Buyers Agency - Who works for you??
I believe the most common mistake a buyer can make is thinking the agent that shows them houses is working for them.
One of the hottest topics in real estate right now is the issue of agency. Agency is important because it answers the most fundamental question asked of any real estate professional: Who do you represent in this transaction?
The relationship between a listing agent and the seller is understandable. There is usually a contract stating that the agent is employed by the seller and defines the terms under which compensation (commission) will be paid.
In the good old days (approximately pre-1985 when I first became a Realtor®), every agent represented the seller. Because the person who pays the commission gets the allegiance of the Realtor®.
Let me explain... The seller pays the commission, his agent shares the commission with the agent who brought a buyer to the closing table. This creates an implied contract; a sub-agency agreement; every agent involved with the house, even those that only showed the house or talked about the listing is a sub-agent representing the seller. (ie working for the seller)
Because of the representation or lack of representation for the Buyer... a Buyer's Agency came into being...
- Buyer agency - a contract where an agent agrees to assist a buyer in locating a home, and represent that buyer's best interests in negotiating a purchase, and closing on a home.
If you are buying a home I strongly suggest you consider working with a Realtor® under a "Buyers Agency" agreement.
Here's a simple scenario...
You meet an agent at an open house. Even though this house is not right for you, the agent tells you she has others you will like. Over the next week or so she shows you several houses and you finally find one that is on the market for $100,000.00. You tell her you have $40,000.00 in cash and you will offer $91,000.00 but will go up to $96,000.00 if you have to. (Been there done that??) What can this agent tell the Seller?
Unless you have a "Buyer's Agency Agreement" in place with your agent, she is most likely working as a sub-agent to the listing broker who represents the Seller. That means she has a fiduciary obligation to the seller to disclose any information that might "promote or protect his interest". She has an obligation to tell them exactly what you have told her.
My advice to Buyers is to make sure that the agent you work with (no matter who it is) has agreed in writing to represent you as a Buyer's Agent.
Never say anything to anyone unless you want it to get back to the seller. Assume everyone is working for the seller until you have a Buyer's Agency Agreement in place. This will insure your agent will represent you in any transaction even FSBOs (For Sale By Owner).
In most cases the commission will still come from the sellers, but with a "Buyer's Agency Agreement" in place, your agent works for you.
Coldwell Banker RPM