SERVING CLIENTS IN LONG BEACH, ORANGE COUNTY, IRVINE, SANTA ANA, WESTMINSTER, HUNTINGTON BEACH, FOUNTAIN VIEW, NEW PORT BEACH, SEAL
BEACH, COSTA MESA, SANTA MONICA, CARSON, TORRANCE, SAN PEDRO,
ALHAMBRA, PASADENA, SAN FERNANDO VALLEY, LOS ANGELES, LAKEWOOD, CERRITOS, GLENDALE, SEAL BEACH, VENICE BEACH, BEVERLY HILLS, AND HOLLYWOOD.
SMITH & GARG – LONG BEACH REAL ESTATE ATTORNEYS
Advantages & Disadvantages In Retaining A Real Estate Broker
One of the many advantages of having a real estate Broker representing you in selling or buying a real property is the use of the Multiple Listing Service (MLS). MLS is a service in which most real estate Brokers and real estate agents list and search for available real properties, especially in residential real properties. One must be an agent or a Broker to advertise or subscribe to the MLS. The advantage, therefore, is that your listing can be seen everywhere by a number of agents and Brokers, even if the potential purchaser is out of state. Commercial real properties may be listed on the MLS but, more often than not, are also listed in specialized commercial listings such as LoopNet.com or OnlineStar.com.
Another advantage of having a real estate Broker representing you is the Broker or the agent may arrange for inspections, surveys, evaluating conditions of property (though your real estate attorney can do the same thing). If the property is a commercial property or an investment property, the real estate Broker may also compile cash-flow and other financial information to evaluate the income potential of the property. Your attorney and/or Broker may also refer you to a CPA that is specialized in your area of real property investment that could potentially save you thousands of dollars. Finally, the Broker, like an attorney, may also advise you various type of financing. However, only an attorney or a CPA may advise you on potential tax benefits and only an attorney may advise you on California real property law. There may be certain legal issues and implications that a real estate Broker may not be knowledgeable and under California law, as is in most states, only a licensed attorney in the state may advise you on legal issues.
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In considering retaining the services of a real estate Broker or a real estate agent, you must complete a cost-benefit analysis and determine whether retaining such individual is beneficial to your investment. Before retaining a Broker, you must consider all factors, especially if it may potentially affect your income and investment. If you are a Seller, in most cases, you must pay a Brokerage fee. The fee is flexible depending on the type of investment, the selling price of the real property, and whether such property is difficult to sell. However, the average Brokerage fee is 6% of the sale price and may range anywhere from 4% to as high as 10% for commercial properties, depending on the factors stated above. If you know the value of your property through an independent appraiser and you are not in a need to sell the property quickly, you may want to sell your own property to avoid the Brokerage fee. WARNING: If you choose to sell a property on your own, you need to hire an attorney to advise you as to the numerous disclosure requirements. Depending on the value of your property, the cost of hiring an experienced attorney, such as Smith & Garg, LLC, may be significantly less than the average 6% Brokerage fee.
As a buyer, you need to be conscious about who you choose as a real estate Broker to represent you. You must avoid unscrupulous Brokers who try to close the contract as high as possible; the higher the purchase-price, the higher the commission. Although a buyer usually does not have to pay for a Brokerage fee, the purchasing agent usually splits the fee with the listing agent (an agent that represents the Seller). In some instances, the buyer may also pay for a finder’s fee or a Brokerage fee if the property is the type that is difficult to find. Thus, even though you may not pay a “Brokerage fee” at closing, hiring an unscrupulous Broker may cost you much more money in terms of purchase price and interest, even if it is not considered “out of pocket” costs. As stated, although the Broker is your agent and owes you a fiduciary duty of care and must avoid conflict of interest, it may be difficult to prove in a court of law that the Broker “could have negotiated and saved you additional money,” unless the price is unreasonably high, above and beyond fair market value. Thus, at all costs, you must use a Broker at you can trust. You may want to get a referral from friends or family. Smith & Garg’s real estate attorneys may also recommend to you to Brokers who we have worked with over the years that have good reputations.
Should you have any questions or concerns, please contact our experienced real estate attorneys at Smith & Garg, LLC. The experienced real estate transaction and litigation attorneys at Smith & Garg, LLC can help.
Call Smith & Garg, LLC today at 1-877-517-4275 or complete our Contact Form and let us assist you.
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