Real Estate: Buyers Agent, Sellers Agent & Dual Agent (defined and explained)

There is a relatively new and not always well understood practice in Real Estate sales; it is called Buyer Agency or Buyer's Agent. Until recently Realtors and agents usually represented the seller, in opposition to the buyer, during the real estate transaction. Even the real estate agent who drove you from home to home was not truly working on your behalf. By law, the agent was required to work on the seller's side in order to get the highest price and the best terms for the seller -- Period! Some agents still work this way.

In the last few years, first the law and now the practice of representation has changed. We have an entirely different set of options and agreements when we are buying real estate. These options were previously only available and utilized by large companies or wealthy individuals. In the past, the buyer would get a buyer's representative by paying a fee up front and usually by the hour, until the transaction was complete.

Twenty five years ago, as a personal agent for wealthy clients and companies, I charged and worked an average of 20 hours a week for $30 per hour, plus expenses, plus 10% of the transaction (or when I was the buyer's agent, a $2,000 retainer fee to start with and then $30 per hour and 10% of the amount below the listed price that I was able to obtain for my buyer. If there was financing involved I also was paid to find and obtain the best financing).

That has changed dramatically. As a buyer's agent, a signature on a buyer's agent contract from my buyer begins the transaction. Usually the same original commission fee that would have been paid by the seller is split and half goes to pay the buyer's agent. In some cases the selling agent does not set up any fee to the buyers agent, or a very reduced fee, such as those agencies that advertise 2% or 3% or 4% commissions to the sellers, etc. In that case the Buyer just picks up the missing commission and at settlement another 4% or 5% comes out of the transaction and goes to us as Buyer's Agent. In other words there is a guarantee from us that we are working ONLY for you the buyer and in exchange you guarantee us a commission of 5% - which is usually already taken care of, or at least part of it, in the seller's commission.

I can draw this division of fees out for you on paper if need be when we meet the first time. Bottom line; you don't pay any more and you get the absolute best representation.

The buyer's agency arrangement begins with the initial interview, continues through an initial selection of properties to investigate and view and then to contract negotiations. This culminates with the final settlement and transfer of funds for property. The buyer may choose to have an agent specifically committed to representing his best interests.

The great part for the buyer is that he/she gets the benefit of decades of experience and professional knowledge, all of our connections and reputation with those connections, and pays nothing until final close of transaction. Where else can you get the best possible professional service and pay nothing until it's complete and satisfactory. Will your doctor, lawyer, accountant, mason or carpenter do that... NO. We do, if you contract with us first. Otherwise we represent the seller at your expense! This is true of all Realtors by law. Which would you like?

Recently real estate laws in virtually every state are being rewritten to allow and suggest that the buyer have his own specific representative. If you are the buyer and have a buyer's agent, your agent will try to get you the best deal possible, even if that is NOT in the best interest of the seller.

Legally: "Buyer's Agency" is a relationship where the real estate agent is working FOR you with fiduciary responsibility (financial and legal responsibility). The agent is then legally bound to only the buyer and owes his entire loyalty and allegiance to the buyer alone.

In the past, and even most of the time today, all real estate agents and brokers represent the seller alone; to get the highest price for the seller. In fact seller's agents MAY NOT disclose fully all that they know about a property to the buyer as they seek the highest price. The relationship of a broker and agent is established in writing with the seller when the property is listed for sale in the "Listing Agreement".

In Delaware we are required to give each person we work with; buyer or seller; a written explanation regarding agency status. We have professionally written brochures that explain the "seller's agency" and it's opposite "buyer's agency". This agency disclosure must be explained, in writing, at the first significant contact of the agent with the buyer or seller.

Agents in our office talk with a great number of long-distance buyers over the phone. We must, when we finally meet in person, disclose and determine which position we will take with the person we are speaking with. Some agents work mostly as seller's agents; some work mostly as buyer's agents and some work as a dual agent (where we act as full representative to both buyer and seller). Regardless of the role the agent takes -- it should be fully and completely known by all agents, buyers and sellers involved -- and it should be in writing.

Let us now put this forward again:

Seller's Agent: has the full and complete and sole duty to obtain the best deal for the seller. The seller's agent is ONLY allowed to give the buyer material facts about the property. It is customary for a cooperating broker and agent to be a subagent to the seller's agency established by the brokerage that has the written contract with the seller to sell the property.

Buyer's Agent: has the full, complete and sole duty to obtain the best deal for the buyer. The buyer's agent may convey any and all information obtained in any fashion, including in depth investigations about the seller or the property.

Dual Agent: has to be legally and financially loyal to both parties. Dual agency occurs when a real estate agency is contracted to sell a home. That means they have the listing, and an agent from that same brokerage, working as a buyer's representative, shows that listing. Dual Agency must be disclosed and agreed to in writing by all parties. Some people feel that Dual Agency is potentially a conflict of interests. It can be unless the agent is fully honest to all parties and they are fully aware of and in agreement with that relationship. Here, the entire purpose of the dual agent is to get the best possible deal, in all it's components, for both the buyer and the seller.

There are, in general, two major personalities of buyer's agents. First is the agent who only and always represents buyers. The other is the agent who takes each transaction and each customer into account before making that decision. An agent who usually works as a buyer's agent, for instance, may NOT want to represent a particular buyer as that buyer's agent for one reason or another. The reason is usually one of some personality difference. As I put it, when speaking with a buyer whom I wish to represent "I will be your gladiator. I will do battle on your behalf, and at the expense of and against the interests of, the seller and the seller's agent."

The buyer's agent must still be honest, but he need not be fair. For instance, if the buyer's agent is able to find out that the seller is in big financial or personal trouble and that the seller has a small mortgage on the property or that there is some impending deadline for selling the property, then the buyer's agent will tell the buyer. Together they will use that information to get a great deal for the buyer at the seller's expense... it that is possible.

If I were a buyer, I would not even consider doing a real estate transaction without a buyer's agent to act on my behalf. I suggest that you are wise to do the same. If there are detailed and extensive negotiations that need to be done; such as unique and difficult terms that must be negotiated then (being the buyer) I'd ask that the buyer and the seller agree to have me as a dual agent. Whatever your choice, it should be in writing with your agent and must be known to all parties involved.

Copyright © 2001-2004 by www.JodyHudson.com

Source for this article is: http://www.kate-jody.com/essays/buyersagent. html

---

Maximizing Curb Appeal and First Impressions to Sell your Home

We all know that a home or property of any... Read More

Avoiding A Bad Investment Is Easier Than You Might Think

Human nature being what it is, none of us can... Read More

Selling Your House - $100,000 Pets

Is your pet worth $100,000? It may be if you... Read More

10 Easy but Essential Steps for Home Selling Success

They say that the whole process of selling up, buying... Read More

A $100,000+ Discount On Miami Condos

By this point and time, many people have heard about... Read More

Content Ideas for Ads and Brochures When Selling Your Home

Even in this hot real estate market, selling your home... Read More

The Listing Agents Role in Selling Your California Home

Advertising to the "Public"Every home seller likes to be assured... Read More

Maui Realtors: What You Need To Know

Maui is a great place for families of any size.... Read More

The Costs of Transforming Your Home into a Buyers Dream House

Turning your house into the home of a buyer's dreams... Read More

Expense List for Buying a Home

There are many expenses that come with buying a home.... Read More

We Buy Houses Scams ? How to Spot Them and How to Avoid Them

There are many reasons why a home owner would want... Read More

Real Estate Investing - Maximum Leveraging of Your Money

At this moment, you have access to some amount of... Read More

Buying A Home ? Zoning and Architectural Review Board Restrictions

When you buy a home, you need to be aware... Read More

Top 7 Reasons Why FSBOs Fail To Sell Their Home On Their Own!

In the United States, less than 10% of all For... Read More

Flipping or Fixing Houses for Profit

Many real estate investors make $5,000 to $10,000 or more... Read More

Internet Battleground for Future of Residential Real Estate

Real estate agents are gearing up to face the biggest... Read More

What Is a CMA

"CMA" is an abbreviation real estate agents use for a... Read More

How to Build Your Dream Home

Building your dream home is a process that takes some... Read More

Real Estate Investing - Basis Explained

Our complex IRS code requires that your, as a real... Read More

Real Estate Investing - Protect Your Privacy

An irate tenant or disgruntled home-buyer, with the help of... Read More

Flipping Fixers: Using Transformation Psychology for Top Dollar

Satisfying and lucrative real estate investment depends upon your correct... Read More

Real Estate Wealth Protection Through Short Sales

Is a sharp correction in store for the real estate... Read More

A Difference Between Appraisal, Assessment, Home Inspection

Every one should have a home inspection before purchasing any... Read More

Reprint Rights and How To Use Them To Generate A Steady Income

I can't emphasize enough how important it is to have... Read More

Pricing your House to Sell

Most Sellers set their initial asking price at an amount... Read More

The Real Estate Agent Alphabet

Alphabet Letters after a person's name seem to bestow some... Read More

Conversation & The Real Estate Investor

One key that makes investors is conversation or should I... Read More

Buying Houses at Discount Prices

Buying a house is the best way you can create... Read More

Real Estate Bubble: Fact or Fiction?

The real estate market buzz across the country these days... Read More

Selling Houses with Curb Appeal and Design Psychology

Curb appeal is the most important challenge you'll face when... Read More

Condo Hotels Offer Luxury and Great Investment Potential

Not Your Typical Vacation HomeWhat could be more perfect that... Read More

Let the Broker Show the House

Of course you're curious, and you'd like to see what... Read More

The Person With The Most Money Wins!

More money can mean better:- Health Care - Relaxing... Read More