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Buyer Information
 Representation

Recently the way agents represent buyers has changed. Buyers now have the opportunity to hire an agent to represent them. In the past, agents represented only the seller but had to treat the buyer fairly. Now, the law provides the option of buyer representation. To be represented, a buyer signs a "representation contract" with an agent. Without this contract, the buyer is unrepresented and agents will generally only show them properties listed by their own firm. Agents prefer not to act as subagents on other firm's listings because of requirements of the agency law. 

Agents are required to discuss the options you have at the first meeting and give you written disclosure about who they represent. They will ask you to let them represent you and if you agree you will sign a contract. The contract is usually exclusive in nature and you will only be able to look at homes through that firm. Until you enter into a buyer representation
contract you should not give out any information about yourself, your motivation or your financial ability that you would not want told to every seller of the homes you inspect. 

Once you have signed a buyer representation contract you should be loyal to the agent and not look at homes without the agent's presence. You should not inquire from other agents about homes once you hire an agent, let your agent work for you. If you are serious about buying a home quickly the term of the agency contract should be short. If you are just looking, the contract should be much longer.  

The contract should call for you to pay for the services of your agent if compensation is not offered to the buyer's agent from the listing agent or if the agent finds an unlisted home or if you buy without going through the agent when the contract is exclusive. 

The duties owed the buyer by law are five in number: care, obedience, accounting, loyalty and disclosure. 

For a more detailed explanation please visit our ARTICLE ON AGENCY.

If you are under contract to a firm and your agent's firm has the house listed your agent will be a "dual agent." A dual agent is required to get the informed written consent of both clients (buyer and seller) before the firm can act as a dual agent. There are firms that only represent buyer's and never represent sellers but most firms act as dual agents regularly. Since dual agency is a conflict of interest your agent will explain what duties you will forego.

Choosing a Lender

There are a multitude of different mortgage plans and numerous lenders. If you deal regularly with a bank or lender, you may want to talk to them before you begin your home search. A lender can pre-qualify you and give you a letter stating how much home you can buy. This pre-qualification letter is valuable when you find a home as a seller will feel more comfortable accepting your offer. 

If you don't know a lender, it is still best to find one before you look for a home. Finding a lender is similar to finding an agent, get recommendations from people who have recently purchased a home. Talk to several and have them tell you about their various plans. Compare plans, the lowest monthly payment is not always the cheapest in the long run. 

HUD's Settlement Cost Booklets - (Booklet Takes Time to Load, Please be Patient) This booklet will help you become familiar with how interest rates, points, balloon payments, and prepayments penalties can affect your monthly mortgage payments. In addition there is important information about your loan after settlement, including how to resolve loan servicing problems with your lender, and steps you can take to avoid foreclosure.

Home Inspection

The lender may demand that you hire a home inspector to determine if there are any hidden major structural defects in the property. The home inspector will carefully inspect the property looking for problems that could be expensive for you to correct. The inspector may also do tests such as radon, termite, etc. Usually it is best to select a separate qualified and licensed termite inspector. 

Often the seller has set the price based on its condition and will make no further concessions based on obvious defects that a normal inspection would disclose. These would include painting and decorating, and items mentioned on the Property Condition Disclosure Report. You should evaluate this report along with your own observations before making an offer. The seller is under no obligation to correct such problems should they show up in the Inspection Report. On the other hand if there are major undisclosed problems that you did not consider in your offer you may try to have the seller correct the problems.  

Choosing an Attorney

You will need an attorney to help you close ownership of the property. Your real estate agent cannot carry out that function as agents are not permitted to practice law. Make sure the attorney you select specializes in real estate. Sometimes the lender will require that the mortgage papers and title search be done by an attorney on their approved list. If your attorney is not on the lenders list, you can still have him or her represent your interests. Do select an attorney specializing in real estate transactions. You can check several attorneys to find out what they will charge to represent you at the closing. If your transaction is involved with multiple loans, expect to pay more. You may also want the attorney to check over the sales agreement before you sign. In most cases the standard form sales agreement is sufficient and the attorney will not have to draft a special agreement. 

Many thanks to Frederick W Mansfield, II of the Greater New Haven 
Association of REALTORS® for the above information.