The Role of the Agent.
Does the agent represent the buyer or the seller

Although some home buyers purchase directly from a seller, most buyers  use the services of a real estate agent. Yet buyers often don't  understand the role their agent plays in the transaction.

Precisely what an agent will or can do for you depends on who the agent  represents in the transaction. If an agent represents the buyer  exclusively (called a buyer's agent), he or she owes allegiance to the  buyer and can negotiate on the buyer's behalf to obtain the property at  the best (that is, the lowest) possible price.

If, however, the agent helping the buyer purchase a house represents the  seller then he or she owes an allegiance to the seller. A seller's agent  is duty-bound to get top-dollar for the seller, not the lowest price for the buyer.

You may wonder why buyers would choose to work with agents who don't  represent them exclusively. In some cases, a buyer may have no choice. For instance, if you buy in a new subdivision, the builder may  insist  that you write your offer with one of the development sales  representatives who represent the seller exclusively. Or, you may decide  that you don't want to pay a separate buyer's agent fee, which may be  necessary in some situations if you use a buyer's agent.

Let's say you have a relationship established with an agent who finds  you the property you want to buy, and this property is listed with your  agent's own realty company. In this case, even though your agent is not  the seller's agent, you and the seller would be represented by the same broker.

Real estate agents work under the supervision of real estate brokers. The broker is actually the agent; the individual sales agents act as the agents of the broker. When one broker represents both the buyer and seller, even if two agents are involved, it's called a dual agency  representation. With dual agency, the agents owe allegiance to both the  buyer and the seller. To be legal, dual agency must be disclosed to the buyer and seller and both parties must consent to this type of  representation.

A broker who represents you exclusively in a purchase owes allegiance to you and to you alone. This is referred to as a single agency  relationship: One broker represents the buyer; another one represents  the seller. If you work with a broker who doesn't represent you exclusively, that broker doesn't owe you exclusive loyalty. This would be the case where the agent helping you is an agent of the seller. It  would also be the case in a dual agency situation where the buyer and  seller are represented by the same broker.

FIRST-TIME TIP: Make sure that you and your agent discuss the various sorts of representation available to you before you write an offer to  purchase a property. If you end up working with a seller's agent, don't  discuss the price you'll be willing to pay or the intimate details of  your financial situation with the agent. A seller's agent would be  obliged to pass this information on to the seller which could compromise  your negotiating power. You should let the sellers know that you're  qualified to buy their home, but you don't need to inform them that  you're qualified to pay more.

IFN Newsletter
August 1999