Prior to the 1990′s, real estate purchase contracts were only two pages and were written to protect the “seller”. All real estate professionals pretty much represented the “seller”, not the buyer in any transaction. Today, real estate purchase contracts are eleven pages with several pages of addendums and are written to protect the “buyer”. In the earlier days of real estate, the agent, hired by the buyer was working for the seller. This meant that everything the buyer discussed with the agent was disclosed to the seller.
Could you imagine telling your agent personal information about your situations, finances, etc. and then they would relay this information to the listing agent of the home you made an offer on? It was assumed by the buyer, the agent was looking out for their best interests.
The real estate laws have changed but in the best interests of the buyer or seller, whomever the agent represents. Real Estate professionals now use a form called an “Agency Disclosure”. This form should be signed by the party to the transaction PRIOR to writing an offer on a home. This will assure the buyer the agent negotiates an offer in the buyer’s best interests.
Over the years I’ve known several buyers who actually think they will save money by dealing directly with the agent who is the listing agent on a property. This listing agent then writes an offer on behalf of the buyer but the agent’s fiduciary duty is to get the highest price for the seller, not the lowest price for the buyer. This strategy can actually cost the buyer thousands of dollars more when the negotiations start.
Being represented “exclusively” by your agent is crucial in a real estate transaction. Here’s a good example; you call the listing agent off a sign you see in a front yard and ask them to show you the property. You preview the home, love it and ask to make an offer. When you discuss offer price, you tell the listing agent you would be willing to go higher but you want to start at a lower price. When the listing agent presents the offer to the seller, they can tell their seller you are willing to go higher. So the seller immediately counters your offer with a higher price.
Most buyers don’t realize this, but walking into a new home community without a real estate agent can be very costly. That’s right, the salesperson at the model homes represents the builder/seller, not you the buyer. So this salesperson has a fiduciary duty to get the builder the highest price possible for the new home.
As a buyer, always consider hiring a real estate professional that will exclusively represent you and have the agent take you to the model homes on your first visit. Model home sales offices will not allow an agent to represent the buyer if the agent does not escort them on their first visit.
Buyer’s agents use a real estate form in their business called a “Buyer Broker Exclusive Employment Agreement”. Many buyers tend to shy away from signing this disclosure form upfront, but it really protects the buyer and buyer only. It’s not an agreement that forces the buyer to purchase a home but rather an agreement in writing that the agent agrees to “exclusively” represent (look out for their best interests and work for the buyer making sure they get the best possible price for the home) the buyer when they do decide to purchase.