FAQ's: Who is a buyer's agent and who pays for them?
One of the 'pink elephant in the room' questions when I meet with prospective first time home buyers is "so we want to work with you, but, how much do you charge for your service?" In fact, I know this is one of their concerns while we're going over other topics of discussion, and I usually ask them if they know what is a buyer's agent and how she is compensated. 8 out of 10 times, perspective clients know some kind of answer to those questions.
When real estate professionals work with buyers and sellers, 'agency' relationships are established, i.e. these professionals represent clients in the real estate transaction and have a fiduciary duty to the clients. In California, three kinds of agency relationships are allowed:
• Buyer’s agent — A “buyer’s agent” represents the buyer during the home buying process. The buyer’s real estate professional (agent) has a fiduciary responsibility to represent the buyer’s best interests including reasonable care, loyalty and confidentiality.
• Seller’s agent — A “seller’s agent” represents the interest of the seller and has a fiduciary responsibility of reasonable care, loyalty, confidentiality and disclosure to the seller. A seller’s real estate professional (agent) works to assist the seller in locating a buyer and in negotiating a transaction suitable to the seller’s specific needs.
• Disclosed dual agent — A “disclosed dual agent” represents the interests of both the buyer and the seller, during the same transaction. A dual agent
has responsibilities to both buyer and seller and must act in the best interest of both parties.
Normally, buyer's agent is compensated by the commission from the seller(s), only after the transaction is closed successfully. Therefore, the buyers do not incur the costs of obtaining a real estate professionals. In California, some real estate professionals have been conducting their buyer agency relationships using a exclusive buyer broker agreement, and beginning to charge a retainer fee up front that is credited back at close of escrow/transaction. This is done to ensure that buyers are fully committed to a particular agent.
Then the next question becomes: so, how do YOU conduct buyer agency relationships?
For me, I do think buyer broker agreement is a valid choice to conduct business; however, it's not my choice to do so. I believe in the old fashion 
'hand shake, and we're in business' Additionally, I have the information, skills, and tools to help buyers to accomplish their goals quickly, effectively, and efficiently. So, if a perspective client does not understand my value, then perhaps, not even a signed buyer broker agreement can prevent them from working with someone else. I'm grateful that most people that come my way are pleasant and easy-to-work buyers that translate into successful closings.
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