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MOST REAL ESTATE FIRMS LIST HOMES

Listing Company Obligations


 

MANY TRY THEIR BEST TO WORK FOR BOTH SELLERS AND BUYERS

If You Work With A...

 

WE WORK ONLY FOR YOU

Exclusive Buyer Broker Obligations


Realtors® Working For Buyers Exclusively


 

BUYER'S CHOICE REALTY

BUYER REPRESENTATION IS ILLEGAL

Buyer’s Choice Realty has been representing home buyers exclusively since 1990.  We were initially not well received in those days and were even told it was illegal to represent a home buyer.  They said everybody must work for the seller!  We patiently went about our business of advocating for buyers and eventually became well accepted within the industry.  The Banker and Tradesman magazine awarded us with the Visionary of the Year award.  The North Shore Realtor Association elected me as their president, and gradually buyer agency was practiced more and more to the point that today, almost everybody is one.

But it is more than semantics that differentiates Exclusive Buyer Agents from buyer agents. When home buyers know the difference they almost always without exception choose to work with an agent and firm who could and would be loyal only to them and never change their relationship with them. The only form of agency that meets those criteria is Exclusive Buyer Representation.

HOW CAN YOU REPRESENT BOTH SIDES?

When I started representing buyers in February of 1990, I was the only buyer's agent in a traditional real estate office. The longer I went the more conflict I realized. I had even given up all my listings and only represented buyers. Nonetheless, I was still put in an awkward position when a buyer showed interest in one of the company's listings. In this case the buyer's agent can no longer represent the buyer without posing a conflict of interest. The result is that the buyer's agent will need to either change his or her relationship with the buyer or refer the buyer to an agent with another company. Thus the company for which I worked would either claim to serve both seller and buyer with undivided loyalty or lose half the commission.

I was initially unhappy with the owner of the company's choice of selecting disclosed dual agency. As I continued to practice buyer agency, however, I realized that by virtue of our agency relationship with the principal of the company all of us associates were indeed dual agents. It came into play not only with the in-house listings, but in fact every house listed with other companies that I took my buyer into forced me to declare allegiance to the seller of that particular home as a result of the sub agency relationship established when another seller's agent in our office had shown that property to a customer. The only situation where I could genuinely represent the buyer's interest fully was when we were considering a property that no agents of our company had yet entered or when dealing directly with a "for sale by owner."

It was then that I realized my principal, the owner of the company, had made the only choice he could. We were a dual agency office. I'm not convinced that everyone really understood the implications, but as the only buyer's representative in the office I felt like a fish out of water. The people were great, but none of us were able to properly fulfill our fiduciary relationship with our respective clients because of my presence there. This approach is called Disclosed Dual Agency, and I found it unsatisfactory. That's why I eventually left and started an Exclusive Buyer's Agency.  No one who works out of our offices may take any listings. That way there can be no conflict of interest.

Disclosed dual agents are supposedly able to represent both parties' best interests but aren't allowed to counsel or advise either buyer or seller if it might affect the other. In other words, dual agents are not allowed to negotiate for either side, but they do know all of the financial information and motives of both sides. Although it offers a little more protection to a buyer than sub agency, it's not an arrangement I felt comfortable with.

EXCLUSIVE BUYER AGENCY      

During the decision process I considered another option which is Single Agency. An office practicing single agency can take listings and represent buyers but never both in the same transaction. This is a much cleaner approach in that the agent never tries to represent both sides of the transaction, but it is troublesome in that the buyer must be referred out of the office if they are interested in one of the company's listings. Most buyers feel an attachment to their buyer's agent at that point and don't want to have to give up their agent. The likelihood of buyer satisfaction, however, is much greater in a single agency office than a seller's office or any type of dual agency office. However, I found that consumers have difficulty differentiating between single agency and dual agency because they all take listings. I decided that for me, the best I could offer a buyer would come out of the branch of single agency called Exclusive Buyer Agency.  In November of 1991 I opened Buyer's Choice Realty, the area’s first Exclusive Buyer Agency.

Why should home buyers take a chance at getting the short end of the stick? Why should they spend time developing a relationship with an agent who may need or want to change that relationship? Why should they pay an agent for services not rendered? Why should they enter a relationship with an agent that limits the number of homes they can choose from? Why should they choose an agency relationship that will take away any liability on the part of their agent? They shouldn't.

PROTECTING THE HOME BUYER

The best protection for the home buyer is Exclusive Buyer Agency. It avoids the above problems and eliminates the inherent conflict of interest. An exclusive buyer's agent will:

  1. Always remain loyal to the buyer and the buyer's best interests.
  2. Never accept listings to work for sellers.
  3. Determine a property's true market value and inform the buyer of a home's weaknesses and strengths, allowing the buyer to make an informed purchase decision.
  4. Negotiate to get the lowest price and best terms for buyers.
  5. Keep all buyer information, financial status and negotiating strategies confidential.
  6. Show all homes that fit the buyer's needs. This includes all homes from the Multiple Listing Service, For Sale by Owner, Bank Owned, and homes not on the market.
  7. Investigate the neighborhood, the seller's motives and additional pertinent information to assist the buyer in negotiations.

Why don't home buyers know about these issues? I've had this conversation with a good number of consumers, and one of the answers is that there are not yet enough people telling the story. Buyers who have been properly represented are thrilled with the process and can't stop talking about it. But sadly for right now, there are too few exclusive buyer agents out there to significantly impact the industry. That, however, is beginning to change. There are a growing number of independent exclusive buyer agencies springing up, and for awhile there were two growing national franchises for Exclusive Buyer Brokerage.  I personally chose to affiliate with The Buyer's Resource, the larger of the two and for several years carried that franchise name along side Buyer’s Choice Realty. We were Buyers Resource-Buyer’s Choice Realty.  Both franchises eventually dissolved and we continue on as Buyer’s Choice Realty. 

We continue our allegiance and advocacy to home buyers as members of the National Association of Exclusive Buyer Agents, Mass Association of Buyer Agents, the Real Estate Buyer’s Agent Council, and the National Association of Realtors.  We are consultants, counselors, investigators, and negotiators. We are not salespeople.

UNDIVIDED LOYALTY WELCOMED

We hoped the day would come when there would be exclusive seller companies and exclusive buyer companies. I’m sorry to say that no large company as yet has been willing to give up the listing side of the transaction.  Instead, they lobbied for Designated Dual Agency as a way to maintain the in-house sale while representing ad getting paid from both sides of the transaction. As buyers become more aware of the inherit conflict, they will demand full fiduciary services from real estate companies.  I'm surprised by the number of buyers who call our office and ask if we take listings. It is obvious they see the conflict.

Why do buyers still use listing agencies to assist them? Some simply don’t understand. For others it hinges on having a friend or relative who is in real estate. The danger with this is that their agent's loyalty may be illegally misplaced with the buyer. In this case the seller gets the short end of the stick, and the buyer is vulnerable to the possibility of the seller discovering it. It's a lawsuit waiting to happen.

And while consumer education in agency is on the upswing, some consumers fear that exclusive buyer agency will be costly for them. The truth is that it doesn’t cost any more and usually costs less than using a listing agency.  The buyer agent's compensation usually comes from the transaction the same as with any other broker fee. Most listing companies have already agreed through Multiple Listing Services that they will grant the same or more compensation to buyer agents as they would any other agents or in some case non-agents.  Add to that the likelihood that having an agent negotiating on the buyer's behalf, which will enable the buyer to do better than they would have done with an agent representing the other side.

Years ago, a US SPRINT survey concluded that its relocating employees who worked with a buyer broker saved an average of 9 percent off the asking price of their homes. While this survey offers no guarantees for the represented home buyer, it certainly tips the scales on the buyer's behalf. We all know that a home will only sell for what a ready, willing and able buyer will pay without being under duress. Obviously both seller and buyer have to agree on the final purchase price. A well represented buyer will know what that price should be.

The Massachusetts Association of Buyer Agents is a single agency organization but offers support, assistance and education to all real estate agents who want to provide client level services to buyers. This includes both Single Agents and Exclusive Buyer Agents.  Unfortunately, most firms do not fall within either of these categories today but in fact practice some form of dual agency.

I genuinely wish them all well because any buyer agency relationship provides more for the buyer than was available in the past. At the same time our bias is clear. We like working one side of the street.   Our clients like it too!

30-Second Buyer Agency Commercials

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