It is important for you to know whether an agent is working for you as your agent, or simply working with you while acting as an agent of the other party.

MONEY MAGAZINE "Buyer's average a 5% savings when represented by a Buyer's Agent rather than a Sales Agent".

Below is some important information you should know about Buyer Agency
(information courtesy of The North Carolina Real Estate Commission)

Buyer Agency: If the real estate firm and its agents represent you, they must

• promote your best interests
• be loyal to you
• follow your lawful instructions
• provide you with all material facts that could influence your decisions
• use reasonable skill, care and diligence, and
• account for all monies they handle for you.

Once you have agreed (either orally or in writing) for the firm and its agents to be your buyer's agent, they may not give any confidential information about you to sellers or their agents without your permission so long as they represent you. But until you make this agreement with your buyer's agent, you should avoid telling the agent anything you would not want a seller to know.

Unwritten Agreements

To make sure that you and the real estate firm have a clear understanding of what your relationship will be and what the firm will do for you, you may want to have a written agreement. However, some firms may be willing to represent and assist you for a time as a buyer's agent without a written agreement. But if you decide to make an offer to purchase a particular property, the agent must obtain a written agency agreement. If you do not sign it, the agent can no longer represent and assist you and is no longer required to keep information about you confidential. Furthermore, if you later purchase the property through an agent with another firm, the agent who first showed you the property may seek compensation from the other firm.

Be sure to read and understand any agency agreement before you sign it.

Services and Compensation

Whether you have a written or unwritten agreement, a buyer's agent will perform a number of services for you. These may include helping you

• find a suitable property
• arrange financing
• learn more about the property and
• otherwise promote your best interests

If you have a written agency agreement, the agent can also help you prepare and submit a written offer to the seller.

A buyer's agent can be compensated in different ways. For example, you can pay the agent out of your own pocket. Or the agent may seek compensation from the seller or listing agent first, but require you to pay if the listing agent refuses. Whatever the case, be sure your compensation arrangement with your buyer's agent is spelled out in a buyer agency agreement before you make an offer to purchase property and that you carefully read and understand the compensation provision.

More on How Realtors Are Paid

This is a question that is very often asked, even by other real estate agents. "Who pays our fee?" This question of who pays the fee is very closely related to the old "chicken and the egg" debate. The sellers might argue that they pay the fees because they are disbursed from the purchase price at the closing by the closing attorney, so they net less. The buyers might argue the same point by saying that the fees inflate the purchase price and is paid from the money they bring to the table.

The truth of the matter is, real estate fees are transaction costs which impact both buyers and sellers. Because real estate fees equate to large sums, they are almost always financed as part of the purchase price.

There are several ways to build-in the buyer broker's fee as part of the purchase price. The easiest method is to use the traditional way in which agents have always been paid - by having the fees disbursed from the purchase price at closing. This method maintains accurate records for accounting and tax purposes.

Keep in mind this important point: The source of the broker's fee does not determine whom the broker represents. A buyer's broker can be paid by a "co-op fee" from the listing broker, or as is usually the case in North Carolina, by a disbursement directly from the settlement funds with the expense being assigned to the buyer or the seller. Expensing the fee on the closing statement is simply an accounting procedure. The important issue is representation!

Represented buyers should have a clearly defined representation agreement with their broker or agent. That agreement should clearly state which party the agent represents, how much his/her fee will be, and how that fee will be paid. I'd be happy to explain this in more detail when I speak to you personally in my NO OBLIGATION counseling.