Dear Michael: I am interested in buying a home. Should I allow the listing real estate agent to represent me as well?
Answer: What you are talking about is called agency. There are three types of agency relationships: buyer agency, seller agency and dual agency. The buyer’s agency discusses how the agent is to be compensated for the work he/she is doing for the buyer. The Seller’s Agency agreement is covered within the listing agreement. Obviously, through the listing agreement the seller and his/her agent will have discussed the terms of the agreement including what the seller is willing to accept for the property. Compensation to the listing firm and how it is divided is also covered in this agreement. Dual agency can come in two forms. The first is when the brokerage firm has the listing and has a different agent within the same brokerage represent a buyer. The second is when the listing agent himself brings a contract to the seller and represents the buyer as well. Dual agency at the company level as far as having agents within a company bringing their clients to see a listing represented by the same company should not cause any problems or raise any eyebrows. But, when a listing agent offers to represent both sides of the transaction, caution is advised, as no party should go unrepresented. That is how real estate transactions can remain fair and impartial, as well as giving all parties to the transaction an equal chance of getting the highest and best value for their dollar.
Dear Michael: What is the effect on a FICO score of a Notice of Default alone vs. a Foreclosure sale?
Answer: A notice of default is the notice to signify the beginning of what will likely end up being a foreclosure. A foreclosure sale occurs when it has now been months later, which further decreases the score. It is also a more adverse situation as a result of the foreclosure actually occurring where as the notice of default is just stating that a foreclosure may be in the works. A notice of default will be listed under public record the same as a foreclosure. This will lower the fico score as does the foreclosure but it is nowhere near as bad as a foreclosure. Foreclosure is the “F” word in the lending and real estate industry; there is nothing that could be worse than this on your record, not even bankruptcy. A short sale is the alternative to a foreclosure. There is absolutely no reason for a seller to do a foreclosure when short sales are available for distress properties.
Dear Michael: If you make an offer on a house and the seller comes back with a counter offer and you agree to it, can the seller still change his mind and sell to someone else?
Answer: A seller is free to withdraw the counter-offer any time prior to your acceptance. The communication method for acceptance is described in the purchase contract. If your acceptance of the offer is communicated to the seller in the method outlined in the purchase agreement (prior to the seller withdrawing the offer), then the seller should honor the contract with you and should not entertain any other offers. But people don’t always do what they should. The problem then becomes whether you try to enforce your contract or not, which requires legal advice and expenses. For that, you would have to consult a real estate attorney. Although you could probably technically enforce the contract, you have to reach a decision on whether it makes sense to spend the time and money to do so. Or does it make more sense to realize the seller is unethical and just move on and buy something else? I would choose to move on, and save myself from many possible headaches that could arise from an unethical seller.
Michael Kayem is a Realtor with Re/max Estate Properties serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: firstname.lastname@example.org.