Buyer representation really started to gain acceptance in the real estate community in the early 1990′s. For those of you who might remember, we as real estate agents would place buyers in our cars, drive them around and show them homes, possibly take them to lunch then out the next day and show them more homes and so on.
The real estate agent had never met the seller of a particular home but the law stated that the real estate professional was an agent for the seller. This is nearly unheard of now, but some companies and or their agents still use this practice.
The real estate laws have changed but in the best interests of the buyer or seller, whomever the agent represents. Real Estate professionals now use a form called an “Agency Disclosure”. This form should be signed by the party to the transaction PRIOR to writing an offer on a home. This will assure the buyer the agent negotiates an offer in the buyer’s best interests.
Several buyers really reckon they can save money by dealing directly with the listing agent, since the buyer and seller will only be working with one agent. Does that buyer realize the agent has a fiduciary duty to the seller and will not negotiate a deal in the best interests of the buyer? Nor can the agent discuss price or provide any recommendations, opinions or anything relevant to market value to the buyer.
Being represented “exclusively” by your agent is crucial in a real estate transaction. Here’s a excellent example; you call the listing agent off a sign you see in a front yard and question them to show you the property. You preview the home, like it and question to make an offer. When you discuss offer price, you tell the listing agent you would be willing to go higher but you want to start at a lower price. When the listing agent presents the offer to the seller, they can tell their seller you are willing to go higher. So the seller immediately counters your offer with a higher price.
Another example is the buyer who walks in a new home subdivision. The sales agent discusses their models, floor plans, etc but is really looking out for the best interests of the builder/seller.
If the buyer goes to a new home community by themselves and falls in like with one of their models, then they call their agent to meet them there can be disastrous. Most builders will not allow this even if the buyer did not register with the new home subdivision on their first visit. Once you cross that threshold in a new home community, the builder will not allow you to be represented by an agent.
Although the “Buyer Broker Exclusive Employment Agreement” is not standard practice, they should be. This is an agreement between the buyer and the real estate agent which discloses responsibilities and fiduciary duties between both parties. As a buyer, don’t you want to know your agent is representing you “exclusively” and the agent will due their due diligence in offering you the best service possible? The agreement by no means forces a buyer to buy a home, but rather an agreement that discloses loyalty between the buyer and their agent.