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From beginning to end, it is a real estate agent helping you select, negotiate, and legally purchase your new home. Choosing the right real estate agent to help guide you through the whole process isn’t easy. Here’s an overview of what you need to know.
THE AGENCY RELATIONSHIP
Real estate agents are licensed by the State of Connecticut to represent a person in the purchase, sale, exchange or lease of real property. The Agency Relationship is based on one person representing the interests of another person.
The responsibility of the real estate agent is defined by the state law relating to agents, the REALTORS®’ Code of Ethics, and general principles of agency law.
The type of relationship formed between the agent and the client is called a fiduciary relationship. A fiduciary relationship is one based on trust because the agent owes the following duties to the client: Loyalty, Obedience, Diligence, Disclosure, Confidentiality, Accountability and Reasonable Skill & Care.
THE FOUR TYPES OF AGENCY RELATIONSHIPS
A Buyer’s Agent represents the interests exclusively of the buyer in a real estate transaction.
A Buyer’s Agent:
o Arranges property showings that meet the buyer’s needs.
o Provides information about the home or property, community, schools, taxes, utilities, and zoning.
o Discloses any information about the property that can be obtained from public sources.
o Prepares a competitive market analysis on the property.
o Counsels the buyer on what price to offer the seller.
o Shows what other buyers are paying for property in the area.
o Assists in writing an offer with the buyer’s interests in mind.
o Negotiates the best price and terms for the buyer.
o Keeps the price capabilities and objectives of the buyer confidential and maintains anonymity, if desired.
o Assists with the loan application process.
o Monitors all dates, events, and requirements.
o Attends the closing with the buyer.
A Seller’s Agent represents the interests exclusively of the seller in a real estate transaction.
A Seller’s Agent:
o Prepares a competitive market analysis of the seller’s home or property.
o Develops and implements effective marketing strategies for the seller, including asking price, staging, and positioning.
o Informs the seller how much other homes and properties have sold for in the area.
o Presents all offers and counsels seller on what price to accept.
o Negotiates exclusively on the seller’s behalf.
o Updates the seller on market conditions.
o Prepares an estimate of closing costs.
o Works closely with seller to assure a smooth closing.
o Monitors all dates, events, and requirements for the seller.
o Represents the seller’s interest at the buyer’s walkthrough inspection.
o Attends the closing with the seller.
Legal in all 50 states, Dual Agency occurs when a buyer’s agent shows a property to a buyer that is also represented by that REALTOR®’s firm, or when the Listing agency shows real estate to a buyer that is also represented by the same firm. In dual agency situations, both the buyer and seller will be asked to sign a consent agreement.
A Dual Agent owes both the buyer and seller equal representation and must:
o Treat both parties fairly.
o Not knowingly represent one party to the detriment of the other.
o Disclose facts each party needs to make an informed decision.
o To assist, as the buyer and seller are empowered to negotiate on their own behalf.
o Assure confidentiality on each party’s price, terms, and personal information.
Buyers and sellers have an option when the real estate brokerage firm is a dual agent. That option is called Designated Agency. In designated agency, the real estate brokerage firm will designate a salesperson to represent the buyer and another salesperson to represent the seller. The designated buyer’s agent will act as an agent for the buyer as described in “buyer agency” above. The designated seller’s agent will act as an agent for the seller as described in “seller agency” above. This is the case even though each of the salespeople is from the same real estate brokerage firm.
The seller and the buyer must each agree to having a salesperson designated for them, and the real estate broker in charge of the brokerage firm must make the designation.
A person is Unrepresented by a real estate agent unless he or she has signed a representation agreement with that agent.
The real estate agent cannot provide advice or counsel to an Unrepresented Person on matters pertaining to real estate, including real estate financing. An Unrepresented Person has the responsibility to protect his or her own interests.
All real estate agents are obligated by law to treat all parties to a real estate transaction honestly irrespective of whom they represent in the transaction.
This information is reprinted courtesy of:
CONNECTICUT ASSOCIATION OF REALTORS®, INC.
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What is the benefit of having a Mortgage Pre-Approval when looking for a new home?
There is a difference between a Mortgage Pre-Qualification and a Mortgage Pre-Approval.
A mortgage pre-qualification is based on the information you verbally give to your loan officer to get a snapshot of how big a house you might afford and how much money you can afford to borrow to buy it.
A Mortgage Pre-Approval is an application file reviewed by an underwriter to be sure your income; assets and credit history qualify you to get the loan you are applying for.
Knowledge is Key: A Mortgage Pre-Approval gives you a firm idea of how much house you can afford. The underwriter bases this amount using a formula that compares your income to your total outstanding debt.
The Debt:Income Ratio (DTI) is derived from the monthly payments that show up on your credit report and the income documents you surrendered as part of the process. This will keep you focused on the big picture and help to prevent being disappointed if you fall in love with a home that is too expensive.
Improve Your Negotiating Position: When a seller is comparing two offers and one of the buyers has Mortgage Pre-Approval there is a high confidence level that the deal will go through and close sooner. This may help you to win in a competitive bidding situation.
Confidence in Your Offer: Knowing that the key information in obtaining a mortgage has been reviewed by an underwriter will give you, and the seller, confidence that your offer is bona fide.
Keeping Your Spending On Track: Having detailed information on your interest rate, mortgage payment, closing costs and down payment requirements will help you stay within your monthly budget.
Time is Valuable: Knowing what you can and cannot afford can save you time and frustration in the house hunting process. This will help your Realtor find the perfect house in your price range.
Move in Quicker: Having Mortgage Pre-Approval will save you time when you submit your complete mortgage application for approval. Everything has been done beforehand. All you need is and inspection, appraisal and closing documents. The faster you close, the sooner you can begin to enjoy your new home.
If you are looking to buy a new home, a Mortgage Pre-Approval is the smartest way to get into your new home. Call Me at 860.945.9284 to discuss the right mortgage option for your family and to take advantage of my FREE Jump Start Mortgage Pre-Approval service.