What is an Exclusive Buyer Agent and Exclusive Buyer Broker?
Unfortunately - the traditional Real Estate Industry is attempting to corrupt the meaning of the term "Exclusive Buyer Agency" by planning to call the old "Buyer Agency Agreement" an "Exclusive Buyer Agency Agreement." Their goal? Create confusion in the public's mind about what an Exclusive Buyer Agent really is - because we are such a great thing for the buyer and a threat to their traditional business model of "double dipped" commissions.
Don't be fooled! An "Exclusive Buyer Agency Agreement" is really an "Exclusive Right to Represent" agreement. What that means is -- that you -- as a home buyer -- agree to use that agent exclusively to help you find your home. That agent - may work for a company that lists property for sale, and may call themselves a "buyers agent" - though 95% of the time or more -- they list property for sale --spending most of their time representing sellers. Would you like heart surgery from a "general practicioner" or a heart surgeon?
The long-standing definitions (as defined by the National Association of Realtors in the early 1990's), and the true meaning of "exclusive buyer agency" are as follows:
Exclusive Buyer Agent: An Exclusive Buyer's Agent is a real estate agent who always works for the person buying a home instead of the person selling a home, and they work for a brokerage that does not list property for sale. The official definition.
An "exclusive buyers agent" represents home buyer clients 100% with no potential conflict of interest (no dual agency - and the broker is behind each agent 100% - rather than having divided interests where they may not be able to offer assistance) - unlike what can occur if someone uses a "buyers agent" who works at a Real Estate company (and thus - their broker) that lists property for sale - and who's loyalties lie with the seller.
Exclusive Buyer Broker: Runs a Real Estate Brokerage that only represents purchasers of Real Estate (home buyers and investors) and chooses to not list property for sale in order to specialize and avoid conflicts of interest for the buyer. The Broker of the office can support the exclusive buyer agents in the office 100% - unlike a traditional broker who has to "designate" an agent (putting a bit of a legal and informational wall between themselves and the agent) to avoid legal liabilities associated with inherent conflicts of interest. Thus - the Exclusive Buyer Broker can offer a higher level of coaching and support to their agents - and the client themselves. The broker manages Exclusive Buyer Agents, but can also work for the buyer clients directly (as their exclusive buyer agent) -- or they can team with the other agents in the office to help a buyer client. Thus - the buyer has a much higher level of support. (A brokers license requires a higher level of licensing and education than a sales agent licence.)
They dedicate their business and their life to being totally impartial and objective when representing home buyers, making sure that their agents never attempt to "sell" the client on a property. They dedicate their brokerage to be the buyer's true advocate. They don't have pictures of homes for sale in their advertising in order to draw "buyer leads." Traditional brokerages with listings have homes to “sell”. They need to make your needs “fit” the homes they have listed to sell. Exclusive buyer brokers (and their agents) do not try to make your needs "fit" the homes they show you, because they don't sell homes, they “serve” homebuyers by showing homes impartially with no conflicts of interest, hiring aggressive home inspectors, and negotiating hard for the buyer! They don't care if the home that fits the client's needs is a for-sale-by-owner home, or new construction, or a pre-foreclosure home, or one of any of over 70,000 homes listed in the Multiple Listing Service (MLS).
Not All Real Estate Agents Are Realtors®: A Realtor® is a member of the National Association of Realtors (NAR) and agrees to abide by the Association's ethics. Everyone in our office is a Realtor®.
Not All Real Estate Agents
Are Members of NAEBA: The National Association of Exclusive
Buyer Agent's (NAEBA) sets much higher ethical standards in the representation
of home buyers, than the
National Association of Realtors (NAR).
Everyone in our office is a member of NAEBA - to go above and beyond NAR's
Code of Ethics to provide the most ethical services to the buyer in Real Estate.
An Exclusive Buyer Agency: A Real Estate company that chooses to not list property for sale. All agents that work for an Exclusive Buyer Agency represent buyers 100% - 100% of the time. Unlike use of a "buyer's agent" - there is no chance of a buyer getting into a "dual agency" situation half way into his working relationship with an agent.
Dual Agency: The situation where an agent must represent both the buyer and the seller equally - (which really means no representation at all for the buyer), and this engenders the potential for huge conflicts of interest. This typically occurs when a home buyer starts working with a "buyers agent" (whom the buyer assumes represents them) - but then when the buyer becomes interested in one of that agent's listings - "dual agency" occurs. The agent is supposed to keep what they know about the buyer confidential and not tell their seller - and they are supposed to not tell the buyer what they know about the seller.
Buyer Agent: Works for a traditional Real Estate company that lists property for sale, and represents buyers to help find them a home. When a buyer signs a "buyer agency agreement" with a buyers agent - the buyers agent agrees to fully represent the home buyer. However - they may not be totally impartial - as they may show more of their own company's properties to the buyer - versus other properties, to keep the money "in house" / perhaps selling their office-mate's / "team-member's" house. You may have never known that you never really saw your "dream home!
As an example - if a buyer wished to purchase a property listed by their buyer agent - the agent has to declare dual (or limited) agency and represent both the buyer and seller in a limited capacity. In this case - the buyer is NOT fully represented. Signing a buyers agency agreement with a buyers agent is better than working with a Realtor without a buyers agency agreement - but working with a buyers agent is NOT as good as signing an buyer agency agreement with an exclusive buyers agent!
REMEMBER!
An "exclusive buyers agent" is totally impartial and ALWAYS represents
the buyer!
TIP If you walk into an open house, you are usually talking to the agent who listed the house. Their legal responsibility is to separate you from as much money as they possibly can -- for their client, the seller. If you walk into a new-homes project -- the agent there is paid to do the same -- separate you from your hard earned cash -- right up to the limit of your pain.
Their job, by law, is to represent the seller to whom they owe a fiduciary responsibility which is a fancy way of saying that they have to hold the seller's interests above yours. The listing agent does for sellers, what we do for buyers - represent them 100%. The legal definition of a fiduciary relationship is a relationship based upon trust which includes:
When you deal with an agent of the seller, you do not get undivided loyalty, full disclosure and confidentiality. You just get treated "fairly".
However - you can CHOOSE to be represented by an Exclusive Buyer's Agent to get your own fidicuary relationship of undivided loyalty, obedience, full disclosure, confidentiality, reasonable care and diligence, accounting of money and property that the seller gets from their agent.
You may agree with recent public opinion polls that put car salespeople, politicians, and real estate agents at the bottom of the ethical heap.
If you bought a car through a dealership recently, you may have experienced similar feelings towards that salesperson as you experienced when dealing with "your" real estate agent. Traditional agents can withhold information from you, which would have allowed you to make an informed, intelligent buying decision that was in your best economic interests. They typically try to "sell" you on a property if you were working with them as a buyer. You probably sensed this, but weren't aware of the alternatives that were available to you.
You would probably never think of using an attorney to represent your interests - when your adversary used an attorney located at the same law firm. (In fact - it isn't allowed in the legal industry - so it shouldn't be allowed in the Real Estate industry -- but unfortunately - it is...)
TIP - The worst thing you could do is call the phone number on the sign of a property you like, and work with the listing agent to buy that home.
TIP - If you select buyer representation from an office that also lists homes for sale, you may end up with limited representation. If you seek out an Exclusive Buyer's Agent, you can be assured that your interests are represented 100% - 100% of the time.
Which type of agent would you prefer? The choice is yours....
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