Why Buyer Agency

Why Buyer Agency

You now have the right to your own representation … a professional who has been trained and accredited to provide you with “client level” services. Don’t be lulled into a false sense of security or buy real estate in the old traditional way … benefit from a professional’s advice, experience, council, familiarity with the market and negotiating skills.  A Buyer Agent will put this knowledge to the advantage of the buyer.

When you hire a Buyers’ Representative (Buyer Agent), that agent owes you Fiduciary Responsibilities.  It can make all the difference in the world.

Why is Buyer Agency Important? 

In the early 1980′s, the Federal Trade Commission conducted a survey of home buyers who had recently purchased homes using the services of agents who represented the sellers in the real estate transaction.  Among the information which was gathered from this survey was the fact that over 70% (1) of those buyers surveyed thought that the agent they worked with represented their interest.

In essence, this survey uncovered what many real estate agents had suspected for years – the fact that buyers assumed that the real estate agents worked for the buyer when showing properties.  This assumption on the part of the buyer prompted them to treat the real estate agent as a friend and confidant throughout the transaction.

Not only did this situation do the buyers a disservice but it also placed the agent at great risk of undisclosed dual agency.

As a result of this survey, state licensing regulators insisted disclosure regulations requiring real estate agents to tell prospective buyers that the listing or selling agent represented the interest of the seller in the transaction.

Some states required that this disclosure be done in writing while other states permitted verbal disclosure.

Once disclosure laws were implemented throughout the country, consumers became more aware that they were not represented in the purchase of real estate.

As a result, many buyers started to ask for representation from agents.  This was indeed the inception of buyer representation in residential real estate in America.

As agents started to become aware that buyer representation was a service consumers would value, they challenged the National Association of Realtors (NAR) to open its Multiple Listing Systems and to revise its Code of Ethics to permit buyer agency.

Although there are many real estate agents who are not Realtors, the efforts of NAR were the catalyst for the change in agency representation that took place across the country.  Buyer agency is permitted in all states.  All Realtor Multiple Listing Services provide for the cooperation and compensation of buyer representatives.  Additionally, the NAR Code of Ethics has been revised to address the issues that occur when buyer agents and seller agents work together in a transaction.

Consumer Demand

The growth of buyer representation has provided choice for both sellers and buyers.  Sellers can choose to cooperate with buyer agents.  The benefit to the seller is that they can reduce liability for the actions and verbal representations of sub-agents.  Having a buyer agent on the other side of the transaction has become a benefit for both the buyer and seller.

Also, the buyer now has the choice of deciding whether to work with an agent who strictly represents the best interest of the buyer.

The agency evolution has been tumultuous for most, if not all, real estate agents, but has opened a new horizon in real estate for the American consumer.

Media Impact

Certainly the media has influenced the growth of buyer agency along with other forms of agency representation.  It is important for real estate agents to stay in touch with all that is being publicized concerning the benefits and drawbacks for consumers of the various forms of representation.  The American consumer is far more aware today than at any other time in history.  This is largely a result of the expansion of media attention to consumer issues.  Now real estate sales opportunities and training come into the consumer’s home.


The Abrogation of Common Law

In response to the changes in agency representation, some state legislatures have passed legislation that basically diminishes or eliminates the impact of the common law of agency.  States that elect to abrogate the common law of agency must draft state specific guidelines for licensees to follow when representing sellers and buyers.  The abrogation of the common law of agency permits the development of state specific laws regarding issues such as buyer agency, sub-agency, and disclosed dual or designated agency.  Licensees must be aware of the common law of agency as well as any specific statutes that affect the practice of real estate in their individual state.


What is Buyer Agency and How Does It Work?

Creating an Agency Relationship:

Under the common law of agency, the creation of an agency relationship simply requires delegation and consent between a principal and an agent.

An agency relationship can be created through the following two means:

1.Consensual – Oral or Implied Agency

2.Written – Contractual Agency

Many states require that, to be enforceable, contracts between buyers and buyer agents must be in writing.  When licensees are working under state laws which require that contract be in writing, it is important that the agent never represents himself as the agent of the buyer until he has a written agreement with the buyer to do so.

Once a buyer agency relationship is written, the buyer agent owes the consumer the following fiduciary duties.

Undivided Loyalty:

Prohibits the buyer agent from advancing any interests adverse to the buyer’s interest or conducting the buyer’s business to benefit a customer, a sub-agent, the agent or any other interests to the detriment of the buyer.  It is the duty of undivided loyalty that establishes the obligation to act solely in the best interest of the client.

For example:  The buyer’s client must be shown every new property listing; even if the agent himself is interested.


Requires the buyer agent to act subject to the buyer’s continuous control by not exceeding the scope of authority conferred by the buyer and by obtaining and following all lawful instructions.

That means the buyer’s agent must not show the buyer/client a property that is more than he wants to spend unless the agent knows the property can be purchased in the buyer’s instructed price range.

Reasonable Care & Diligence:

Requires the buyer agent to protect the buyer from foreseeable risks of harm and recommend that the buyer obtain expert advice or assistance when the buyer’s needs are outside the scope of the agent’s expertise.

For example, it is the buyer’s agent’s responsibility to discover all details pertaining to the property that may be detrimental to the buyer and to recognize the need for other professionals such as engineers for specific inspections, etc.



Prohibits the buyer agent from communicating key personal information about the buyer which was given to or acquired by the agent within the scope of the employment as an agent to the buyer.  Personal information must be kept confidential unless the client releases the buyer agent or sub-agent from his duty.

Surprisingly, many real estate agents don’t know how to keep quiet!  The well-trained Buyer’s Representative will never disclose confidential information about their client.  After all, knowledge is power.  Keeping your information confidential avoids giving the seller an advantage during negotiations.

Full Disclosure:

Requires a buyer agent to disclose affirmatively all information concerning the transaction which might affect the buyer’s best interests … information is knowledge.

Once again, knowledge is power.  Your buyer’s agent must discover as much information as possible about the property the seller(s), etc. and relay that information to you.  This knowledge, often times, can give you the upper-hand in negotiations, ensuring the best price and terms for you.


Requires the Buyer Agent to promptly report to the buyer all money and property received and paid out and, upon request, to render an accounting.  Also requires the agent to safeguard any and all money or property held on behalf of the principal.

There’s no need to worry about any monies or documents given to your agent.  They will always be held in safe keeping with a full accounting to you.

Last Word . . . the days of  “Buyer Beware” and real estate agents representing only the seller are over.  Real estate transactions are more complicated than ever and the need for your own representative, your advocate when buying real estate today, is not a luxury … it is a must.  You should consider Buyer Agency and have a professionally trained Buyer Agent put his/her knowledge to work to your advantage.

1.Reference:  Dianna Wilson Brouthers & Roger Turcotte, “Buyer Representation in Real Estate”; Real Estate Education Company, A Division of Dearborn Financial Publishing, Inc., Copyright 1997.

Warning:  Even in common law states that require agency agreements to be in writing, an agent is responsible for consensual agency relationships that have been created through words and actions.  Although consensual agency relationships are not defensible by the agent for issues such as compensation, an agent can be found guilty of undisclosed or accidental dual agency (being a buyer agent and seller agent at the same time) if a court determines that a consensual agency relationship was created between the agent and someone other than the agent’s principal in the transaction, whether they are the buyer or seller.