Choosing a Buyer Agent
The relationships that agents can have with buyers and
sellers of real estate are established by the �common law of agency� and
through state statutes. The common law of agency includes a body of well
established laws pertaining to agency and the interpretation of these
laws over time by reviewing the results and decisions reached through
the court system.
Most states now have �agency disclosures� to help buyers
and sellers better understand their choices. However, many of these
disclosures are confusing at best and in many cases not presented to
buyers and sellers in a timely fashion. Consequently many buyers and
sellers sign disclosures and consent to various relationships without
true �informed� consent.
When a buyer is asked by a real estate agent to consent
to a particular relationship it must be done with �informed� consent.
This means that the buyer must be �informed� of every conceivable
ramification of entering into the particular relationship. �Informed�
consent is particularly important with regard to a �dual agent� or
�designated agent� relationship where buyers and sellers give up �agent
loyalty� and �full disclosure� of material facts. This could result in
your buying the wrong home, paying too much, or ending up with
unexpected repair bills after closing.
Beware of �bait and switch� buyer agency. Agents who
take listings or work for companies that do take listings can't be a
buyer's agent if you are interested in an �in-house� listing. They will
ask you to consent to �dual� or �designated� agency rather then refer
you out to a buyer agent with another company (which is what they should
do if they really had your best interest in mind). Agents have a
financial incentive to practice dual or designated agency. In a dual or
designated agency relationship, the company and potentially the agent
makes a double commission (known as a �double dip�) and in some cases
the agent is offered a higher commission split on such in-house sales.
Look for �Exclusive� Buyer's Agents. �True� Exclusive
Buyer's Agents represent and provide services to buyers only. Watch out
for agents claiming to be an Exclusive Buyer's Agent when they actually
take listings or work for a company that does. They obviously aren't
really �exclusively� representing buyers.