Some Straight Talk about Buyer Agency & Some Clear Facts About Representation

Agency: Who represents Whom?

SELLER AGENTS are also known as listing agents. They have a fiduciary exclusively to their clients (the seller). They’re paid a commission as agreed upon in the listing contract. They must treat the buyer honestly and with fair dealing. They must disclose all known facts which materially affect the value of the property.

SUBAGENTS like the listing agent, work exclusively for the seller – even though they show homes to potential buyers. They cannot legally negotiate on behalf of buyers. They share in the listing broker’s commission. Subagents’ words and actions may be a liability to the seller and listing agent.

BUYER AGENTS represent the buyer and are legally bound to negotiate the lowest price and best terms for their clients (the buyer). Many provide added services such as arranging for mortgage financing, termite inspections and appraisals. They usually share in the listing broker’s commission. Some are paid a flat fee or hourly rate in lieu of or in addition to the commission.

EXCLUSIVE BUYER AGENTS are buyer agents like above but who only represent buyers. Whether out of preference or some other reason, these agents will not represent sellers and limit their practice to buyers alone.

SINGLE AGENTS represent buyers or sellers but not both at the same time in the same transaction. These agents are much like a lawyer who can and does represent both plaintiffs and defendants but not both at the same time in the same case.

DISCLOSED DUAL AGENTS represent both buyers and sellers in the same transaction with the knowledge and written consent of all parties. They owe fiduciary to both seller and buyer except that the agent may not disclose to either party, without written consent, any information which would adversely affect either party, e.g.: price or motivation It is most often used when, as a buyer’s broker, the agent shows an in-house listing.

TRANSACTION AGENT (Facilitator) now practiced in some states – the agent owes no fiduciary to either seller or buyer other than the duty of accounting and use of skill, care and diligence, but acts as negotiator to assist both parties to reach an agreement satisfactory to both. Sellers and buyers shall have a duty to protect their own interests. The agent has the same responsibility as above regarding adverse information.

COMPENSATION Agency and compensation are not synonymous. Commission may be paid by the seller or buyer regardless of type of representation.

AN UNDER DISCUSSES COMPONENT

With all the talk about buyer representation what often gets lost in the discussion is the professionalism of the buyer broker you choose.

You as a consumer, to be sure, should be clear about whom your broker is representing but you should also be just as clear about how serious and capable your broker is. In other words, the question is not just “How will a real estate agent represent me?” but “How well will he or she represent me?”

Simply because a broker states he or she can work with buyers doesn’t make him or her automatically capable of representing a buyer’s best interest.

The following are just some of the question you might ask:

• What kid of experience or training do they have to represent buyers?
• How serious is the broker in question?
• Is he or she full-time or part-time?
• Does he or she have another job or is real estate his or her only career?
• What and how much do they know about real estate
• How long have they been in business?
• How many transactions have they been involved in?
• How well trained or experienced is the broker?

CHECK FOR DESIGNATIONS

Finally, check to see if the broker has any designations. Designations are a good indication of not only competency, but commitment and seriousness.

It’s awfully easy to put an ad in the paper that says “I’m the Best”! There are also REALTOR®’s out there with NO education, NO designations, and NO experience simply making money by stating they are “exclusive buyer agents.” Obviously, it’s a little more difficult to make the commitment and take the time to get the education and take the tests required to get designations from the highly respected National Association of Realtors. (NAR)

Don’t be fooled. In the midst of all the subjective promotional hype look for any national designations. They are a good objective indication of a REALTOR®’s dedication and professionalism in his career.

Look for the following designation behind any REALTOR’®s name. If they have them, then they will display them.

GRI (Graduate, Realtors Institute): a professional designation granted to a member of the National Association of Realtors (NAR) who has successfully completed three courses covering Law, Finance and Principles of Real Estate.

CRS (Certified Residential Specialists): NAR’s nationally recognized symbol of expertise in residential real estate. Usually, one must have a GRI before obtaining a CRS. However, with certain agents that is not required because of their vast knowledge and experience. The CRS designation has been referred to as the Ph.D of real estate. Less than 5% of all REALTOR®’s have this designtion

ABR (Accredited Buyer Representative)” NAR’s nationally recognized designation for buyer representatives from the Real Estate Buyer’s Council (REBAC).

CBR (Certified Buyer Representative): Another designation for buyer representative which requires education and passage of an exam but is not recognized by the National Association of Realtors®’s.

Making Sense Out Of All Of This

From my experience of more than 25 years in real estate, this is how I view the issues of buyer agency. Exclusive buyer agency is not as important as good competent single representation.

Buyer representation is important to your transaction but whether an agent chooses not to work with sellers as well or something works with them too is usually inconsequential. In fact, when you think about it, throughout one’s life, a person may be both a buyer and a seller. Doesn’t it make sense to have a broker that you like and trust, that can handle both sides of the transaction?

Exclusive buyer agents in their presentations sometimes tend to imply that they are somehow more ethical than sellers agents or any other kind of agent because they “only represent the buyer.” Certainly, ethics is an issue but it is ancillary issue to whom an agent represents. That’s as irrelevant, to me, as a lawyer inferring ethical innuendos when he says he only represents defendants or he only represents plaintiffs. Quite obviously a good lawyer will represent both ot will represent a given person many different ways throughout his life.

Competence, education and experience are more to the issue specific within buyer representation. Size of firm is not so important with buyers as with sellers. Quite obviously a person does not want undisclosed dual agency. Also one should avoid disclosed dual agencies when he can – with it’s limitations.

But nothing replaces a good competent broker. Don’t allow agents to complete on how big or pretty their ads are or a particular buzzword. Make them compete where it counts: on their education, experience and reputation.