Before Talking to a Real Estate Agent
Regarding "Buying a Home"
READ THIS: AGENCY
Indiana Agency Laws,
Revised, Effective July 1, 1999
Homebuyers need to be careful when purchasing their home that they are getting the
full value of having a BUYER AGENT or BUYER BROKER on their side. According to a
1983 Federal Trade Commision study, most buyers fail to understand that the agent
who shows them homes is actually working on the seller's side. Consequently,
buyers often reveal too much information to the real estate agent who is showing
them homes. Few buyers realize that anything they say will be told directly to
the seller and will be used to help the seller obtain the maximum price from the
buyers. This is why it is not only vital to your position as a buyer, but it is
also Indiana law that real estate agents explain agency to you before you see the
very first property.
A Buyer Agent is an agent who will be working for your best interest, can and should
relay any information to you regarding the sellers and their property, yet keeps any
information about you confidential, unless you give permission for such information to
be passed on to the seller. A Buyer Agent will help you to negotiate the best terms
for your purchase. There is not an execution of a contract to employ a Buyer Agent.
The seller will be responsible for the Buyer Agent's professional service fee.
According to Alice and Denise Fields, authors of Your New Home, the buyer's
best protection is to hire a Buyer Broker with the use of a written contract.
Most real estate experts agree. Both the Buyer Broker and the Buyer Agent can open
more of the market to the buyer, including for-sale-by-owner properties and properties
that are not yet listed. But, the Fields caution that buyers should be aware of
"counterfeit" Buyer Brokers who say that they will offer you buyer agency and then do
business the same way they always have. According to Fields, buyers should never
hire a real estate agent without a written contract that spells out the details of
how the broker will work. Unlike the Buyer Agent, the Buyer Broker's professional
service fee can be paid by the buyer instead of the seller.
A Limited Agent is an
agent that represents both the buyer and the seller, because the agent
has that particular property listed. A Limited Agent is prohibited by Indiana Law from relaying information about
their client which may weaken the client's negotiating power. Before an offer
to purchase is presented to the seller, both the purchaser and the seller must
give written permission for representation of the agent as a Limited Agent, and that
each party fully understands the terminology of Limited Agency. As with a Buyer Agent,
the seller is responsible for the payment of the professional service fee of the Limited
Agent.
The final category of agency found in Indiana is the Seller's Agent. The seller will have
their own representation, their listing agent, or their listing agent who
asked and was denied permission by the seller to be a Limited Agent. Again, the seller is responsible for the payment of
the professional service fee of a Seller Agent and of a Limited Agent, if applicable.
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