Do You Need a Buyer Agency Agreement?

Reblogger Margaret Goss
Real Estate Agent with Baird & Warner Real Estate

I've gotten calls from potential buyers who are looking online and they inevitably ask "Are you the listing agent?"

If I am not, I will explain exactly what it means to work with a listing agent when buying a home versus working with a dedicated buyer's agent who represents you, the buyer of the home. 

While "dual agency" is legal in Illinois, think how an agent is supposed to "serve two masters."  It won't go in the buyer's favor.

Read on for more information.

Original content by Leslie Ebersole

Is a Buyer Agency Agreement just a ploy for a real estate agent to lock you into a relationship? Do you wonder why you couldn't just call the listing agents to show their listings and then help you out if you decide to buy?

In Illinois a buyer cannot be equally and fully represented by the agent who is listing the home being purchased.

Most people know that they need to sign a Listing Agreement in order for a real estate agent to list a home for sale. The Listing Agreement protects the home seller because it clearly specifies the work that will be performed to sell the home and the compensation if the home is sold.

So what about buyers? Don't they deserve the same protection and services as sellers?

I certainly think so, and so does the State of Illinois, which made it mandatory on January 1, 2010 for real estate brokers and agents to provide written disclosure of buyer agency.

Most home buyers will benefit from working with a real estate agent who will provide comparative pricing information, prepare and negotiate offers and manage the transaction through to the closing.

My brokerage, Baird & Warner Real Estate, requires a written agreement for our Realtors to perform real estate services for clients. There are three options for the arrangement between a buyer and Baird & Warner:

(1) Written acknowledgment of buyer agency is the minimum required by Illinois state law. The agent must describe the services available to a buyer and the duties and responsibilities of a buyer agent.

(2) Non-Exclusive Buyer Representation Agreement: The Realtor can show homes, prepare market analyses and represent the buyer in the purchase of a home. The client is not required to work with only the Baird & Warner Realtor. Many agents and brokers will start a relationship with a client under this arrangement and then request an Exclusive Agreement before writing an offer.

(3) Exclusive Buyer Representation Agreement: If the client buys a home in the time period of the agreement and in a specific area then he agrees that the Baird&Warner Realtor will exclusively represent him in the purchase of a home.

 

In Illinois a buyer cannot be equally and fully represented by the agent who is listing the home being purchased.

Many buyers believe that they will save money on commission if they work directly with the listing agent. In a simple transaction perhaps an agent can perform the services known as "ministerial acts" and get a house sold without fully representing either side, but there just don't seem to be many simple transactions anymore.

Many agents and brokers believe that "dual agency" -- or doing both sides of the transaction -- should be illegal in Illinois. Under the law, dual agents must limit the services they can provide to the buyer and the seller. If an agent is acting as a dual agent, the buyer and seller must each act on their own behalf in negotiating the terms of a contract.

I would be very worried about working with an agent who says "oh, I never bother with a Buyer Agency Agreement" because I'm not sure that all agents understand the differences between disclosure and representation. At a minimum, the buyer must be provided with written disclosure about agency. This is especially true in the case of an agent who is working as a dual agent.

Would it be a good choice for a buyer to select an agent who picks and chooses which laws he or she will follow? Or to select an agent who doesn't make a written commitment about the work to be done and the compensation to be provided? The purpose of the agency disclosure law is that an agent or broker educate the client about agency at the beginning of the working relationship.

If you would like more information about buying or selling a home in St. Charles IL and the surrounding towns, , please call me at (630)945-7935 or email me at leslie.ebersole@bairdwarner.com.

 

This post was originally published at FoxValleyRealEstate.net

 

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This post was written by Leslie Ebersole of Baird & Warner Real Estate.

(630) 945-7935

leslie.ebersole@bairdwarner.com

    

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Rainer
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Bill Morris
RE/MAX Capital City - Austin, TX
ABR, CRS, CDPE, ePRO, MBA

Margaret, you're right.  Unfortunately, some uneducated buyers think they'll get a "deal" if they "represent" themselves.  Texas doesn't recognize dual agency, but we have a similar relationship called "intermediary" that prohibits the agent/broker from providing advice and counsel to either party.  Easy to say.  If an agent has relationships with two clients, both of whom are accustomed to a consulting relationship, and to both of whom the agent owes duties of confidentiality and full disclosure, these transactions can get difficult for everybody involved.

Dec 06, 2010 06:31 AM #1
Rainmaker
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Debi Boucher
Real Estate Showcase Photography - Woodland Park, CO
"Realtor Showcase" - Real Estate Photography/Virtual Tours

In Colorado, the agent in this case would be known as a  'Transaction Broker'. Every agent would like both sides of the deal, but the buyer, and seller, should be fully aware of the limitations imposed on the agent.

Dec 12, 2010 03:13 PM #2
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Rainmaker
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Margaret Goss

Chicago's North Shore & Winnetka Real Estate
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