estate transaction involving one or more brokers, the seller never actually keeps the full amount of “gross” sale price. Instead, the seller keeps a “net” amount after the brokerage commission, closing costs, taxes and fee are paid. Thus, from the seller’s point of view, the seller is paying the brokerage commission from the seller’s gross sale price. As described above, when two brokers are involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
· No matter whether a broker works for the buyer or seller, you can see that the question of who pays the brokerage commission is a matter of opinion and interpretation. Most experts agree that the simplest way of looking at a real estate brokerage transaction is by looking at it as simple arithmetic.
What makes a Buyer’s total purchase price:
Seller’s “Net” Proceeds
Real-Estate Brokerage Commissions
Buyer’s “Gross” Acquisition Cost of Ownership
· With the majority of real estate transactions involving professional real estate brokers, buyers should employ their own exclusive buyer agent to assist them in locating, evaluating and negotiating real estate, without the fear of additional fees needing to be paid for buyer brokerage services. Remember that unless you specifically employ a broker to work for you by signing a buyer agency employment agreement, all brokers and salespeople represent the seller.
Michael Daly, Principal Broker
Serving The Hamptons, Shelter Island and the North Fork
631 725 0554 (o) 631 525 6000 (m) www.beachamptons.com
After 10 years as a salesperson, broker, executive and owner in Hamptons real estate, I and my brokerage, True North Realty Associates have become an Exclusive Buyers Brokerage. True North will be working only with BUYERS seeking to purchase real estate in the Hamptons, Shelter Island and the North Fork. TNRA will not take listings and will not represent those selling their properties in this market.
WHY? We see the need for buyers, who are NOT BEING REPRESENTED in the current market, to have an advocate; someone who will accept the Fiduciary Responsibility to protect their interests in the real estate transaction. Someone willing to take the time to get to know you, the buyer, to find out what makes you tick, what truely fits your needs, both personal and financial and do the research necessary to build the business case for your purchase.
With all that is taking place in the financial markets; Bear Sterns, Lehman, AIG, Countywide – one thing that is becoming clear is the concept of “Moral Hazard” and we see the preponderance of Listing Agents pushing their own listings, showing customers (who, by the way, are NOT clients – clients get fiduciary) the properties that THEY want to sell them, not what the customer wants to see, as a true Moral Hazard, one that the industry is not yet willing to face head on. Interestingly enough, the name of our brokerage, True North, was inspired by Stephen Covey literature (Seven Habits, First Things First), where “true north principles” lead to decisions that are guided not merely by the “clock” of scheduling but by the “compass” of purpose and values.
In the following days and weeks, we will be adding posts, separately and as links below, explaining the nuances of Buyer Brokerage; how it works, from the “head” to the contract agreements to the commissions. One thing is for sure, it doesn’t cost any more or less to use a Buyers Broker. All the commission comes from the same place, the proceeds of the sale.
For those of you who I have represented as sellers over the last 10 years, I will be happy to assist you in finding the best suited listing agent for your property. We can do a thorough analysis of who has the best experience in your particular market and who would be the perfect fit for your needs.
Here’s an explanation of Buyer Agency from About.com in fairly easy to understand terms.
Part 1: What is Buyer Agency?
Buyer agency is defined as a principal-agent relationship in which the broker is the agent for a buyer, with fiduciary responsibilities to the buyer. What does that mean? It means that as a buyer’s agent you are tied to the buyer, and that all of your loyalties are to the buyer.
Buyer agency is a relatively new concept for the real estate world. In the past, agents were Seller’s Agents, working for the person who signed a contract employing them to sell real estate. Over time that arrangement resulted in too many misunderstandings. A buyer working with a Seller’s Agent often regarded that person as his agent, and felt free to make confidential statements, not understanding they would be passed on to the seller.
Complaints were made to real estate commissions, and lawsuits were filed. As a result, many states now require us to explain agency status to the buyer. New York State requires that the buyer or seller is presented with a disclosure on the first substantive contact.
In today’s real estate world, you’ll find agents who work as Seller’s Agents and Buyer’s Agents, and in some areas you’ll see Dual Agents and Designated Agents. Here’s a simplified recap of those terms.
|Seller’s Agent||Your duty is to obtain the best deal for the seller. You are allowed to give the buyer only material facts about the property.A Seller’s Sub Agent is an agent from another office who is not working as a Buyer’s Agent.|
|Buyer’s Agent||Your duty is to obtain the best deal for the buyer. You may pass on any and all information you obtain about the seller or the property.|
|Dual Agent||You must be loyal to both parties. Dual agency occurs when a real estate agency owns a listing, and an agent from the office, working as a buyer’s representative, shows that listing.|
Here are subsequent posts with more info on the Buyer Agency subject as it pertains to the Hamptons market: