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The Definition of an Exclusive Buyer(s) Agent

Exclusive buyers' agent: A licenced real estate practioner who represents only buyers and neither accepts listings nor works in an brokerage which represents the interests of sellers or accepts listings.

Exclusive buyer agency

1. A real estate brokerage that employs only buyers' agents and never engages in the agency representation of sellers.
2. A real estate brokerage that exercises a fiduciary obligation to serve only buyers interests, thus being independent of all obligations and inducements owed sellers.

Exclusive Buyer Agency observes the virtue of the Common Law axiom that an agent may represent a seller or a buyer, but never both.

We believe most buyers want their interests to be represented -- but not necessarily by a "buyers' agent" that is employed by and owes allegiance to a "seller agency"

There are real differences between being the agent for a buyer, whose primary goal is to find and beneficially purchase the ideal home, and the seller agent, whose goal it is to reap the highest possible profit for the seller.

We are building a business based on the principle of providing consumers with a clearly defined choice -- representation independent of interest or obligation to any other party.

Thus, we provide our clients with the opportunity to make informed choices based on purely objective guidance - in what is usually the most expensive and important purchase of their lives.

Posted by Rick Hauser, ABR, CNE, GRI Exclusive Buyer Agent - 100% Buyers on 03/11/2008 11:19 PM

Comments (15)

buyer agent, definition, exclusive buyer agent, exclusive buyer broker

15 Comments on The Definition of an Exclusive Buyer(s) Agent

MAR

2008

As an exclusive buyer's agent, do you receive compensation from your buyer and what ever cooperation the listing broker is offering? or is it just one or the other?

Most buyers want an agent that represents them. While exclusive buyer agents certainly do that, that fact that a certain agent may have represented sellers, in no way disqualifies them from representing a buyer every bit as well as an exclusive BA.

Brian -- "fact that a certain agent may have represented sellers"? I think you mean - the fact that the so-called "buyer agent" represents sellers -- not "may have represented sellers."

You cannot possibly represent a buyer every bit as well as an exclusive BA when you have potential home showing biases (example - pushing in-house listings), the very real potential for dual agency conflicts of interest - and financial incentives that are in direct opposition to the buyer's economic interests.

Eugene - to answer your question:; As an exclusive buyer's agent, do you receive compensation from your buyer and what ever cooperation the listing broker is offering? or is it just one or the other?

Every EBA has their own way of getting compensated. It varies. Just as commissions are fully negotiable.

Most EBA's have the seller pay for any shortfall (vis a vis their advertised payout) - via the transaction - so the buyer is nothing out of pocket to the EBA.

Some charge a flat fee - where any excess payout is rebated to the buyer. Shortfalls are made up in credits from the seller (either directly or via closing cost credits).

Sometimes - things are structured where when the buyer's price goes up - we make less. When the buyer's price goes down - we make a little more. Buyer's seem to like that our incentives are their incentives - rather than the opposite.

We believe in letting our buyer define the compensation model that they like the best.... We explain the advantages and disadvantages of each option...

100% of our clients are under contract - vs. almost zero with trad. agents in IL.

MAR

2008

Thanks for clearing that up for me Rick, because I wasn't sure about that one. I remember being told when I first got my license (1995) that if your compensation comes from the seller, then that's where your fiduciary relationship remains. Thanks again!

Rick, I beg to differ. I represent more buyers than sellers. Most of my buyers have never seen one of my listings. I do not "push in-house listings". No one can say that I don't represent my buyers' best interests, and my many positive testimonials from buyers attest to that fact.

Ultimately - it is the buyer that is paying everyone's commissions - because that is where all the money comes from. So they might as well have the best possible representation for it... It's all built into the transaction.

They have no choice as to what the listing agent gets paid from the transaction of course - just as the LA should have no choice as to what the BA gets paid. (The listing agent thinks they are dictating that through the "co-op" payout - but that just isn't the case when the buyer has a written agreement with the BA.... and of course - they have no right to dictate it... )

We make it very clear in our Exclusive Buyer Agency agreement about our fiduciary obligations to the buyer - which are at a much higher level - than a typical BA. That is independent of who pays what.

If a buyer has no agreement with a BA at all - they are skating on thin ice - as there are no promises to them in writing.

MAR

2008

Hi Brian - you may not - but others do. It's a well known fact that it happens sometimes. Some agents don't - & some agents do - depends on a lot of things...e I even have links from the web stating how some firms pay more to their agents if they sell an in-house listing (w/bonuses etc.) I've had past buyer clients state that they left the other agent and came to me because of that fact...

JUL

2008

By the buyer paying all commissions through the sales price, then this "procuring cause" issue that is invoked by listing agents seems to be unfair to buyers.

I agree with you Stephen. I also believe that if a buyer in under contract with someone (a written contract) - there should be absolutely no way that there should be "procuring cause" going to someone else. The buyer knows who their true agent is.

JUL

2008

Whether it's seller paid closing costs, commissions and/or anything else paid on behalf of the seller, the buyer is indirectly paying for those items through the sales price -- insomuch as it is all accounted for through the price in which the seller agrees to sell the home.

When you buy a gallon of gasoline, are you directly paying your government for taxes? No, the seller of the gasoline directly pays the gov't, but the buyer pays the taxes indirectly through the price of the gas; it's all accounted for in the price of a gallon of gas.

You don't have any disagreement from me here..... They buyer really pays everyone's commissions..... They are the party that puts up all the money that everything is paid out of.

So they might as well have the best possible representation for their money. Unfortunately - they have no control over what the listing agent keeps (which may or may not be an even split. The public always thinks it is an even split for some reason...

Of course - we don't let the listing agent dictate what we get paid (via a unilateral offer of a "co-op
commission) - just as we don't dictate what they get paid.

JUL

2008

Procuring cause can hurt home buyers; the google links expound.

Why should a buyer have to pay twice for their own buyer's broker if procuring cause is invoked? After all, if the buyer is really paying the commission, then the buyer's agent should be compensated from those pre-determined commissions -- regardless of procuring cause.

Procuring cause would never be invoked with us - as we ensure that that could never happen with our clients (in a variety of ways).

If PC was invoked against a regular buyer agent - and another agent was deemed to be procuring cause - the regular buyer agent would not get paid anything out of the "pre-determined" commission that you mention. If they had a contract with their buyer client for X% - it is possible that they might hold them to that. A good agent would brief their buyer client upfront about PC - and ask them if they had seen any homes with another agent recently etc. - and of course - if they are currently working with anyone else. Given a good up-front briefing - if the buyer screws up like that - then that is unfortunately - their stupid mistake (for not listening to their agent about how to avoid PC issues)

JUL

2008

Not using a Buyer Agency Agreement is like not having a Seller sign a Listing Agreement. Why would you work for free?

Christina

I agree 100% Christina

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