What is an “Exclusive Buyer’s Agent” anyway?
Research shows that most homebuyers understand very little about who their agent represents and the vital importance of representation. While state law requires agents to disclose whose side they’re on, most required disclosures fall short of explaining clearly what’s at stake. Representation disclosures poorly explain the issues, gloss over important factors, minimize the dangers of improper representation, and they’re just downright confusing! A growing number of brokers represent only the buyer, which is known as Exclusive Buyer Brokerage, or Exclusive Buyer Representation. The agent is called an Exclusive Buyer’s Agent. Buyers Advantage Real Estate of Metro Denver, Inc. is one of only a few Exclusive Buyer Brokerages in Colorado, even fewer in the Denver metro area. Buyers Advantage works only for buyers, and never has a conflict of interest with sellers. We don’t list homes.
Are All REALTORS® ALIKE?
No. There are four kinds of REALTORS®: Seller's Agents, Dual Agents (including non-exclusive Buyer Agents), Exclusive Buyer Agents (or brokers), and Transaction Brokers.
- Seller Agents - list property and represent the seller. Remember that if you're buying a home and call the listing company, it's the legal obligation of the company's agents to get the highest price and best terms for the seller. Any information given by a prospective homebuyer to the seller's agent must be relayed to the sellers. This includes any reference to the buyer's financial and personal data, potentially increasing the cost of the home by thousands of dollars.
- Dual Agents - are real estate agents whose company lists property for sale, but act as buyer's agents on those properties. Unfortunately for buyers and sellers dual agents are legal in most states, though not in Colorado. While dual agents attempt to justify this practice, consumer advocates warn NEVER to use a dual agent. The National Association of REALTORS® wrote that the practice of dual agency is as dangerous as playing Russian Roulette. If a real estate company lists property and represents the seller -- you can strongly doubt any attempted claim that their agents can properly represent home buyers. Funny how some folks like the CIA don't like dual agents -- they're known as "double agents!"
- Transaction Brokers - are also known as facilitators. These are true non-agents because there's no liability for wrongdoing. The attempt by a growing number of real estate agents to avoid the responsibility wed to buyers and sellers is legal in a few states (including Florida and Colorado). Services by transaction brokers are substantially reduced from those of true agents, and should be avoided by all sellers and buyers.
- Exclusive Buyer's Agents - represent home buyers -- never sellers. These agents are required by law to get the best price and best terms for the home buyer. All consumer advocates recommend that home buyers take advantage of the benefits offered by exclusive buyer agents. Exclusive Buyer Agents are specialists in the home buying process. This higher level of professional service for buyers has resulted in an average of over 5% savings and greater satisfaction for home buyers over using a traditional agent. Because these agents don't list property, they don't have company listings to try to sell to you first. Most traditional agents' web sites showcase their own listings because if you buy from them they get both the buyer's agent commission and the seller's agent commission, which is called "double-dipping." They don't tell you that, though, when you're using them to buy your house. Instead, with an Exclusive Buyer's Agent, all homes are available to home buyers without bias, including For Sale By Owner homes, new build construction by home builders, and Multiple Listing Service homes (other REALTORS'® listings). Exclusive Buyer's Agents will better protect the interests of buyers than dual agents, sub-agents, designated agents, or so-called "split agents." They are more likely to negotiate a lower sale price on a home and bargain fr needed repairs uncovered at inspection.
According to the Consumer Federation of America, when interviewing real estate agents or buyer brokers to buy a home, “Make certain at least one is a Buyer Broker who works exclusively with buyers.”
THE CFA RECOMMENDS ASKING THE FOLLOWING SEVEN IMPORTANT QUESTIONS:
1. Will you (the agent) represent my interests only, or those of the seller?
2. Do you or your brokerage represent any sellers or builders
3. Do you have full access to the Multiple Listing Service
4. Will you show me For Sale by Owner properties?
5. Can you give me the names of several current and former clients?
6. What experience do you have as an agent and Buyer Broker?
7. Does your commission amount vary? What about bonuses, inducements, or rebates (kickbacks)? Do you give them back to me, the buyer? (After all, you, the buyer, are paying for it!)
NO Dual, Designated, or "Split" Agents
By agency law, a listing real estate company and all of their agents represent the people selling the home. If they say they can represent the buyer and the seller that is dual (i.e., double, like a spy) agency or designated (also called split) agency. Confused? So are most traditional brokers and agents! If they try to minimize or downplay its importance to you be very careful! It’s at this point that dual or split agents may begin to protect their commission checks rather than your interests. An Exclusive Buyer Broker does not take listings and never represents sellers. They won’t “steer” you into looking at their company inventory of homes for sale, because they don’t have any!
The entire foundation of exclusive buyer representation is not having any real or potential conflicts of interest with a buyer/client! When representing a buyer/client who has a home to sell, a true Exclusive Buyer Broker will never change their fiduciary relationship with a buyer/client during their entire home buying process, whereas 99% of so-called “buyer agents” and their brokerages gladly represent sellers and may even “switch” their relationship with you.
Remember that while buyers and sellers need not be adversarial in actions and attitude, their personal interests are adverse to one another. Buyers want the lowest price and best terms, and sellers want the highest price and best terms. We don’t make wild claims that we’ll save a client $100,000 on their next home purchase. We do negotiate for our clients without any chance of real or perceived conflicts of interest. You wouldn’t expect less from your doctor, accountant, or attorney, so why potentially settle for less on the biggest financial transaction of your life?
Steps to Ensure the Selection of a Quality Exclusive Buyers Agent
- Be sure the Exclusive Buyer’s Agent is a REALTOR® whose company never takes listings or represents sellers.
- Use only Exclusive Buyer Agents who have access to For Sale By Owner homes, New Construction by Builders, and REALTOR® inventory homes in the MLS (Multiple Listing Service.)
- Membership in a national organization helps to assure a higher standard of quality service (for example, the National Association of Exclusive Buyer’s Agents, or NAEBA; the Real Estate Buyer’s Agent Council, or REBAC, etc.)
- Insist on signing an Exclusive Buyer Brokerage Agency Agreement. This agreement assures that the real estate agent and company are committed to the buyer exclusively. Those companies who do not use this agreement are not able or willing to make a full commitment to you.
- Be sure that the Exclusive Buyer’s Agent uses a Purchase and Sale Contract that is “buyer friendly.” In Colorado our standard Purchase Agreement is designed to be “buyer friendly”. But in most states the Purchase and Sale Contract is seller oriented. Your Exclusive Buyer Agent will negotiate terms and conditions in the purchase contract that offer greater protection to homebuyers.
Buying a Builder New Home -- Should You Use an Exclusive Buyers Agent?
- There is no additional cost involved to have an Exclusive Buyer Broker represent you. Builders expect 50-80% of their clients to come from REALTOR®S and budget their marketing dollars accordingly! Get an Exclusive Buyer’s Agent to represent you. You're already paying for it. Without one, the builders are looking out for themselves, and you won't have anyone looking out for your best interests! Here’s what one builder says when asked if the homebuyer needs a real estate agent: No, you do not need a real estate agent to purchase a new builder residence. Our experienced sales staff can assist you throughout the home buying process. Don’t believe it!
- Knowledge and history of various developments help match the buyer with the right community.
- Knowledge of builders’ reputations regarding quality help buyers get the best builder for the money.
- In many cases lower prices or other concessions are offered to buyers with buyer agents, since builders consider these agents as “multiple sources of buyers.” Individual buyers buy only one home; buyer agents bring in many buyers. Be sure, though, to use only Exclusive Buyer Agents who can help buyers with both new and existing homes. So-called new home specialists often don’t have access to or knowledge of existing homes and may have monetary relationships with builders, which can cost you thousands.
Selling Your Home: Can An Exclusive Buyers Agent Help Me?
Yes. An Exclusive Buyer’s Agent only represents homebuyers and doesn’t take listings. However, these agents work with hundreds of listing agents. They know which ones will aggressively market your home and provide excellent seller representation. Should you use your seller’s agent to help you buy your next home? No, for all the reasons cited above. It’s best to use one agent to sell your home, and another to help you buy your next home.
