What’s to stop you from retaining your own broker, someone obligated to put your interests first and legally bound to help you obtain the property at the lowest possible price? Nothing. Almost unheard of in years past, brokers who represent buy ers are now found in every real estate market, and you should have no trouble locating one.
When you have specifically engaged a buyer’s broker, those fiduciary duties are now owed to you, and sellers become merely customers. Your agent must keep your information confidential and obey your orders, such as If they don’t accept our offer, give them one for $5,000 more. The buyer’s broker is duty-bound to tell you anything that would be useful to you (I’m not sure, but I’ve heard the seller needs a fast deal) and to help you obtain the property for the lowest price.
The buyer’s broker may ask for a nominal retainer to compen sate for time invested; sometimes the retainer applies against eventual commission due or even against the purchase price of the property bought. If no property is bought within the con tracted time, the retainer may be forfeited.
Occasionally, the buyer pays the usual share (perhaps hail) of the commission that the seller originally promised to pay to a selling broker. In return, the seller may reduce the sale price by that amount, because the seller will be paying only half a full commis sion to the listing broker.
In theory, the buyer who specifically hires a broker should pay for the service. In real life, though, it usually works out that the seller pays the originally agreed-upon commission, part of which goes to the buyerís broker.
Why would the seller be willing to do that?
Buyers, first-timers especially, don’t have much spare cash lying around when the sale closes. Just to make the deal work, sell ers are often willing to furnish the commission in that fashion.
Proponents of the system like it because it sets up an adver sarial situation similar to that in which the parties retain two different attorneys. Sellers and buyers each have a broker clearly working for them alone, without the conflicts of interest that arise under the more traditional system.
If you hire your own broker, you can expect to sign a contract in which you promise that during a specified period of time you will not house hunt with anyone else, and that if you buy any prop erty within that time in any fashion, your broker will be entitled to a fee. A typical buyer’s broker contract is shown in Figure 2.1.
The system can work well unless you find yourself tied to an agent who does not, in the end, suit your needs. But it’s well to remember that the old-fashioned method, in which you would deal entirely with sellers brokers, has been around for years, and can also bring satisfactory results.