By Bob Miles
Most people believe that if they hire a real estate broker, then only that broker will help them find a buyer. In many cases, however, this is not true. Most brokers have access to multiple listing services, which allow a broker to list the concerned real estate with many brokers with the understanding that if another broker locates a suitable buyer for the first broker’s client, then the two brokers will share the commission. This is good for brokers because they can earn money from buyers who may not be looking for the type of property their own clients are selling; it is good for sellers because for the same price they can take advantage of the efforts of many brokers instead of just one; and it is good for buyers because many brokers representing many different sellers will be looking for them.
Brokers perform two different functions – the ‘listing broker’ represents the seller, and the ‘showing broker’ shows the real estate to potential buyers. Although most people assume that these two functions are carried out by the same person with respect to a particular piece of real estate, with multiple listing services this isn’t necessarily the case. In many cases the showing broker has received authorization to show the house from the listing broker. This is important because although the buyer may assume that the showing broker represents him, in fact the showing broker represents the seller’s interests, not his. In response to this situation, and increasing number of potential buyers are concluding broker’s contracts with their own brokers to make sure they are receiving (relatively) unbiased information about the real estate that is shown to them. If you are a buyer, it would certainly be a good idea to conclude such an arrangement. Although you will have to pay for it, consider how much money you have to lose by buying a house that you will later regret buying. Of course, this arrangement offers new opportunities for corruption as well – imagine a broker secretly representing buyer and seller at the same time and receiving commission from both!
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DISCLAIMER: The foregoing is intended for reference purposes only and not as legal advice.
About the Author: Real Estate Law in Plain English explains real estate law without the legalese.
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