Frequently Asked Questions (FAQ's)

1. What is the Texas Homestead Law?
2. What is the difference between a Traditional Agent and an Exclusive Buyer Agent?
3. Who does the listing agent represent?
4. What is the difference between a customer and a client?
5. Does an Exclusive Buyer Agent have access to all of the same resources as a traditional agent?
6. How much does it cost to retain the services of an Exclusive Buyer Agent?
7. Exactly how does an Exclusive Buyer Agent save me money?
8. Can an agent represent both the Buyer and the Seller?
9. How can I be sure the agent is representing me as a buyer?

1. What is the Texas Homestead Law?

The purpose of the homestead laws is to protect people from losing their homes to their creditors, through foreclosure, as a result of failure to pay their debts. To accomplish this, the law provides that the only liens which can be enforceable created against one’s home are liens which secure the payment of loans used for financing the purchase of the home, new improvements to the home, and/or liens which secure federal taxes.

What this means to you is that once you buy a home, you can ONLY refinance your home to pay off the existing mortgage and for the cost of new improvements to the home, if any, and you can ONLY get a second mortgage to pay for the cost of new improvements. In short, after purchase, you cannot mortgage any of the equity in your home for any reason other than improvements to the home itself. This appears to be true even after you have paid off the entire mortgage and own it free and clear.

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2. What is the difference between a Traditional Agent and an Exclusive Buyer Agent?

The primary difference is that the Traditional Agent is working in the best interest of the seller, and the Exclusive Buyer Agent is working for the buyer. A Traditional Agent lists properties and works with both buyers and sellers. In order to eliminate the conflict of interest caused by this type of arrangement, an EBA never takes listings and only represents buyers.

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3. Who does the listing agent represent?

The listing agent is bound by contract to represent the best interests of the seller. Any sub-agent for the listing agent is also representing the seller.

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4. What is the difference between a Customer and a Client?

Webster defines a customer as; A person who purchases goods or services.
A client is defined as:

• A person under protection of another.
• A person who engages in the professional advice or services of another.

An Exclusive Buyer Agent is not selling anything to the Buyer. The EBA is in the employ of the buyer and is therefore bound to provide service to the buyer that is always in the buyer's best interest.

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5. Does an Exclusive Buyer Agent have access to all of the same resources as a traditional agent?

Of course! Your EBA is a licensed real estate agent and belongs to local real estate groups, such as the Board of Realtors. In addition to all of the homes listed on the Multiple Listing Service, your EBA can show you for-sale-by-owners, foreclosures, and new constructions. Best of all, your EBA does not list properties, so s/he can give you a completely unbiased look at all available properties. Some EBA’s even specialize in new home construction; they can help you locate lots, screen builders, select materials and much more.

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6. How much does it cost to retain the services of an Exclusive Buyer Agent?

There is no additional cost for the services provided by an EBA. Even if you purchase a home through a conventional Realtor, a percentage of the sales price is used to compensate both agents. The conventional agent and any sub-agent are representing the seller. As long as you are paying for it, you may as well get someone who is going to be working in your best interest.

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7. Exactly how does an Exclusive Buyer Agent save me money?

An EBA is legally and ethically bound to get the best price, terms and conditions for the buyer. There are two main ways an EBA will save you money--disclosure of all information to the buyer and negotiating on the buyer’s behalf.

Things an EBA will reveal to the Buyer:

Willingness of the seller to accept a lower price
Any information relating to the motivation of the seller to sell the property quickly, such as relocation, purchase of another home or financial problems
Any information relating to the motivation of the seller to sell the property quickly, such as relocation, purchase of another home or financial problems
Any facts that will either positively or adversely affect the value of the property
Any information that will enable the buyer to obtain the property at the lowest possible price with the best possible terms.
Negotiating Strategies:

Making sure you pay no more than the fair market value for the property
Making termite treatment and repairs a part of the contract
Obtaining favorable mortgage rates and terms
Obtaining the best rates on home warranties and insurance
Adding any special provisions to the contract that will protect the best interest of the buyer and/or provide the buyer with an additional concession or savings.

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8. Can an agent represent both the Buyer and the Seller?

Can a lawyer represent both the defendant and the prosecutor? Maybe, but not very well. If you are shown a home by an agent that has that home listed, that agent has a signed contract with the seller of the house stating that the agent will protect the best interests of the seller. To be safe, only select an Exclusive Buyers Agent who works for a company that does not take listings. This eliminates the conflict of interest. Also avoid any agent that mentions dual agency, facilitation, transaction brokers, assigned agents, contract brokers or designated agents; this type of representation gives the buyer less than full representation. This type of relationship is not beneficial for the buyer or the seller.

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9. How can I be sure the agent is representing me as a buyer?

The key word in buyer representation is Exclusive. You will want to make sure that neither your agent, nor your agent's company, lists properties. You should also have a signed agreement with your agent stating that s/he will be representing your best interests. This signed agreement makes your EBA legally bound to represent you--not the seller.

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