Buyer Agent Article - San Francisco Chronicle

Newspaper article in San Francisco on using a buyer agent. Too bad they didn't educate people more about the difference between a buyer agent and an exclusive buyer agent...

There is a nice valid point here about traditional agents:

"Buyers should keep in mind, however, that because the agent receives a commission only when the deal is done, there is an incentive to close a sale - possibly at a higher price to earn a bigger commission - even when it might not be in the buyer's best interest. To get around this conflict, some buyer's agents work for a flat fee."

The other way around this is via use of retainer agreements - where the retainer is reimbursed to the buyer at closing - but if the buyer doesn't buy anything - the agent still gets compensated for their time. In addition - this doesn't happen when an Exclusive Buyer Agent structures their compensation where they have a flat fee - plus perhaps the addition of an incentive plan. IE - make less when the buyer's price goes up - and a little more when the buyer's price goes down.

Some exclusive buyer agents structure their compensation to be aligned with the buyers interests. (We do for example - if our buyer client chooses that) When the buyer's price goes down - the agent can make a little more - and when the buyer's price goes up - the agent makes less.

The tendency of a traditional buyer agent can be to get the buyer to come up to get the deal done since it is easier and less time consuming than getting the seller to come down in price. Since many of them don't work on retainer - they only get paid if a deal gets done. The buyer is none-the-wiser that they could have perhaps gotten the house for 20k less if their agent had taken a few more days in negotiation and really worked over the seller - with everything they had. But time is money to the agent - it is easier to just "make a deal" - which really isn't in the buyer's best interests...

When an agent's incentives are aligned with the buyer's incentives - that is when you see them work their butt off to get the best possible price for the buyer. There is no substitute for an experienced, professional negotiator. Many traditional agents are poor negotiators unfortunately...

A good negotiator is worth their weight in gold.
Exclusive Buyer Agents are specialists - always working for the buyer - never on the seller's side.

A "buyer agent" may spend 95% of their time listing property for sale - and only calling themselves a buyer agent when they are working with the buyer. Their main priority is their seller clients - and they don't have much experience working with buyers. But of course - the buyer hears "buyer agent" and they think differently...

Unfortunately - the public is in the dark about the existence of Exclusive Buyer Agents. Only two states (Ohio and California) disclose their existence to the people in their State. The other state Real Estate Associations are too controlled by the mega-brokerages to be willing to disclose this consumer option...

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent

Kiplinger's Personal Finance - Recommends Using an Exclusive Buyer Agent in this March, 2007 article. (They have written many along the same lines in previous years..) Consumer Reports, Money Magazine, CNN Money, the Wall Street Journal, Medical Economics Magazine, the Consumer Federation of America, and many others have all done the same..

An Exclusive Buyer Agent is an agent that never lists company for sale - nor does their company. They never represent sellers - ever. On the other hand a "buyer's agent" works for a company that lists property for sale - and they themselves usually list property for sale. Whether they are practicing designated agency or dual agency - those are not good things for the buyer...

I like the fact that the article points out that "Agents are paid a cut of the selling price, so the higher the price, the better for them -- but not for their clients." As Exclusive Buyer Agents - we ensure that "the higher the price - the worse for us" - which puts us in alignment with out buyer client's interests.

The definition of insanity is hiring someone with financial interests that are in opposition with yours. When you purchase a used car - the used car saleman's interests are just that.

Like a dog - we "work hard for our scraps" - and we believe that everyone does in this world... So when consumers hire a so-called buyer agent that makes more when their price goes up - they are really doing themselves a dis-service....

When I bought a home when coming in for a position at Motorola in the 90's - the "company referred agent" (read relo company) I had - kept trying to work me over to come up in price - and it really teed me off. She was acting like she was representing the seller and not me. She also referred an awful home inspector - who glossed over many things that should have been found. Many agents refer inspectors that "won't blow the deal" which is really a disservice to the buyer.

I realized then that home buyers needed much better protection than what they were getting - which is why I started this company.... to provide the best possible protection and representation to home buyers... I feel great about what I do for a living - becuase it has the most integrity to buyers in the Real Estate industry....