You’re thinking of buying a home in Rumson or a home in Fair Haven. Has a Realtor ever taken the time to tell you about the 5 “P’s” of buying a home? Whether you’re a first-time home buyer or someone who’s purchased houses in the past, it’s important to know about these 5 P’s: people, property, price, payment and paperwork.
Today we’ll begin with the first one: People. Obviously there’s you, the Buyer(s), and the present owner(s), the Seller(s). In addition, there’s a Realtor who represents the owner(s) called the Listing Agent or the Seller’s Agent. Then there’s a Realtor who represents the buyer(s), known as the Buyer’s Agent. The person who acts as an agent has 6 specific fiduciary (highest degree of trust) responsibilities to his client(s). The most important one is undivided Loyalty, which means putting the client’s interests first, even above the Realtor’s personal interests. For the Buyer’s Agent, this includes a responsibility to negotiate the lowest price for the home; conversely, the Seller’s Agent has a responsibility to negotiate the highest price. The Buyer’s Agent shouldn’t disclose the highest price the buyer is willing to pay for the house, and the Seller’s Agent shouldn’t reveal the lowest price the owner is willing to accept for the house.
In some states it’s illegal for one Realtor to serve as both the Seller’s Agent and the Buyer’s Agent. The reason for that is a possible conflict of interest- it’s impossible to negotiate both the highest price and the lowest price. In New Jersey, it’s legal to represent both the Seller and the Buyer, as long as both parties agree in writing to accept this; the Realtor is then acting as a Disclosed Dual Agent.
I always recommend that a Buyer never call the listing agent directly, even if it’s me. Remember, the listing agent works for the Seller. As a Buyer, don’t you want someone who’s working only for YOU? Another of an agent’s fiduciary responsibility is Disclosure. This includes sharing all pertinent facts or information that might affect the client’s decisions, whether the client asks for them or not. For example, the Buyer’s Agent must share any information discovered about other offers, the Seller’s willingness to accept a lower price, etc. A Disclosed Dual Agent can’t do that and still act in the best interests of both parties.
If you use a Disclosed Dual Agent to represent you, 2 of the 6 Realtor’s fiduciary duties are affected: both undivided Loyalty and pertinent Disclosure. Why would you ever compromise these important duties when making one of your largest financial investments?
Obviously other people are involved in a real estate transaction: attorneys, home inspectors, mortgage lenders, etc. If I serve as your Realtor it will be my pleasure to discuss each of their roles with you, whether you’re looking for Rumson real estate, Fair Haven real estate, or real estate in a neighboring town. However, whether you decide to use me as your Realtor or not, I hope you found the above information useful. Tomorrow we’ll cover the 2nd “P” of buying a home: the property itself.