Buyer Agency Agreements are where a Realtor represents the buyer of real estate.
Contents |
With the advent of "Buyer Agency" (Buyer Brokerage) in the early 1990s as opposed to seller agency, a real estate Agent/Broker agrees and contracts to represent the Buyer in her purchase of a home/property. Buyer Agency Agreements were developed to set out the terms and conditions of this representation. They are similar to the written "Listing Agreements", required between Listing Agents and Sellers (property owners). Buyer Agency Agreements set out the main conditions of the relationship between the Buyer Agent and her Buyer Client including such things as the duration of the agreement, the commission to be earned/paid, and the various rights, duties and obligations of the parties.
The Buyer Agent owes fiduciary duties to the Buyer under this relationship and agreement, including fidelity, honesty, dedication to purpose, acting in the Buyer's best interests, etc.[1] The commission to be paid to the Buyer's Agent in the Buyer Agency Agreement, though ultimately the Buyer's obligation, is generally offset in whole or in part against the share, or "co-op", commission offered by the Listing Agent through the Multiple Listing Service ("MLS").
An exclusive buyer agent is a real estate agent who works for a company that does not ever represent sellers in real estate transactions.[2]Exclusive buyer agents (and their clients) avoid the conflict of interest of working with an agent who promotes their listings or their firm's listings. It is beneficial to a buyer to have representation because the agent is responsible for acquiring information on the property and advising the buyer based on that information. Without an agreement, the agent may not have an obligation to work with the buyer's best interests in mind.
A Realtor that is acting as a Buyer's Agent has a significant economic conflict of interest if their commission is split with the Seller's Agent, as in most real estate transactions. Because a commissioned Buyer's Agent is paid more if the Buyer pays more money, the Buyer's Agent has a direct economic incentive to make the Buyer pay more for a property. This encourages Buyer's Agents to violate their fiduciary duty to Buyers.