Reader Question: We recently purchased a home. We used a buyer agent because we understood that a buyer agent works for the buyer instead of the seller. Our friends also bought a house recently, and they used a buyer agent. We just learned that our friends signed a buyer agent contract when they started working with their agent. Our agent never asked us to sign a contract. Is our buyer agent legitimate?
Monty’s Answer: For full disclosure, I am sharing this agency article on DearMonty.com. In my opinion, agency works no better now than in the 60s. Your experience is a typical example of agency not working. Your friends have no assurance of fair treatment because they signed a contract. Your agent may have done a better job without an agency agreement than your friend’s agent did with an agency agreement.
A legal buyer agent
A written buyer agency agreement is the contract that creates an agency. The agent agrees to represent the client, and the client agrees to pay the agent a commission. The agreement includes the agent’s duties, an explanation of the agency, and compensation. It also provides for the scope of the property the client is seeking to acquire and the relationship’s term on a success only arrangement. Without this agreement, the agent is acting as a subagent for the seller. Some states may have slightly different agency laws.
A buyer agent’s work
The buyer agent should have the interest you communicated to them about your wants and needs at the forefront. Some examples of what an excellent buyer agent will do include:
- Automate your search parameters to capture new inventory on the MLS that meets your criteria.
- Seek agreement with you on a plan. When to look, the lender pre-approval letter, how you prefer to communicate, and more.
- Prepare price opinions on houses that meet your specifications and help you read them.
- Allow you to “be the screen” in picking comparable sales instead of showing you the three homes they consider to be the best comparables. You should be picking the best three out of twenty with your buyer agent’s help.
- They may suggest a strategy to begin a negotiation based on data they have acquired from the MLS and the seller’s agent. A buyers agent may suggest what price to offer, backed up with facts.
- The best home for you may be outside the MLS in a for sale by owner. Your buyer agent should be searching for the entire market.
A different kind of buyer agent
Most agents work with both home buyers and sellers. There is another type of buyer agent called an “exclusive buyer agent.” An exclusive buyer agent only works with the buyer. They are strictly buyer orientated. The question to ask when searching for representation is; Does your firm take listings? If they do, they are not a member of the National Association of Exclusive Buyer Agents (NAEBA). NAEBA requires members to sign a contract prohibiting them from listing a home for sale or working for a firm that takes listings. Exclusive buyer agents are rare because most agents feel an exclusive practice will cut their market by half.