THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, September 10, 1994 TAG: 9409080381
SECTION: REAL ESTATE WEEKLY PAGE: 04 EDITION: FINAL
SOURCE: BY KATHLEEN BUTLER, SPECIAL TO REAL ESTATE WEEKLY
LENGTH: Long : 150 lines
For most of her 14 years in real estate, agent Barbara Hodge of Century 21 Charter Realty Corp. in Virginia Beach says, she struggled with feeling she couldn't be totally loyal to some of her clients - those who came to her solely to look for a house.
Traditionally in real estate, agents have worked for the seller.
The listing agent directly represents the seller, and another agent who shows the house to a prospective buyer - even though that agent might have been working with the buyer for several months - becomes a sub-agent representing the seller.
Until recently real estate agents were not required to disclose up front who they worked for, so agents like Hodge say many buyers never realized they had no one looking out for their interests until a problem arose.
``Most buyers thought because the agent was working `on their side,' they assumed the agent was working for them,'' says Betty Koebler, president of Century 21 Charter Realty.
Then, a few years ago, the law was changed, requiring agents to disclose in writing whom they represent. And with that legal change came an increase in ``buyer brokers,'' agents hired by a prospective buyers to represent their interests.
``It's the most natural way for the real estate agent to practice,'' Koebler says.
Hodge adds: ``We waited a long time for this. It puts everything in perspective. Now I assist (buyers); I don't just sell.''
Buyer brokerage presents a win-win situation for everyone involved, agents say. The buyer can make a more educated purchase, the seller still has an agent representing him and the real estate agent is able to build lifelong clients.
``Buyers feel more comfortable with it; they feel like they're getting more attention,'' says Jack Garris, managing broker for Nancy Chandler Associates Inc.'s Chesapeake office. ``The buyer works a little harder for the agent. If they see something they like, they call the agent.''
Hodge agrees.
``I can't think of a negative side to buyer brokerage,'' she says. ``The only negative is not using it.''
Through the traditional agent-seller relationship, Koebler says, if she showed a buyer a house listed through another agent, she was in essence working for that listing agent, which meant she could not point out potential problems with the house or offer advice about making an offer. And, if the buyer told Koebler something in ``confidence,'' for example how much money he could afford for a down payment, she was required to disclose that to the seller.
Under the buyer broker relationship, however, the agent can advise the buyer and keep his financial information confidential.
``Now, if a buyer tells me something in confidence, I'm on his side,'' Hodge says. ``The buyer still decides what to offer, and the seller may still not take less than the listing price, but I can do research for the buyer.''
Koebler says before she even begins trying to match a buyer with a home, she tries to educate him about the home buying process - and listen carefully to his needs and desires.
``We listen carefully to the type of lifestyle,'' Koebler says. ``We're not selling sticks and bricks, we're selling a family's emotional ties to that house.''
Emotion is one reason Hodge says buyer brokerage is so important.
``Buying real estate is emotional,'' she says. ``I let them have their emotional time, but I also keep them on track so I make sure they understand the finances.''
After the buyer finds his dream house, Steve Barbour, president of Barbour Realty Inc. in Virginia Beach says, he reviews what the house is worth, the tax assessments and what other houses in the neighborhood have sold for, so the buyer can make an offer based on fact, not just emotion.
``The bottom line is the buyer should pay for the house what it's worth and the seller should sell the same house for what it's worth,'' Barbour says.
Actually, Hodge says sellers who realize buyers will be better advised about the sales process tend to price their homes more realistically and therefore sell their homes more quickly.
``Homes are priced more competitively,'' she says.
``This even helps the sellers. They're more realistic because they know the buyers are more aware.''
Buyer brokerage also helps limit the sellers liability, Koebler says. Under the traditional real estate relationship, the agent showing the house might know little about it. But, because he in effect worked for the seller, any accidental misrepresentation the agent makes because he doesn't know the ins and outs of the property could hurt the seller, Koebler says.
In the past year, Realtors and their agents say buyer brokerage has become more popular throughout Hampton Roads, though they admit some agents and customers remain wary of the new technique.
That, Hodge says, may be partially because many buyers do not realize they were not represented under the traditional agent-buyer relationship.
``Most buyers don't understand buyer brokers,'' Barbour says.
Explaining agency or brokerage options can be confusing to a potential client, Garris says.
To help avoid confusion, he says, his agents explain both verbally and in writing the option of hiring a buyer broker or working with the traditional seller's agent.
``Once it's explained, we're seeing a much larger percentage opting for the buyer broker,'' Garris says.
Part of the skepticism among buyers may stem from the misbelief that they must pay a large commission up front for a broker, Barbour says.
Although in the past that may have been true, today he says the agents' commission is usually paid by the seller, even in a buyer broker sale.
``We're paid the same way we always were,'' Hodge says. ``A percentage of the sales price.''
Typically, the buyer does sign a broker agreement stating the agent will serve as his representative through the buying process. And, to ensure an on-going relationship, the agent may charge a retainer fee at the time she contracts to represent the buyer; that fee is then held in escrow until the sale, when it is used to help pay for the property, Hodge says.
In choosing a buyer broker, a prospective buyer should interview agents to find one he is comfortable working with, local real estate professionals say.
``Sometimes it boils down to personality,'' Hodge says.
``Make sure you feel comfortable, because that is the joy of buyer brokerage - you can confide in the person.''
In addition, Barbour says, prospective buyers should look for someone who can explain the whole process of buying a home.
``The sales agent should not be a salesperson; he should be a teacher,'' Barbour says. ``He should educate the buyer so the buyer can look at all his options.''
The trend toward becoming an educator and consultant has enhanced the real estate agent's career Hodge says.
``We're quickly going out of that salesman mentality,'' she says.
``It's more of a profession now. We're more on the level of a consultant, and because of this, more homes have been bought and sold.''
In fact, Hodge says since she began representing buyers as well as sellers she has sold more homes than at any other time in her career.
And she says she is developing lifetime clients - couples who bought their first home from her who will then sell the home through her and buy the next with her help.
``I can consistently represent clients,'' she says.
``I go home at night and I have a nice feeling.'' ILLUSTRATION: Color photo on cover by Joseph John Kotlowski
Betty Koebler...
Photo by Joseph John Kotlowski
Betty Koebler, president of Century 21 Charter Realty, says before
she even begins trying to match buyers with homes, she tries to
educate them about the home buying process. Here she's assisting
Kathy Seabolt.
Photo by Eric Thingstead
After the buyer finds his dream house, Steve Barbour, president of
Barbour Realty Inc. in Virginia Beach, says he reviews what the
house is worth, the tax assessments and what other houses in the
neighborhood have sold for, so the buyer can make an offer based on
fact, not just emotion.
by CNB