"What is Buyer Representation and how did it come about?"

A recent Federal Trade Commission study found that over 72% of all homebuyers nationwide mistakenly believed they were being represented by the agent who was showing them homes. As an outcome of this study, Real Estate License Law officials from all 50 states recognized the need for public awareness of buyer representation. Consequently, disclosure laws requiring agents to specifically disclose exactly who they are representing are being passed all over the country. In 1989 the National Association of Realtors (NAR) for the first time began requiring all Realtors to advise buyers and sellers who they represent in each transaction.

"Isn’t the agent who shows me homes representing me?"

Don’t count on it. Unless you have a written Agency Agreement, the Law of Agency, as defined by federal and state courts, specifies the contractual relationships that are formed when property is bought and sold. Agents listing property enter into a signed contract with the seller to represent them in the sale of their property. The same contract permits the listing agent to use "sub-agents" to help secure a sale. Unless you have a written Agency Agreement with a real estate agent promising to represent your best interests, the agent showing you homes should be considered a sub-agent working with the listing agent to obtain the best terms for the seller.

"Does the legal representation that goes with a contractual relationship really matter?"

Absolutely. If you had to go to court, would you use the same attorney the opposing side was using? Responsibility and accountability to a client are two legal requirements of representation. By law, traditional selling agents must negotiate in the best interest of the client, not withhold information from them, and present their property in a favorable manner. In the absence of a Buyer Agency Agreement, a traditional real estate agent views buyers as customers, not clients.

" My agent agrees she "technically" represents the seller, but says she will be fair and "take care of me." Isn’t that all I need?"

Of course agents try to be fair and are nice to the buyer since they want to make a sale. But, because they are bound by the Law of Agency and their Code of Ethics, they can only do so much without jeopardizing their license to practice. For instance, a traditional agent can not tell you how much they feel a certain piece of property is worth, or how to negotiate the best purchase price. In this case, "technically" means legally, and if the seller has representation, shouldn’t you? Only a Buyer’s Agent can negotiate for your best interests.

"Does a Buyer’s Agent have access to all resources like the Multiple Listing Service?"

Absolutely yes, and more. If the real estate firm is a member of the local Board of Realtors and the MLS, they can show you homes listed with this service. In addition, since you are represented and not the seller, you can be shown homes that are "For Sale by Owner" or "For Sale by Builder" as well as homes that may not be on the market - such as "expired" and "withdrawn" listings.

"Exactly how is this legal relationship established?"

Just as a seller establishes a legal relationship by signing a listing agreement with their agent, you establish a legal relationship by signing a buyer’s agreement. This agreement makes the Buyer’s Agent legally accountable to you and not to a seller.

"How much will it cost me to retain the services of a realtor to represent me?"

Nothing....there is no additional cost for Buyer’s Agent services when one helps you to buy a home. The compensation comes from the proceeds of the transaction, unless you choose otherwise.

"How does the Buyer’s Agent get paid for their services?"

There are several ways for the agent representing you to get paid. It is always your choice. The most common way is exactly the same way other real estate agents are paid: the typical commission paid at closing is divided between the listing agent and the buyer’s agent. The only difference is that the contract says the buyer agent’s portion of the commission is paid "on behalf of the buyer."

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