About Real Estate Agency
One of the most common misconceptions that is shared by a large number of home
buyers is that when working with a Real Estate Agent, he or she will "automatically" represent you as
a buyer. As we will discuss, unless this is specifically disclosed in writing, in all probability the Agent will
be representing the seller.
The traditional relationship (probably going back to when the first thatched hut was sold by someone other than
its owner) has been that a Real Estate Agent's primary loyalty was to the seller of the property. This relationship
was in effect whether the Agent was the listing agent or working with a buyer. This situation caused many home
buyers to be confused: they assumed that the Agent that had been driving them around showing them houses for the
last 3 weeks was representing them. In reality, the Agent was representing the owners of the houses they saw, and
was bound to reveal to those owners any information he or she knew about the buyers.
Buyer Agency, which is almost universally available now, changed all that. The buyer now often has a choice in
representation: the Agent with whom they were working could continue to represent the seller in the transaction,
or the Agent could represent them as buyers. The buyer is now able to compete on a more level playing field.
Although there are state to state variations (please verify the situation in your particular locality), the following
is a basic summary of the types of agency, and who the Agent represents.
SELLER AGENCY: The "default" situation. Unless
disclosed to the contrary, all Agents involved in a Real Estate transaction (and their Brokers--with whom a listing
agreement is actually with) represent, and owe their allegiance, to the seller. If you contact an Agent who has
a property listed, that Agent will always represent the seller.
When an Agent represents the buyer, that Agent "rejects" the implicit seller agency and thus owes loyalty
to the buyer. For more information on this subject, see the section devoted to Buyer Agency.
This occurs when 2 Agents--or the same Agent--working for the same Broker each represent a buyer and a seller in
a transaction. This situation must be disclosed to both the buyer and the seller. Privileged information (e.g.
the price that a buyer will pay or a seller will sell at) cannot be disclosed to the other party without the express
permission of that party.
What it means to you
If you leave the agency question "as-is", your Agent will automatically
represent the seller in the transaction (although it is very likely that they will suggest Buyer Agency.) If the
Agent does not represent the seller, in most areas you can opt for Buyer Agency. If the house in which you are
interested is listed by the same Broker as your Agent, then you have an automatic Dual Agency situation. To sum
it up, if you want full representation and it is available, insist on Buyer Agency.
To find an Agent in the area in which you are interested, click here. (You can compare a selection of top-performing Agents and remain anonymous throughout the search
process.) More information.