First some history about the evolution of the different types of real estate agencies.
Exclusive Agency is something that has been lost in the muddied waters of Real Estate. A long time ago, all agencies were Exclusive Seller Agencies. Sellers would get full, uncompromising representation from start to finish.
Then the Exclusive Buyer Agency got started. For the first time ever, buyers could also get uncompromising representation from start to finish. Finally, buying and selling a house allowed for each person to worry about their own affairs and let the experts take care of the details… but in 1996, all that changed.
Seller Agencies wanted in on the Buyer Agency money. Dual Agency was born. Suddenly, sellers and buyers no longer had guaranteed uncompromising representation.
Fortunately, buyers can still find uncompromising representation through Exclusive Buyer Agencies. Unfortunately, there is no longer anything for the sellers that offers the same level of care.
It comes down to the individual agent and their personal morals and expertise. No longer does an agency have the back of the clients unless they are an EBA (Exclusive Buyer agency).
With that said, how do you know you are going to get the best representation available? Here I will cover some good questions to ask an agent, and go over some answers that you can hope to get if you have found a quality agent.
Where do I start?
Maybe you’ve been browsing the internet, looking for listings. Maybe you’ve gone to some open houses. That part’s easy right? What about when it comes to decision time? Are you ready?
‘Where do I start’ is a good question to ask an agent. It may just catch them off guard. They will likely come back to you with some questions like have you been looking? Are you pre-approved?
A quality agent will get a good idea of where you are at, and give you good advice of where to “start” from there. The best starting point truly is to sit down with an agent you’d consider working with and have a consultation. This is where you can get to know the agent you potentially would be working with both personally and professionally. This is where you bring your tough questions as well as your curiosity questions and see how they fare with them.
If you ask an agent ‘where do I start’; a quality agent will listen to your needs and wants, your time frame, and discuss with you the best plan of action for your goals. They will also educate you about marketing conditions, available options and more.
How are you different from other agents?
This is a great question to ask. You’re about to embark on one of the most expensive and life changing processes of your life. The last thing you’re going to want is any run-of-the-mill agent representing this extremely important decision. You are going to want an agent that can confidently tell you how they… AND their company stands out from the crowd.
This will be a tough question for agents to answer. As you saw in the introduction, most agencies are now pretty much the same. Dual agencies that represent both sides.
If you’re a buyer, an EBA can tell you how their agency is the only type of agency that can give you full fiduciary duties 100% of the time, no compromise. That is something other agencies cannot claim.
An EBA real estate agent will also be able to tell you that they will look at a house with a critical eye and actually point out reasons NOT to buy a house! They will also point out maintenance issues as well as possible safety concerns. They can do this because they and their company have no allegiance to the sellers and take on absolutely NO listings. An EBA’s allegiance is with the buyer only.
The problem you might run into with the other agencies is they do have allegiances with sellers. If you’re a buyer and you have questions about a house they’re listing, their job is to sell you on that house, not steer you away if it’s got issues. They typically will have motivation to do so because many times they will be getting some sort of stipend on top of the commission they would get from your purchase by your buying their company’s listing.
Speaking of money, why not ask how we get paid?
EBA’s are compensated typically by the cooperating fee offered by the seller. When a seller and a seller’s agent sit down for their consultation. Part of what is discussed is how much of the sale price will be taken out and paid to the agency. A share of that amount will be paid to the buyer’s agent when you purchase a home.
In other words, you’re already paying the buyer agency fee when you purchase the house. Therefore, if you were to buy through the seller’s agent for example, it wouldn’t really save you money, the seller’s agent would just pocket more money in the end.
The fee an agent may “charge” varies and it is a negotiable term. You can discuss and negotiate the number with your agent if you feel the rate they offer isn’t fair.
Won’t I get a better deal/more likely to get my offer accepted if I buy directly from the listing agent?
Even if you already know the answer, put the agent on the spot! Make them explain to you what they’ll do to save you money and why working with them is the better choice.
It’s a common misunderstanding that a buyer would get a better deal working with the listing agent. As a fiduciary, a listing agent owes his or her loyalty to the seller and cannot legally help you get a better deal. That right there shows you that a buyer agent could be saving you money right off the bat.
Some people think that if they buy through the listing agent, that the agent could take less of a commission saving them money. Here’s the truth behind that.
First of all, most agents work on a commission that has already been agreed upon with their seller prior to the house being listed. That commission is coming out of the sale regardless and you as a buyer have no say in the matter. Unless they have agreed to a variable rate commission with their seller, there will likely be no adjusting the commission in your favor, especially considering the agent who takes you on will then have twice the work as they will be acting as your buying agent and the listing agent.
Regarding the variable rate commission; the seller only agrees to that with the stipulation that if a buyer chooses to work with their listing agent, the SELLER will get more money back at the closing table, not the buyer! Either way you look at it, everyone in the deal but the buyer wins when the buyer goes with the listing agent.
What about a better chance at getting your offer accepted if you go with the sellers agent?
Again, the selling agent’s loyalty is with the seller. They also can’t legally present your offer above any other offers that come in. They have to present them all equally.
In the case of a multiple offer situation, you’re likely to lose out to people who have agents that are going to try and improve the presentation of your offer (EBA’s).
I mean sure, there’s a chance that your offer could be accepted over others if you go with a listing agent… IF there are no other higher offers, IF no other offers come in with less contingencies, IF no one else comes in with a more financially sound offer, IF no one offers more money down.. and the “IF’s” go on.
Ultimately, it is best to have your own representation and a good Buyer Agent will easily be able to explain why.