Buyer Brokerage or Agency. Who's Working for Whom?

In my first part in this series, I talked about How to Choose Your Real Estate Agent. Once you've selected who you want to work with, you need to clarify in fact that they ARE working FOR YOU! That is determined by what is known in the real estate world as a brokerage relationship, or agency.  (NOTE: For the purpose of this discussion, I'll refer to the laws as they apply in the State of Georgia. If you live in another state, be sure to check the laws that apply there.)

The Brokerage Relationships in Real Estate Transactions Act (BRRETA) was enacted by the Georgia legislature in 1994 and was revised in July, 2000. The purpose of BRRETA is to define and to regulate the relationships between real estate brokers and the public through state statute rather than through the traditional common law rules of agency.

First, let me explain the difference between the terms "real estate agent or agent" and "broker" as I make reference to both terms here. While you may be working with me as your agent, any agreement (Purchase and Sale Agreement, Buyer Brokerage, etc) you sign is actually with the brokerage firm (in my case, Morris and Raper Intown) and your agent (me) is acting as an affiliated licensee of the brokerage.

In buyer brokerage (or buyer agency) the broker represents only you, the buyer as a client in the transaction. The broker working for the buyer is called the Selling Broker. Don't be confused with the broker representing the seller, who is referred to as the Listing Broker. (This is because they "listed" the property on behalf of the owner).

Some schools of thought say you should only work with an Exclusive Buyer Broker as they never work for sellers. In other words, they do not have listings that might meet your needs, and be inclined (or obligated) to show you those listings. This situation is referred to as "dual agency" whereby the Selling Broker and the Listing Broker are one in the same. While this type of agency is allowed under Georgia law, it does have its risks. You as a buyer should only enter into this relationship when there is no other form of agency available, or both clients clearly understand this relationship and are comfortable with it.

Another way this situation could be handled is by having another agent under the same broker represent the buyer. This is called "designated agency." Confused? Let's look at an example....

Thom is working with John and Mary (they have signed a Buyer Brokerage Agreement) to find a condo in Midtown Atlanta. Thom has a listing that he thinks would be perfect for John and Mary. However, they are not comfortable with Thom representing them AND the Seller at the same time. Thom asks Bill, also an agent in his office, if he would represent John and Mary in the purchase. The same broker is involved, but different agents are working with the buyer and the seller.

The Buyer Brokerage Agreement, as used in Georgia outlines the roles of the Buyer and the Broker. For example, here are the Broker's Duties to the Buyer and the Buyer's Duties:

The Agreement goes on to outline limits on the Broker's Authority and responsibilities as well as further explain the Agency policies we discussed above.

So, why should you be represented when buying real estate? Unless you are well versed in real estate law and transactions, why would you NOT want someone working for your interests? Here's another example I often hear...

"Well we went to the Sales Center and we bought directly from them so we could save money."

To that, I quietly respond....SHREEEK! Who do you think the sales person in the Sales Center was working for? THE SELLER, NOT YOU! They did not save you any money, in fact, may have cost you money. Remember, your agent (Selling Broker ) is paid a portion of the commission by the Listing Broker. In this case, YOU saved the Seller money! And you may have missed an opportunity to get upgrades or concessions from the Seller that the Selling Broker is NOT going to offer you when they represent the SELLER!

This topic can get quite detailed, and would make for long reading. As a Buyer, consider your options in being represented in the purchase of your next home.