|Research shows that most homebuyers understand very little about whom
their agents represent and its vital importance. While State law requires
agents to disclose whose side they are on, most required disclosures are
woefully inadequate, poorly explained, glossed over, minimized, and
downright confusing. A growing number of brokers represent only the buyer,
which is known as Exclusive Buyer Brokerage or
Exclusive Buyer Representation. Buyer’s
Resource® is the nations oldest brokerage franchise system
working only for buyers and never having any conflicts of interest.
ARE ALL REALTORS® ALIKE? No. There are four types of Realtors: Seller Agents, Exclusive Buyer Agents (or Brokers), Dual Agents (including non-exclusive Buyer Agents), and Transaction Brokers.
1. SELLER AGENTS - list property and represent the seller. Remember that if you are buying a home and call the listing company, it is the legal obligation of the company's agents to get the highest price and best terms for the seller. Any information given by a prospective homebuyer to the seller’s agent must be told to the sellers. This includes any reference to the buyer's financial and personal data, potentially increasing the cost of the home by thousands of dollars.
2. DUAL AGENTS - are real estate agents whose company lists property for sale, but act as buyer agents on those properties. Unfortunately, for buyers and sellers, dual agents are legal in most states. While dual agents attempt to justify this practice, consumer advocates warn NEVER to use a dual agent. The National Association of Realtors wrote that the practice of dual agency is as dangerous as playing Russian Roulette. If a real estate company lists property and represents the seller--you can strongly doubt any attempted claim that their agents can properly represent homebuyers. Funny how some folks like the CIA do not like dual agents, because they know them as "double agents!"
3. TRANSACTION BROKERS -- are also known as a facilitators, finders, and statutory agents. These are true non-agents because there is no liability for wrongdoing. The attempt by a growing number of real estate agents to avoid the responsibility owed to buyers and sellers is legal in a few states (including Florida and Colorado). Services by transaction brokers are substantially reduced from those of true agents, and should be avoided by all sellers and buyers.
4. EXCLUSIVE BUYER AGENTS -- represent homebuyers--never sellers. These agents are required by law to get the best price and best terms for the Homebuyer. All consumer advocates recommend that homebuyers take advantage of the benefits offered by exclusive buyer agents. Exclusive buyer agents are specialists in the home buying process. This higher level of professional service for buyers has resulted in an average of over 5% savings and greater satisfaction for homebuyers. Because these agents do not list property, they do not have company listings to try to sell to you first. Instead, all homes are available to homebuyers without bias, including For Sale By Owner, New Build Construction by homebuilders, and Multiple Listing Service homes (other Realtor listings). Exclusive Buyer Brokers will better protect the interests of buyers than dual agents, sub-agents, designated agents, or so called split agents. They are more likely to negotiate a lower sale price on a home, for example.
THE CFA RECOMMENDS ASKING THE FOLLOWING SEVEN IMPORTANT QUESTIONS:
1. Will you (the agent) represent my interests only or those of the seller?
2. Do you or your brokerage represent any sellers or builders?
3. Do you have full access to the Multiple Listing Service?
4. Will you show me for sale by owner properties?
5. Can you give me the names of several current and former clients?
6. What experience do you have as an agent and Buyer-Broker? What other designations or credentials do you have?
7. Does your commission amount vary? What about bonuses, inducements, or rebates (kickbacks)? Do you give them back to me the buyer? (After all, you the buyer are paying it!)
NO DUAL, DESIGNATED, OR SPLIT AGENTS! By agency law, a listing real estate company and all of their agents represent the individual(s) selling the home. If they say they can represent the buyer and the seller that is dual (i.e.: double, like a spy) agency or designated (also called split) agency. Confused? So are most traditional brokers and agents! If they try to minimize or downplay its importance to you be very careful. It is at this point that dual or split agents may begin to protect their commission checks rather than your interests. An Exclusive Buyer Broker does not take listings and never represents sellers. They will not "steer" you into looking at their company inventory of homes for sale, because they do not have any!
The entire foundation of exclusive buyer representation is not having any real or potential conflicts of interest with a buyer/client. When representing a buyer/client who has a home to sell a true Exclusive Buyer Broker chooses not to "list" the property for sale. In other words, they turn down thousands of dollars in full commissions each month because their clients’ best interests are at stake. An Exclusive Buyer Broker will never change their fiduciary relationship with a buyer/client during their entire home buying process, whereas 99% of so called "buyer agents" and their brokerages gladly represent sellers and may "switch" their relationship with you.
Remember that while buyers and sellers need not be adversarial in actions and attitude, their personal interests are adverse. Buyers want the lowest price and best terms, and sellers want the highest price and best terms. We do not make wild claims that we will save a client $100,000 on their next home purchase. We do negotiate for our clients without any chance of real or perceived conflicts of interest. You would not expect less from your doctor, accountant, or attorney, so why potentially settle for less on the biggest financial transaction of your life?
STEPS TO ENSURE THE SELECTION OF A QUALITY EXCLUSIVE BUYER BROKER:
1. Be sure the Exclusive Buyer Broker is a Realtor whose company does not ever take listings or represents sellers.
2. Use only Exclusive Buyer Brokers who have access to For Sale By Owner, New Construction by Builders, and Realtor inventory Homes in the MLS (Multiple Listing Service).
3. Membership in a national organization helps to assure a higher standard of quality service (for example, Buyer's Resource, the National Association of Exclusive Buyer Agents (NAEBA), the Real Estate Buyer’s Agent Council (REBAC), etc.
4. Insist upon signing an Exclusive Buyer Brokerage Agency Agreement. This agreement assures that the real estate agent and company are committed to the buyer exclusively. Those companies who do not use this agreement are not able or willing to make a full commitment to you.
5. Be sure that the Exclusive Buyer Agent uses a Purchase and Sale Contract that is "buyer friendly." (Most contracts are seller oriented.) Your Exclusive Buyer Agent will negotiate terms and conditions in the purchase contract that offer greater protection to homebuyers.
BUYING A BUILDER’S NEW HOME: SHOULD I USE AN EXCLUSIVE BUYER AGENT? Yes. It is just as important to use a qualified Exclusive Buyer Agent Realtor in purchasing a new home. Benefits include:
1. There is no additional cost involved to have an Exclusive Buyer Broker represent you. The builder cannot give you any cash back because you are not licensed as a real estate agent. It would be illegal, so therefore the builder cannot give anything back to you, the buyer.
2. Knowledge and history of various developments help match the buyer with the right community.
3. Knowledge of builders' pricing strategies helps buyers determine best negotiating strategy.
4. Knowledge of other builders of equal and greater quality help buyers get the best builder for the money.
5. Knowledge of builders' reputations regarding quality, follow- up, warranty, and financial stability, help prevent problems after the sale is closed.
6. In many cases, lower prices or other concessions are offered to buyers with buyer agents, as builders consider these agents as "multiple sources of buyers." Individual buyers buy only one home; buyer agents bring in many buyers.
Be sure, however, to use only Exclusive Buyer Agents who can help buyers with both new and existing homes. So-called new home specialists often do not have access to or knowledge of existing homes and may have monetary relationships with builders, which can cost you thousands.
SELLING YOUR HOME: CAN AN EXCLUSIVE BUYER AGENT HELP ME? Yes. An Exclusive Buyer Agent only represents homebuyers and does not take listings. These agents, however, work with hundreds of listing agents. They know which ones will aggressively market your home and provide excellent seller representation.