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About Buyer Agency

History of Buyer Agency
What is Real Estate Agency?
Buyer's Agent Services
Types of Buyer Agency
Brokerage Fees

Selecting a Buyer's Agent

Do you need a Buyer's Agent?
Choose a Buyer's Agent
Buyer's Agent Duties



For many years investors and corporations have engaged Buyer's Agents to represent their interest in locating property, as well as for their relocating employees. Hiring a Buyer's Agent is crucial in negotiating the sale of property because an agent has the fiduciary responsibility to keep all information about the client confidential.

When looking for a house, most buyers generally look to real estate brokers for advice and information. However, until recently traditional real estate brokers were bound by law to promote the interest of sellers. National surveys have indicated that most buyer's of real estate thought that the sales agent represented them in the transaction.  Agents who listed property and their brokers were obligated only to the seller, not the buyer. Traditionally, the agent has always represented the seller's best interest of getting the highest price and best terms. 

Times are changing. Residential residential buyers have become aware that they also require confidentiality and loyalty in their home purchases. Therefore, buyer representation become a growing trend in residential real estate.

There are four reasons that buyer/client representation has become common:

  1. The increasing complexity of real estate transactions.
  2. The rise of consumer protection laws and the decline of caveat emptor.
  3. Buyers are more educated about the effects of customer or client representation.
  4. The rising tide of litigation


The word "agent" in the legal sense means a "fiduciary". A fiduciary's primary duty is to put the interest of his/her client first. (Doctors, lawyers and accountants are examples of fiduciaries.) The courts have ruled that when real estate licensees act on behalf of others and represent them, they are accountable as fiduciaries. Obviously, buyers need protection and representation as well as sellers. That is why the traditional real estate setup no longer makes sense. This idea has led to the emergence of "Buyer Agency".


Services provided the buyers' agent consist of the following:

Providing information such as property data, zoning information, community statistics, financing sources,

  • offering property value reports
  • negotiating assistance
  • advocacy
  • confidentiality.

Buyers can protect themselves to an extent by hiring buyer's agents and/or attorneys. They cannot, of course, give legal advice. The main service that buyers typically are looking for is confidentiality. Sellers' Agents are legally responsible for disclosing to sellers any information about about the buyer which might affect the seller's decision making. For example, if the Sellers' Agent knows how high the buyer will go on a piece of property, he/she must disclose that information to the seller. A Buyers' Agent, on the other hand, maintains the buyer's confidentiality and will disclose only those facts which a buyer wants disclosed. It is illegal for a Buyers' Agent to violate the confidentiality of the buyer.

Agency Disclosure
In most states, real estate licensees are required to provide buyers with an "agency disclosure", the purpose of which is to disclose to buyers whether they will be assisting them as seller agents, buyer agents or some form of dual agent. You should require every real estate licensee to provide you with an agency disclosure and explain his role to you upon first meeting to discuss your real estate needs.


It is important to remember that there are essentially 2 types of "Buyer Agency".

Limited Representation Dual Agency
Most firms today offer something known as "Dual Agency", "Disclosed Dual Agency", "Transaction Brokerage", "Limited Representation Dual Agency" or something similar which involves representing both the buyer and the seller. Generally, an agent of the company will work with buyers as a "Buyers' Agent" unless the buyers happen to be interested in a property owned by a "Seller Client" of the same firm. Then, the broker is forced to enter into dual representation, in which case neither party gets full protection and representation. Although certain items, such as property defects, must be disclosed to the buyer by law, by and large the parties are on their own. Many buyers and sellers don't seem to mind the setup as long as they can come to terms. However, there are many who are concerned about the potential conflict of interest.

Exclusive Buyer Agency
An "Exclusive Buyers' Agent" is employed by a company that represents only buyers, never sellers. As such, they have no listings of their own and are able to work in the buyers' best interest on any piece of property. There a are a relatively small number of "Exclusive Buyers' Brokers" around the country, since most traditional Real Estate brokerages do not want to give up the practice of listing properties. Nonetheless, the concept is gaining popularity because of the obvious advantages to the buyers.


Traditional Co-op Fee
This is, by far, the most common fee structure today. Buyers' Brokers generally don't charge the buyer for services. Their fee is paid by the Listing Brokers in the way of a co-operating fee. The Listing Broker's fee which is negotiated at the time of listing is paid at from sellers' settlement funds. Thus, the fee is handled like all the other fees pertaining to the transaction. However, since the buyers are the ones actually paying for the property, it is a air assumption that both buyers and sellers are sharing the brokerage expense.

Other Fee Structures
There are several other fee structures used by brokers, most of which are designed, in theory, to ultimately save buyers money and/or offer better representation. Sometimes the buyer agrees to pay a fixed fee or an hourly fee for the agent's services. Of course, the co-op fee which is normally paid to the Buyers' Agent at closing should then be turned over to or shared with the buyers at closing. Another fee structure involves the buyer paying the agent a commission based of the purchase price. Once again, the normal co-op fee should be paid to the buyer. The possibilities for compensation are numerous. Quite often, in such arrangements, buyers are required to enter into an exclusive agreement with the Buyers' Agents.