Since so many of my clients have asked me this or asked questions about compensation and sometimes think they will save money by going directly to the listing agent, I wrote this up for a client and then decided to share it more widely. This is an area that is important and we should avoid confusion!
WHAT IS A BUYER'S AGENT AND WHY DO I NEED ONE?
Q: How do Buyers' Agents Get Paid? Do I, the Buyer, pay my agent?
A: Their services are free to the Buyer.
Q: How does that work?
A: When the Seller's Agent signs a listing agreement with the Seller, they negotiate a commission. They then offer a part of that commission, usually half, but it varies, to the Buyer's Agent. This is listed in the Agent part of the MLS. So when a Buyer chooses a home and purchases it, the total commission is subtracted from the Seller's side of the totals, and is paid out to the Seller's Agent and the Buyer's Agent.
Q: But if the Buyer's Agent gets paid by the Seller, do they really work for me?
A: Good question! Actually the Washington State laws have changed. It used to be that both parties worked for the Seller! Even though you might pick out your own agent to tour and help you, they would still be obligated to guard the best interest of the Seller of any property you saw. That was deemed unfair to the Buyer and the law has been changed. The Buyer's Agent by law owes the Buyer confidentiality and fiduciary loyalty... i.e. has a responsibility to guard the best interest of the Buyer. Ask me for a copy of the Washington State Pamphlet on Buyer's Agency Law. And by the way, all agents are obligated by law to provide this to their clients, many do so at the time of making an offer but I like to do so upon our first meeting ... or even before!... to give my clients a chance to review the pamphlet and open up any questions or discussion they may have.
Q: So can I save money by working directly with the Seller's agent?
A: Usually if the Buyer approaches the Seller's agent directly the Seller will have both Buyer and Seller sign an agreement that the agent is neutral and represents both parties. They are supposed to not disclose confidential information to either side. In practice this can be difficult to do since they already have a well developed relationship with the Seller and are psychologically devoted to their interests. For this reason some Seller's Agents will suggest another agent to be the Buyer's Agent if approached directly by a Buyer. Some will go ahead and represent both, in which case they keep the entire commission.
Q: Is there a disadvantage to me in working with the Seller's Agent directly?
A: In my opinion it is disadvantageous to have an agent who would prefer you to buy one certain property. The Seller's Agent really wants you to like that property, because his job is to get it sold, so he is in the position of advocating or presenting the property to best advantage. If you select and work with your own Buyer's Agent your agent does not care which property you select, just that you get the property that best fits your needs at the best possible price. My job is to get you what you want and negotiate to get you the most possible advantage. That way you are satisfied and if your friends and relations need a Realtor you will be able to recommend me wholeheartedly.
It's a Buyer's Market...enjoy!!