What Is Exclusive Buyer's Agency?
Bill & Fran Jenkins
Keller Williams Realty the Marketplace REALTORS
702-845-8540 for Bill 702-860-5432 for Fran
In real estate, agents can either represent the seller or represent the buyer. Years ago, there was only one kind of agency - agents representing sellers. In that situation, a seller would hire an agent to sell their house. The agent had a fiduciary relationship with the seller - meaning that the agent owed the seller: accounting, obedience, loyalty, care and disclosure. A buyer would want to see houses and would get an agent to show them houses. The agent worked as a sub-agent for the seller (regardless of if their name or company name was on the sign or not). What the agent owed the buyer was: reasonable care and skill, honest and fair dealing, and disclosure of known material facts. The seller got obedience, loyalty and disclosure and the buyer got minor consideration.
The real estate commission decided in the mid 1980s that buyers deserved representation too, so they came up with Buyer's Agency. Now a buyer can hire an exclusive Buyer's Agent to represent them. When you hire a Buyer's Agent - you get a fiduciary relationship - meaning your agent owes you care, accounting, loyalty, obedience, and disclosure. Your agent is working for you, not the seller.
Who pays for the Buyer's Agent? Originally, the idea was that a buyer would pay for their own agent. That did not pan out. So the way it evolved over time is now when a seller agrees to sell their home, they agree in the contract to pay for the Buyer's Agent - even though the agent does not work for them.
So buyers get the best of all worlds! They can hire exclusive representation, and the seller is still paying for their agent out of the seller's proceeds at closing.
One misconception that some buyers have is that they can save money if they do not have a Buyer Agent represent them. This is a false conception. When the seller hires their agent, they agree to a certain percentage to be paid at closing. If the buyer does not have an agent and the listing agent (or a sub agent) handles the transaction, the seller pays the full percentage to that agent. The only person that lost was the buyer - because they no longer had anyone working exclusively for them - and still did not save any money!