Buying Your Next Home (Part III)

By Stephen Shea

[This is the third part is a series focused on buying your next home. Part I can be found here and part II can be found here.]

In prior posts, we’ve discussed the preliminary steps one needs to take before initiating finding your dream home.  Now you’re ready to begin the search effort. 93% of all homebuyers first begin their search online, at sites like Realtor.com and Zillow.com.  The online services have greatly enhanced buyers’ ability to search for homes across wide geographic areas of interest and appeal to them.  

However, pictures and glowing house descriptions can’t beat actually visiting these homes.  And doing so with a knowledgeable real estate professional is best of all.

Why work with a real estate professional?  What value do we add?  What are the risks or concerns when confiding in your realtor?  For those who have been online already reading up on the home buying process, there may be some confusion about the role of realtors. 

It was surprising for me to learn it is still the practice in some states across the US that only the home seller signs an agreement with a realtor.  That signed agreement creates a fiduciary duty for the realtor on behalf of his/her seller client.  However, it also creates a de-facto fiduciary duty on every other realtor who shows that home with a potential buyer. 

Those agents are, in effect, are subagents of the listing agent, even though the realtor is purportedly “working with” a buyer.  Legally, the realtor retains the fiduciary duty to disclose all pertinent information learned – such as how much you’re willing/able to pay for the house, how much in love with the house you are, what other properties you may be considering – to the seller.  You may have heard the advice never to disclose your true situation or feelings to your realtor, as they don’t really work for you.  In some parts of the country that is sound advice. 

You may also read advice to hire a buyer’s representative.  In so doing, you will have an advocate that works just for you.  But in most states with buyer representatives, the buyer pays for this representative’s services. 

In Connecticut things are different.  In Connecticut we have two agreements: one for sellers, i.e., the traditional exclusive right to represent seller; and one for buyers, the exclusive right to represent buyer. 

By signing the buyer representative agreement with a buyer client, a Connecticut real estate sales agent is bound by a fiduciary duty, enforceable under the law, to work exclusively on behalf of the buyer.  No information learned by the agent can be disclosed or used to the disadvantage of the buyer. This agreement and its requirements are enforced by the CT Department of Consumer Protection to assure the best interests of the consumer are protected.  

And if you’re wary of signing binding agreements, take note it is not the Department of Real Estate Agent Protection that enforces the law, helping assure the best interests of realtors are protected!  The Department of Consumer Protection protects you, the client. And whether a realtor is working as the Seller Representative or the Buyer Representative, it is the Seller that pays for this representation upon the sale of the property.

When viewing a property with a buyer client, the realtor has the duty to carefully observe the property with an eye toward identifying any potential issues or concerns.  Starry-eyed buyers may look past the ceiling’s water stain or evidence of possible mold above a baseboard but the realtor is required to be vigilant about such things, and seek all required disclosures from the owner and the owners’ realtor.  The sellers’ realtor assumes a fiduciary duty to disclose all issues that are known or should have been known to the buyer and the buyers’ representative. 

No realtor can know all there is to know about every Fairfield County city and town.  We all have our areas of greatest expertise, areas of effective understanding, and areas, frankly, we’re not sufficiently well versed in.  You’ll want to work with someone extremely well versed in the locale you are interested in, or seek a referral to someone who is.  And if a buyer’s interests lays in two or more areas, signing the Buyer’s Agreement to work with one agent in one area and another agent in another area is perfectly acceptable.  How long you wish to work with the agent is also up to the buyer.  It could be for as little as one day – in just one town, or even to be shown just one specific house.  It is up to the client to decide what is best.

One way to gain an understanding of the local housing market is to view open houses.  The public gets to do so every Sunday whereas the broker community typically has open house tours twice a week.  In Greenwich, they are Tuesdays and Thursdays.  Every agent that chooses to take advantage of the open house showings, and a great many do not, has their own methods of retaining the information gathered in these reviews. Some make a cursory assessment, looking for anything exceptional – either positive or negative – and leave it at that.  Others review in greater detail, though how they retain the information and are able to recall particulars that distinguish one home from the rest is open to question.

I take a rather unusual approach, unusual in that I do not see others following my lead, and that will be the subject of next week’s blog.

                                                   

Stephen Shea is a licensed real estate agent, real estate developer and has a background in financial modeling and planning. He can be reached at Stephen@ChiltonAndChadwick.com or 203.822.1555.