While the subject of real estate agency relationships is confusing and often misunderstood, even by many real estate licensees themselves, the practice of exclusive buyer agency seems to be gaining awareness in the mainstream media, with recent favorable mentions from the likes of Consumer Reports, Money Magazine and the Wall Street Journal.

One of the fundamental reasons why I decided to become an exclusive buyer agent was my belief that exclusive buyer agency just makes sense. As an attorney, the idea of being an advocate for my clients comes quite naturally.  Entering into the real estate brokerage field, it was hard for me to understand why anyone would choose to make one of their major life purchases without representation.

The fact that buyers generally pay the same commission when purchasing a home, whether or not they are actually being represented, continues to puzzle me. Why should a buyer who receives no agency level services (an unrepresented buyer) pay the same commission as a buyer who is being represented?  Buyers may not think that they pay the real estate commission when they purchase a home, the common misconception being that the sellers are responsible for paying the commission. The fact of the matter is that the commission is built into the purchase price, which is funded by the buyer. While the settlement statement may show the commission coming out of the seller's proceeds, the reality is that both parties are paying the commission.  It is included as part of the purchase and sales price.

Historically, the commission has been divided into two parts, the listing side and the sale side. The listing side goes to the listing broker while the sale side goes to the selling broker. This is where things get confusing. I am not a "selling" broker, I am a buyer's broker! I do not sell anything, other than my services to potential clients. I am the agent, fiduciary, representative of and protector of my clients' interests. Unfortunately, until the past twenty years or so, there was no such thing as buyer agency. The listing broker represented the seller and the selling agent also represented the seller (this is called sub-agency, where the agent who "sells" the house is considered a sub-agent of the seller).

With the advent of buyer agency, the practice of real estate has evolved, while the compensation structure upon which almost the entire real estate industry is based (the MLS offer of compensation) has not. If you buy your house directly from the listing agent, the listing agent will receive the entire real estate commission, both the listing side and the sale side, and you will be unrepresented. At best, the listing/selling agent will serve as a dual agent, in which position the agent can truly represent neither party.

If you buy your house using an exclusive buyer agent, the exclusive buyer agent will in many cases accept the "sale side" of the commission from the listing broker, and in return, you will have a loyal agent who will be your advocate, who will negotiate on your behalf and who will endeavor to protect your interests every step of the way.  Can you obtain the same representation from a traditional buyer's agent who works for a firm that accepts listings?  Absolutely, as long as you are not interested in that agent's listings, or the listings of that agent's broker.  Single agency can also be a good option as a single agent will never represent both sides in any one transaction.