Having representation when buying property in the USA can be very different from the UK, Canada or many other countries.
The single most important difference between the USA and many other countries is that in the USA we use a two agent system – one who represents the seller (known as the listing or sellers agent) and one who represents the buyer (known as the buyer’s agent). Both parties have representation in the sale process. One agent can represent both the buyer and the seller (called a transaction broker) that we will address later.
Two Agent System.
The two agent system works because in the USA all properties are made available to all Realtors via the MLS.
The MLS is like a big property warehouse where every property for sale is listed and updated to give an immediate interactive vessel which a Realtor can search to help locate the most suitable property for you. Unlike the UK for example where buyers have to visit all the real estate agent offices in the location they are looking to buy in and work with each real estate agent individually – in the US you only need to find one Realtor you like and trust and he can find you any property, gain access and negotiate on your behalf to help you acquire a property.
This system works because when a listing agent prepares a listing for a seller he negotiates a sale commission, which the seller pays. The seller’s agent lists the property on the MLS and splits the commission to a buyer’s agent who brings a buyer. It’s called a “co-broke”.
What does all that mean to you as a buyer?
Your first priority is to find an agent that you like, trust and has your interests in finding you the most suitable property and is able to negotiate a contract that results in the vacation home of your dreams. You should also take into consideration how they will represent you after the sale.
If you are intending to utilize your property as a business within a short term rental program your Realtor should put together a plan to allow you to be successful. This may turn out to be far more important than the buying process as many short term rental homes falter because they are not set up properly through bad advice or mismanagement.
Find yourself a Realtor who understands the business side of owning a vacation home and who can educate you on all aspects.
Talk to as many Realtors as you like, get to know them and make your decision based on trust, their knowledge and experience. This may be the most important investment decision you will ever make. You should feel confident the Realtor you choose knows and can handle the complexities of both the purchase and the business aspects.
This person (or business) who oversees and handles all this for you will ask for only one thing from you in return – your loyalty.
They may have to work for you for many months, giving much time, knowledge, expertise, their honestly and loyalty without any guarantee of as much as a penny in return.
If you want the best representation from an experienced and knowledgeable expert, then tell the Realtor you are working with – “I’d like you to represent me in this transaction”.
Contrary to belief – you won’t be able to get a better deal if you don’t have an agent – the seller is still contractually obligated to pay the sales commission regardless – in fact if you don’t have someone representing you it will most likely cost you money, not only during the sale but after you buy.
Ask yourself, who is going to help me with everything else I need to take care of my investment and newly established business? Most likely not the seller or the sellers Realtor.
I can’t emphasize enough the importance of post sales expertise and having someone you can rely on to ensure the continued care and success of your home should be paramount in your decision to have the best representation possible.
It may however turn out that your favorite Realtor is also the listing agent for your favorite property. This can be addressed because a Realtor can transition to be a “transaction broker” – an agent who acts as a neutral go-between to both parties to complete a home sale.
What does representation mean?
Representation means you work with only one Realtor. If you meet or discuss real estate with anyone else you tell them you are already working with a Realtor. Proudly tell them your Realtor’s name and let them know your Realtor will be in touch with them regarding additional information – they will respect you all the more.
So to summarize, take your time to find someone you like and trust and give them your undivided loyalty. A good Realtor should assist you in buying a property rather than trying to sell you one so be candid and explain exactly what you’re looking for so he has the tools to serve you best.
Having completed hundreds of contracts and dealt with thousands of unique issues that in many cases a buyer need not to know about I’ve learned that all transactions are complex and there are ALWAYS items that need to be properly resolved.
Sometimes the best representation is those you hear least from.
If you lose the vacation home of your dreams, your deposit or end up in a legal battle after the purchase because of the inexperience or negligence of your representation it will be too late to reverse.
How many vacation homes have you sold?
How long have you been licensed?
Do you have testimonials?
Can I contact some of your clients?
Have you sold a home in the resort I am looking to buy in?
What’s your policy for transfer of the business elements to me if the home I like is already in a rental program?
Ask them to give you a run down on their experience.
Don’t accept they know what they are doing.
Ask questions and…
MAKE SURE YOU HAVE GOOD REPRESENTATION!