How buyer agency has changed real estate? And why that is good for you!

By
Real Estate Agent with Long & Foster Real Estate Inc 610-225-7400 PA License - AB067198

Several years ago, well 1988 to be exact buyers were allowed to have their own agent represent them in a real estate transaction. It seems amazing, a little like women being given the vote, or equal rights for all! But before this buyers were not represented, all agents in the transaction represented the seller. Regardless of what broker they worked for they were a sub-agent for the seller. So, even if you thought you were being represented you were not. Sort of like having one lawyer represent both parties in a divorce.

Today, many buyers want to remain un-represented as long as they can. They ignore all the benefits that a buyer agent can give them.

  • Confidentiality of their motivations and finances, 
  • using their buyer agents local knowledge of home styles, neighborhoods, negotiation skills,
  • customer service,
  • lists of contractors, dentists and doctors, playgroups,
  • educating buyers on the buying process in this particular area, 
  • relationships with other agents and how that will facilitate a transaction for a start.

This may be because many agents find it hard to differentiate themselves from each other. The buyer is unsure of where the loyalties of the buyer agent lie. It most often comes about because agents do not follow the law in sharing the Consumer Notice with buyers at a first meeting where any substantial discussion about real estate is talked about, and many agents do not ask buyers to sign a buyer agency contract. If they are willing to flout the law this early, how will they perform later in the transaction.

So the buyer sees little difference between them and allows multiple agents to know some if not all of their business. This weakens their negotiating position. Buyers allow listing agents to see their buyers playbook without even signing any paperwork that would restrict what this agent can tell the seller.

The buyers agent must work or act in the best interest of the buyer. That is logical, many buyers don't realize by dealing with the listing agent without representation the listing agent is working in the best interest of the seller.

The buyer agent must make an on-going and continuous effort in good faith to find the buyer a home. Just because they find you one they think is right does not mean they stop offering you homes, even when you write an agreement on a home they should be making you aware of any homes that might be of interest. Although you might be subject to an existing contract a good agent will keep you informed just in case something crops up with this property under contract that causes the deal to fall apart. The listing agent for a property that interests you has no interest in telling you about other properties and only wants you in this deal.

A buyers agent must keep all your information confidential. If you are unrepresented and use the listing agent, anything you disclose to the listing agent can and should be revealed by them to their seller if it helps the sellers position.

So how has buyer agency changed real estate?

Today, it does not matter which broker lists a home for sale, because all brokers put their listings in the Multiple Listing Service(MLS) advertising to buyer agents what compensation they are offering. So regardless of how big or small the brokerage is, your home will be seen and marketed to buyers by all buyer agents in every company because they are working for the best interests of their buyers.

Broker logos

Because of this, every listing agent wants every buyers agent to know about their listings. It does not matter who sells the property because the buyer's agent has responsibility to their buyer not to the listing agent's seller. Buyer's agents inform their buyers of every new listing coming on the market, good agents both listing and buyer agents develop relationships with other agents in other brokerages so they know what listings are about to come to market so their clients can gain any advantage by this information and do a little research as well.

Also the big brokerages don't want agents in other companies, whom they do not supervise to be acting as a sub-agent to the seller. Why not? Because they can held liable for any errors made by the sub-agent. How is buyer agency going to keep changing.

As mentioned above today, sellers are still compensating the buyer agent out of the transaction. Whilst it is funded by the buyer, many feel that buyers should be paying their own representative. Would you want your attorney to be paid by the other side, it might just make you consider where their loyalties lie? So a natural progression, will be the payment of buyer agency commissions by the buyer rather than the seller, this can still be incorporated into the mortgage once banks accept this new paradigm but it may still be some years away for now.

 

 

 

Posted by

 

Nick Vandekar
Nick is a Tredyffrin Easttown Residential and Commercial REALTOR selling The Main Line, Chester, Delaware and Montgomery Counties.

Giving you the confidence to make
the right decisions.

92 Lancaster Avenue
Devon , PA 19333
SellingTheMainLine.com
Mobile: (610) 203-4543 [call or text me]
Email Me

 

My Blog

   

If you are buying or selling on or around
Tredyffrin Easttown or along the Main Line, 
we can help you, contact us.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Bonnie Vaughan 03/08/2012 05:52 PM
  2. Christine Smith 03/09/2012 06:26 AM
  3. Karen Steed 03/09/2012 11:09 PM
Topic:
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Delaware County, PA
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Posts to Localism
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Tags:
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Rainmaker
1,553,844
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

It's not the best practice now, but it's difficult to describe (such that anyone can understand) the pre 1988 state of affairs.

Mar 09, 2012 06:13 AM #25
Rainmaker
570,370
Christine Smith
Buyers Brokers Only LLC - www.BuyersBrokersOnly.com - Canton, MA
Exclusive Buyer Agent & Attorney, Canton, MA

So glad Charita Cadenhead mentioned this one in her featured post today as I had missed it.  You are right that we need to keep educating the public - and buyers - about agency & why having a buyer agent is a good thing!

Mar 09, 2012 06:22 AM #26
Rainmaker
1,937,053
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

The old fashion listing agents who continue to rationalize about "being fair to everyone" when acting as a Dud Dual Agent are placing our reputations and ability to command TOP Commission Dollars at RISK ! It is the principle of REPRESENTATION in TODAY's 21rst century transaction that makes us worth whatever we are charging consumers ! Anytime we (selfishly) reduce our services to that of a mere facilitator we are grossly overpaid and cheating consumers from the professional advice and counsel they EXCLUSIVELY sign up for ! Instead we need to be positioning ourselves in the publics mind about the dangers of purchasing real estate without a protective advocate helping you thru some turbulent waters !

Mar 09, 2012 10:57 AM #27
Rainmaker
508,598
Sylvie Stuart
Realty One Group Mountain Desert 928-600-2765 - Flagstaff, AZ
Home Buying, Home Selling and Investment - Flagsta

This is an excellent post! The changes over the years have really been to the benefit of the buyer. We always get buyer agreements in place and educate the buyer on the benefits of choosing one agent to represent their best interest.

Mar 09, 2012 10:42 PM #28
Rainmaker
333,839
Samantha Smith
214.422.0729 www.SamIAmHouses.com - Rowlett, TX
Sam I Am Houses, Simply Texas Real Estate
Wow I had no idea that before 1988 there weren't Agents to represent the Buyer! Crazy! and Crazy that Buyers still choose not to be represented!!
Mar 09, 2012 10:43 PM #29
Rainer
39,594
Laura Degiovanni
Home Buyer's Agent of Ann Arbor - Milford, MI
Milford Exclusive Buyer Agent

It's not necessarily true that it doesn't matter who the listing brokerage is or that all brokerages put their listings in the MLS.  Buyers sometimes go to listing agents because many of them have pocket listings.  Some agents from big brokerages actually advertise that fact (of course, they call it something that makes it sound like a good thing).  I recently had clients who found a pocket listing they were very interested in on Zillow (or wherever).  By the time it hit the MLS and we were able to see it, it was already under contract.

Who knows what would have happened if that home had been offered to ALL buyers right away...I'm not sure sellers think about that when their agent is telling them about the benefits of first trying to sell their home in-house.

I'm an exclusive buyer's agent and I never want buyers to talk to the listing agent--but I can see how a buyer could think they may have been better off calling the listing agent on that property.

Good post. 

 

Mar 10, 2012 01:30 AM #30
Rainmaker
242,238
Roger Johnson
Hickory Real Estate Group - Hickory, NC
Realtor - Hickory NC Real Estate

The real meat of your post lies in the fact that buyers do not pay for the cost of an agent upfront or separate from the seller's commission (the fact is that they actually pay ALL the commission, but that's another topic).  Because of that, the mindset of the buyer in most cases is the buyer agent is worth exactly what we're paying them....Nothing!

Until the compensation structure changes, there will always be issues with buyer agency.  And if we're waiting on the banks to make the change to include that as part of closing costs, we'll be too old to care!

Mar 10, 2012 01:58 AM #31
Rainmaker
1,631,086
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Well, I'll have to disagree on some parts here. In IL, we work for the buyer & that's it. No deciding as you say when to do so.

Mar 10, 2012 03:44 AM #32
Rainer
57,945
Wayne Jackson
Lakeshore Realty 208-714-4109 - Hayden, ID
North Idaho Realtor, Serving Coeur dnullAlene and Hayden Lake

Hi Nick,

Thanks for bringing up this subject.  Here in Idaho when we met a new buyer we must give them a brochure that explains agency. They sign a receipt and we must keep it in our file to show that we have given them the brochure. 

Mar 10, 2012 04:35 AM #33
Rainer
4,609
Paula Brown
Results Home Loans - Austin, TX
There is currently a feud brewing in Austin Tx between the Realtors. Some are not wanting their listing to go into IDX, because then Buyer agents get the info and "steal" leads. You can google it, as I am not up to date on it at all, but it is getting very heated with Realtors taking sides and will probably end up in court before long. I always say knowledge is power!
Mar 10, 2012 04:45 AM #34
Rainmaker
212,771
Mary Sheridan
Keller Willliams - 1033 Hamilton Place,Johnson City TN 37604 - Johnson City, TN
Creative Marketing, Buyer Agency 423-943-7655

When I first started representing buyers, back in middle-ages of mid-80s, there were a few cases in which the listing broker took both listing and selling portions of the commission even when my buyer client was paying me.  That didn't sit well with either, and everyone assumed that if I wasn't taking the selling commission, the other side wouldn't want it.  Seller was understandably perturbed, but of course I couldn't get involved in the agreement between them.    Buyers paying their own agents isn't likely to catch on until there's universal agreement that things like I described won't happen.   That hurts both sides.

Mar 10, 2012 06:54 AM #35
Rainmaker
848,807
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Nick & Trudy, it is pretty straight forward here in Florida.  98% of our representeation buer or seller is transaction broker.

Mar 10, 2012 09:00 AM #36
Rainmaker
1,431,803
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Great post.  Most people do not understand the agency issues nor do they appreciate how important it is to have some one working for them.

Mar 10, 2012 12:09 PM #37
Ambassador
3,716,308
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Nick and Trudy, there were agents representing buyers before buyer brokerage became the norm.  I remember a couple here in the DC area who were treated like cranks by the big brokerages.  I like it much better it is now!

Mar 10, 2012 12:27 PM #38
Rainer
299,244
Paddy Deighan JD PhD
federalfinanciallawgroup.com - Vail, CO
Paddy Deighan J.D. Ph.D

Agency disclosures are a basic part of every Real Estate transaction.  It is surprising that not every state is on board with such dosclosures

 

Paddy Deighan JD PhD

http://www.homesavers.pro

Mar 10, 2012 01:03 PM #39
Rainmaker
1,016,057
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Roger, very true, as mentioned in passing in the blog, the buyer funds the transaction, without which no agent gets paid, however, the seller signs the contract that lays out who gets paid what.

I find newer agents have the least trouble asking for consumer notices and buyer agency forms to be signed.

Mar 11, 2012 03:04 AM #40
Rainer
15,438
Brian Park
Danville, CA

1988 was not a magical year, buyer agency was very common among commercial agents. I started doing it in 1980 and it drove agents crazy when I refused sub-agency and the real estate board had an attorney call me to straighten me out and to get me to conform to the status quo, and I had the state bar, a UC law professor , the DRE, and the feds straighten him out.

As for asking for the listing agent there are several books and courses suggesting it in order to get a cut of the commission directly or indirectly. I even had a buyer say that I had to do it because the expert that wrote the book said so. I told him if he wanted my commission he better use a gun, and if his company wants me to continue to do my business with them they should give me part of his paycheck each time I do a deal with them.(Turned out he worked for a company that I buy product from when I do a rehab)

Mar 13, 2012 06:17 AM #41
Rainmaker
388,631
Dana Hollish Hill
Hollish Hill Group, KW Capital Properties - Bethesda, MD
REALTOR and Productivity Coach

Great post. When I tell people I can not represent sellers, they think I'm crazy, but I sleep well each night knowing that

I properly disclose agecy and never have to try and arm wrestle myself with dual agency situations.

Apr 19, 2012 05:33 AM #42
Rainmaker
212,771
Mary Sheridan
Keller Willliams - 1033 Hamilton Place,Johnson City TN 37604 - Johnson City, TN
Creative Marketing, Buyer Agency 423-943-7655

I just came across this again.   Still good to read.   Some day, someone should do a history of buyer agency.  I have boxes of documents from mid-80s but haven't made time to do anything with them except be glad that things have changed.   And of course I only know only part of the story - mostly Maryland.  

Jun 19, 2013 01:29 AM #43
Rainmaker
1,016,057
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Thanks Mary, had not realized just how many comments had been left on this. One of my pet peeves is that buyer agents should be paid by their buyers and we should have true agency representation. But it will need a lot of changes along the way,

Jun 19, 2013 01:55 AM #44
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Nick Vandekar, 610-203-4543

Tredyffrin Easttown Realtor, Philly Main Line
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