Buyer agency agreement
Encyclopedia
Buyer Agency Agreements are where a Realtor represents the buyer of real estate
.
, a real estate Agent/Broker agrees and contracts to represent the Buyer in her purchase of a home/property. Buyer Agency Agreements were developed to set out the terms and conditions of this representation. They are similar to the written "Listing Agreements", required between Listing Agents and Sellers (property owners). Buyer Agency Agreements set out the main conditions of the relationship between the Buyer Agent
and her Buyer Client including such things as the duration of the agreement, the commission to be earned/paid, and the various rights, duties and obligations of the parties.
, is generally offset
in whole or in part against the share, or "co-op", commission offered by the Listing Agent through the Multiple Listing Service
("MLS").
An exclusive buyer agent is a real estate agent who works for a company that does not ever represent sellers in real estate transactions.Exclusive buyer agents (and their clients) avoid the conflict of interest of working with an agent who promotes their listings or their firm's listings. It is beneficial to a buyer to have representation because the agent is responsible for acquiring information on the property and advising the buyer based on that information. Without an agreement, the agent may not have an obligation to work with the buyer's best interests in mind.
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
.
Creation
With the advent of "Buyer Agency" (Buyer Brokerage) in the early 1990s as opposed to seller agencySeller agency
in the brokerage of homes. The listing agent and the seller enter a written contact under which such particulars as home price, duration of agreement, commission, rights & obligations, duties, etc...
, a real estate Agent/Broker agrees and contracts to represent the Buyer in her purchase of a home/property. Buyer Agency Agreements were developed to set out the terms and conditions of this representation. They are similar to the written "Listing Agreements", required between Listing Agents and Sellers (property owners). Buyer Agency Agreements set out the main conditions of the relationship between the Buyer Agent
Buyer agent
In the real estate business, a buyer agent refers to an agent or broker that represents the buyer in a transaction. This can include buyer agents from traditional listing firms, as well as buyer agents from EBA firms, which represent the interests of the buyer in all transactions.Also See EBA, or...
and her Buyer Client including such things as the duration of the agreement, the commission to be earned/paid, and the various rights, duties and obligations of the parties.
Fiduciary duties
The Buyer Agent owes fiduciary duties to the Buyer under this relationship and agreement, including fidelity, honesty, dedication to purpose, acting in the Buyer's best interests, etc. The commission to be paid to the Buyer's Agent in the Buyer Agency Agreement, though ultimately the Buyer's obligationObligation
An obligation is a requirement to take some course of action, whether legal or moral. There are also obligations in other normative contexts, such as obligations of etiquette, social obligations, and possibly...
, is generally offset
Offset
The term offset may refer to:* Carbon offset, a financial instrument aimed at a reduction in greenhouse gas emissions* Offset agreement, trade practice in Aerospace and Defense Industry...
in whole or in part against the share, or "co-op", commission offered by the Listing Agent through the Multiple Listing Service
Multiple Listing Service
A multiple listing service is a suite of services that enables real estate brokers to establish contractual offers of compensation , facilitates cooperation with other broker participants, accumulates and disseminates information to enable appraisals, and is a facility for the orderly...
("MLS").
An exclusive buyer agent is a real estate agent who works for a company that does not ever represent sellers in real estate transactions.Exclusive buyer agents (and their clients) avoid the conflict of interest of working with an agent who promotes their listings or their firm's listings. It is beneficial to a buyer to have representation because the agent is responsible for acquiring information on the property and advising the buyer based on that information. Without an agreement, the agent may not have an obligation to work with the buyer's best interests in mind.
Conflict of Interest
A Realtor that is acting as a Buyer's Agent has a significant economic conflict of interest if their commission is split with the Seller's Agent, as in most real estate transactions. Because a commissioned Buyer's Agent is paid more if the Buyer pays more money, the Buyer's Agent has a direct economic incentive to make the Buyer pay more for a property. This encourages Buyer's Agents to violate their fiduciary duty to Buyers.See also
- AgreementAgreementAgreement may refer to:* Agreement or concord, cross-reference between parts of a phrase* Gentlemen's agreement, not enforceable by law* Contract, enforceable in a court of law...
- Conflict of interestConflict of interestA conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....
- ContractContractA contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
- ClosingClosing (real estate)Closing is the final step in executing a real estate transaction.The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is transferred...
- Fiduciary
- Listing
- Meinhard v. SalmonMeinhard v. SalmonMeinhard v. Salmon, 164 N.E. 545 , is a widely cited case in which the New York Court of Appeals held that partners in a business owe fiduciary duties to one another where a business opportunities arises during the course of the partnership...
- Real estateReal estateIn general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
- Real propertyReal propertyIn English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
- Real estate trendsReal estate trendsReal estate trends is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change...
- Realtor