Buyer Agent
As a home buyer you should seek out the services of a true buyer agent. Agents owe fiduciary duties, client level services to their clients. That is what makes them "an agent". The legal principals involved in real estate agency come from "Trust Law", ie., duties of a trustee or custodian to their principal. As a buyer you should seek out the services of an agent who will guarantee to give you, the buyer, these full duties no matter which property you are interested in. In other words, seek out a true home buying agent and ideally an exclusive buyer agent or exclusive buyer broker. Exclusive buyer agents are agents who represent home buyers only and are with companies which represent home buyers only and never represent sellers or write listings or market homes for sale. By representing home buyers only they have eliminated the conflict of interest which arises when a real estate company attempts to represent both a buyer and a seller in the same transaction. Buyers and sellers have opposing interests. You, as the home buyer, want the lowest price and best terms for you. The seller, on the other hand, wants the highest price and best terms for them. The fiduciary duties a buyer agent owes to you, their buyer client, include: Confidentiality Accountability Reasonable Skill and Care (Undivided) Loyalty Obedience to Lawful Instruction Advocacy (Full) Disclosure An easy way to remember these duties is through the acronym, “CAR LOAD”. As in, “A real estate buyer agent owes a CAR LOAD of duties to their Buyer Clients: Confidentiality, Accountability, Reasonable Skill & Care, Loyalty, Obedience to Lawful Instruction, Advocacy and Disclosure!” Confidentiality - Prohibits the agent from disclosing confidential information obtained from you such as: the price you are willing to pay, the amount of mortgage you are actually qualified for, how much cash you have to work with or the level of your motivation to buy a particular home. Accountability - Requires the agent to properly handle all money received, e.g. escrow deposits, and keep an accounting of same for you. Reasonable Skill and Care - Requires the agent to protect you from foreseeable risks and to recommend that you obtain expert advice when your needs are outside the scope of the agent’s expertise. This would include home inspections, mortgage companies, real estate attorneys, etc. (Undivided) Loyalty - Prohibits the agent from advancing any interests that are adverse to your own. This loyalty is "undivided". They can not advance the interests of the seller or themselves or their real estate company above yours. This is an extremely hard fiduciary duty for agents to provide if they or their company also represents sellers or practices dual or designated agency. Obedience to Lawful Instructions - Requires the agent to act subject to your continuous control and for the agent to obtain and follow all "lawful" instructions from you. Advocacy - Requires the agent to act in your best interest at all times and for the agent to proactively support your position. In other words the agent "must" step into your shoes and consciously and constantly be thinking, "What would I do if faced with the same situation?" (Full) Disclosure - Requires the agent to disclose "all" information, available or reasonably available to yoru agent, concerning your home purchase which might effect your best interest; things such as the seller’s motivation for selling, the price the seller paid for the home, deferred maintenance or defects in the home, price comparable's for similar homes and the listing history of the home, etc. An agent who represents the buyer provides all of the above duties exclusively to the buyer. A true buyer agent understands the above duties and will be able to share them with you when asked. Casual buyer agents on the other hand won’t understand them. When you experience this, find another agent who does understand their legal obligations to you. A true buyer’s agent acts like a consultant to you and never tries to “sell” you a home. If your agent is using "sales" jargon or is acting like a salesperson, eg. pushing you toward a particular home or toward homes that he or she or someone else in his or her company has listed, run, don't walk, away from that agent as quickly as possible. You want to use an agent and real estate company that are "conflict-free". That means they don't attempt to represent buyers and sellers in the same transaction and they have an office policy that discloses other potential conflicts and lists how the conflicts will be handled. Check out our "conflict-free" buyer services discussion.
Please Note: The type of agency representation and the duties that an agent owes to a home buyer will vary by state. Check out the ARELLO (Association of Real Estate License Law Officials) web site (see below) for a link to the real estate commission in your particular state for further detailed information.
Click here to be taken to the ARELLO website.
Click here for help finding the right agent.
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