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Buyer Beware: Read Mortgage Documents Before Signing Them!

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Closing day can be a very hectic and stressful time. However, I cannot stress the importance of taking the time to read the fine print of your loan documents before signing them. It could be your last chance to spot items that need correction before they are recorded, and before the loan funds.

For example, if you told your lender that you preferred a fixed rate, and after taking the time to read the fine print, you discover that the loan documents show the mortgage will actually be adjustable, you can have this corrected before you go through with closing. It will be too late if you wait until after closing.

Make sure you read everything, or if you have an attorney, have them review these loan docs for you. Don’t let anyone pressure you into signing without reviewing your mortgage documents, and make sure that you clearly understand what you are agreeing to. All questions should be addressed prior to signing your loan documents, and all corrections should be made prior to signing your closing documents.

It will be well worth the peace of mind you will have when all is said and done.

The Truth About Exclusive Buyer Agency Services

Exclusive Buyer Agency – A Value to Buyers:

Many traditional agents and brokers have nothing good to say about exclusive buyer agency, for the obvious reasons. The truth of the matter is that exclusive buyer agency offers something that traditional agencies do not; loyalty and commitment to the buyer only–without any possibility of dual agency conflicts.

An exclusive buyer agency agreement spells out in writing the expectations between client and broker. It is a negotiable instrument that protects both broker and client. It demonstrates that a buyer is serious, which allows room for other types of negotiations–such as buyer rebates. It will contain a cancellation clause that will allow a buyer or agent the option to cancel the agreement, should either party decide that the association is not working for them. It establishes mutual respect, loyalty, confidence, honest communication, and trust–five elements that create a fantastic working environment and team synergy.

If a client does not agree with certain elements of the proposed agreement, then they should raise their concerns and negotiate for better terms. The best agreements are those that are win/win, meaning that both client and broker feel good about the terms negotiated, as well as, feel good about working together. It is very important to establish honest communication, mutual respect, trust, and loyalty between broker and client upfront–and this is the primary purpose of the agreement.

An exclusive buyer agency agreement assures a buyer that the agent or broker working with them is only working for them. It means that they will have maximum choice of available properties, listed and unlisted, as well as, properties that are both on and off the market. It also means opening up the possibility of negotiating special terms, as already mentioned above.

Favorable feedback from traditional real estate brokers and agents about exclusive buyer agency is highly unlikely:

Buyers need to understand that getting honest feedback about exclusive buyer agency from traditional agents or brokers is highly unlikely, because their priority is to get your business, and if their company takes listings, they will not be able to sign an exclusive buyer agency agreement with you even if they hold an ABR designation.

Their first priority is to keep your business with them, and not necessarily talk to you about the purest form of buyer representation; which is always the best option for buyers. As a matter of fact, there is plenty of mixed information on the Internet regarding whether or not a buyer should sign a buyer agency agreement, let alone an exclusive buyer agency agreement. The negative information found happens for reasons already described above.

Working with clients:

As a policy, my company only works through exclusive buyer agency agreements, also known as, Service Engagement Letters. While there are some buyers out there who prefer not to work this way, we prefer not working with such buyers, because clients receive the highest levels of loyalty, integrity, advocacy, and commitment. Therefore, it is only fair to expect the same in return. Ideal clients understand that it is a good thing to give and receive mutual consideration and commitment in writing–as all real estate agreements are supposed to be.

A Word About Fees:

Fees are negotiable and depend on the type of property purchased, for example, if the property is listed or unlisted. For properties listed on the MLS, fees are covered by the "Selling Office Commission" through the listing company. This means that clients receive the purest form of buyer representation at no cost to them. While there are real estate companies out there that would like the public to believe that buyers actually pay for real estate commissions on listed properties, the truth, is that commissions on listed properties are deducted from the seller’s side of the closing statement, not the buyer’s.

This means that the seller is paid the purchase price first, and then his or her costs of sale are simultaneously deducted to result in net proceeds. The notion that buyers pay commissions on listed properties makes about as much sense as employers paying their employees income tax deductions. An employee must be paid by his or her employer first (aka. Gross Pay) before taxes are simultaneously deducted to result in an employee’s Net Pay. Hence, an employee pays his or her own income taxes through automatic deductions. The employer does not pay the employees income tax deductions–just like in real estate–buyers do not pay the sellers costs of sale on listed properties. The seller’s costs of sale are deducted from “Gross Sale Proceeds” to result in “Net Sale Proceeds.”

Buyers can owe commissions or flat rate fees, however, if they desire to include unlisted or off-market properties in their search–unless a seller agrees to cover the cost. This would require negotiating with the seller to pay some, if not all, of the fee. Since our fee is generally less than what a seller would pay to a traditional real estate company, a motivated seller should not have a problem with this. However, the portion that is not covered by the seller would be owed by clients at closing.

Clients have the choice of limiting their property search to only MLS listed properties, or including unlisted and off-market properties. It is entirely up to them, how they would like to go about it.

The bottom line:

Clients have the opportunity of customizing their own exclusive buyer agency experience to fit their individual needs, while completely avoiding dual agency, designated agency (just another name for dual agency), and the limitations of single agency. It only takes communication, honesty, and a willingness to reciprocate mutual respect.

Search Residential and Commercial Properties on WorldInvestments.com!

Our web site now offers residential and commercial property search capabilities on WorldWestInvestments.com. Some of these new features include Realty Watcher, where prospective homebuyers can keep track of the market, and a “Sold” section, where a buyer can research what properties have sold for. Be sure to visit us often for more innovative developments!

How to Hire the Right Exclusive Buyers Agent in 5 Easy Steps.

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Unfortunately, buyers often make the mistake of working with the first agent they come into contact with. The following information offers a practical and easy system for searching out potential candidates and selecting the right exclusive buyers agent for the job at hand.

Buyers need to know what options they have available to them, and not let others make these decisions for them. Isn’t there enough of that going on these days?

With knowledge comes the power to make the best practical decisions possible, real estate decisions included.

Step 1: The Search – According to the National Association of Exclusive Buyer Agents (NAEBA), only ½ % of all real estate licensees are truly buyer‘s agents. The best way to begin looking for an exclusive buyer‘s agent is to do a search online using the term "exclusive buyer‘s agent" and including the desired property location. A prospective buyer should visit at least 3 to 4 web sites and pay attention to details like professional impression and the overall message communicated in the web site. Buyers should ignore hype that comes from biased sources. For example, a biased source will choose one particular agency to handle all of their real estate inquiries to the exclusion of all others, instead of having a directory of several buyer agencies. This takes away from a buyer‘s right and freedom to choose the best representation for them. In truth, one size does not fit all; therefore, relying on biased sources is quite questionable.

Step 2: The Interview – After finding the best two or three candidates, the next step is to set up an interview. At the interview, a buyer should pay attention to detail and ask plenty of questions. Buyers should ask candidates to address any concerns, and be prepared to discuss real estate goals in general. The goal here is to uncover enough information about a particular agent in order to get a feel for each personality interviewed in order to make the best choice. When concluding the interview, buyers should inform all candidates of when they expect to make a final decision and then notifying each candidate by phone or e-mail, regardless of whether or not the candidate was successful in landing the job.

Step 3: The Selection – After concluding the interview process, which can occur online, via e-mail, in person, or over the phone, the selection process begins. The main goal of this step is to determine the best candidate for the job by considering the comfort level of buyer during the candidate‘s interview, assessing the candidate‘s level of knowledge and expertise, as well as, seeing whether personalities between buyer and candidate click or clash. Buyers should be aware of how an agent handles their questions and concerns. Does the agent seem honest, workable, and flexible? Does it seem like the agent is trying to push their own agendas, trying to use money as incentive or bait, or discouraging buyers from interviewing with other exclusive buyers agents? These are all important considerations. As small as they may seem, these traits reveal the quality of an agent‘s character and the nature of their motivations. This is good for a buyer to know upfront.

Step 4: The Exclusive Buyer Agency Agreement – After buyer determines the best exclusive buyer‘s agent to work with, the next step is making the working relationship official through an Exclusive Buyer Agency Agreement. There are currently many misconceptions about this type of agreement. Some buyers are reluctant to sign one because they do not understand what it is for and why it is important for them to have one with the right agent. An Exclusive Buyer Agency agreement establishes the boundaries and ground rules of a working relationship between a buyer and their chosen agent. Without this agreement addressed upfront, important issues become a matter of chance and fate. Buyers and their agents should negotiate the terms until they both feel good about the agreement. Expectations are set and mutually understood. A proper Exclusive Buyer Agency agreement avoids misunderstanding and unwelcome surprises, as well as, prevents wasted time and effort. Buyers and their agents should spell out the details of how they should work together in writing, before actually starting to work together.

Step 5: Getting Started – Once an agreement is in place, buyers should meet with their agent to review goals and options based on the information discussed at the interview. In this step, the agent prepares the buyer for what is ahead. The agent will help buyer determine affordability, shop for the best financing, find the best properties that fit buyer‘s criteria and qualifications, help negotiate for lowest price and best terms in favor of buyer, and manage buyer‘s side of the transaction to closing while watching for, and handling, problems that may arise. The bottom line is that an exclusive buyer‘s agent is a buyer‘s best friend in real estate, and buyer‘s should make sure that they choose the right one for themselves.

Suzette West, RECS, EBA
Exclusive Buyers Agent Seattle