So you're going to buy a house in Virginia. You'll save money by working with the Seller's agent right? After all, she doesn't have to split her commission with a buyer agent, so she'll be willing to cut her commission, and you'll get the house for less.
Many buyers take this route when purchasing a home, and it can work to your advantage- if the agent is actually willing to do this in this market. But there are some things to keep in mind, in particular, who is working on your behalf?
In order to discuss this, we have to discuss agency and what it means. A Seller who has employed an agent has an agreement with a Real Estate Broker. The Broker agrees to perform certain duties in exchange for a certain fee, usually expressed in a percentage of the sales price of the home.
The mulitiple listing service (MLS) is a venue in which Brokers offer each other compensation for selling one another's listings. In exchange, all Brokers can view all other Broker's listings.
A Buyer Agent on the other hand forms an agreement with a homebuyer. The Broker agrees to perform certain duties in exchange for a fee, again, usually expressed in a percentage of the sales price of a home. The Buyer is obligated to pay that fee. However, the Buyer also agrees to allow the Buyer Broker to be compensated, as per the MLS, by the cooperating Broker (the Seller's Broker), and the fee that the Buyer has agreed to pay is then reduced by that compensation from the Seller's Broker. This part of the transaction is transparent to the Buyer, so 9 times out of ten, the Buyer pays nothing out of pocket, hence the Buyer Agent's services are "free."
Many buyers are hesitant to enter into an agreement with a Buyer Agent, mostly out of fear of what it obligates them to. But in fact, the Buyer Broker agreement can be likened to an employment contract. The Buyer is "hiring" the Broker to perform certain acts for them. Without this agreement, the Broker may not get paid.
The State of Virginia recognizes that any agent that does not have a Buyer Agency agreement with a client is, by default, obligated to work for the Seller. If you are a Buyer and the agent that is showing you properties does not have a written Buyer Agency agreement with you, your agent is working for the Seller. In other words, they are a "subagent" of the Seller. This is the law in Virginia.
Going back to the MLS, some agents will not compensate a "subagent". So an agent with whom you have no written agreement will likely not show you properties where there is no compensation for subagents, and rightfully so, who wants to work for free?
When you revisit the scenario where the Buyer has the Seller's agent write the contract and handle the entire transaction, the Buyer should keep in mind that this is called Dual Agency. While totally legal in Virginia, many agents steer away from it because it can get dicey. Can one person truly represent two sides of a transaction to the full extent and advantage of both? Buyer and Seller agents use their finely honed negotiation skills to work the best deal for their clients. When there is only one agent, you will probably end up somewhere to the left of win-win. Not because of any ill will on anyone's part, but simply because in the end, the Seller's Agent is just that- the Seller's Agent.
A Buyer-Broker agreement should not be feared. Communication is key. If you are buying a home, ask the agents that you speak to who they represent. Ask them to see a buyer agreement. Ask them what their duties are if you sign an agreement with them. Ask them how you can "fire" them if you don't feel that they are working on your behalf, and are you obligated beyond the termination of the agreement, and why. A good agent will be happy to explain these terms to you until you are comfortable. In the end, you establish a relationship, there are no questions or doubts, and you get the piece of mind that someone is looking out for you.
*I am not a lawyer and the preceding is not intended as legal advice. Always consult a lawyer for legal advice.