ABR V.S Buyers Rep only

If you have formalized an agency relationship, typically by signing a buyer’s rep agreement with a buyer’s rep, you can expect him or her to:

• Understand your specific needs and wants and locate appropriate properties.
• Assist you in determining how much you can afford (pre-qualify your mortgage).
• Preview and/or accompany you in viewing properties.
• Research properties, to identify any problems or issues you should consider.
• Advise you in formulating your offer.
• Help you develop your negotiation strategy.
• Provide a list of potential qualified vendors (such as inspectors, attorneys,
  lenders, etc.) for other related services that may be needed.
• Keep track of all the details throughout the entire transaction—to closing and
  beyond.

In other words, a buyer’s rep should make your home buying experience go as smoothly and successfully as possible.

But not all buyer’s reps are equal. A buyer’s rep who has earned the Accredited Buyer’s Representative (ABR®) designation has made an extra effort to raise the bar, with additional training and experience in serving you, the homebuyer. If you work with an ABR®, you can feel more confident that you’ll receive the highest level of buyer-representation services.

DESCRIPTIONS OF AGENCY

There are agents, and then there are agents. Yes, it sounds confusing. That’s because the term “agent” is often used in a casual manner, referring to any real estate practitioner.

But agent also refers to someone with whom you’ve established a formal agency relationship—someone who represents your best interests in a real estate transaction and owes you fiduciary responsibilities.

Agency relationships are usually established in writing with buyer agency agreements, and require:

• loyalty
• obedience
• disclosure
• confidentiality
• reasonable care and diligence
• accounting

THE BIRTH OF BUYER AGENCY

For many years, real estate was practiced in such a manner that agency relationships were only extended to sellers. Any real estate agent who brought a buyer to the table was actually working as a sub-agent to the seller.

This all began changing in the 1980s, when buyer agency started gaining momentum in residential transactions. Today, agency laws still vary from state to state. But even if you live in a state that recognizes buyer agency, you can’t assume that you will automatically receive fiduciary responsibilities from the agent you’re working with as a potential home buyer.

That’s why it’s vitally important to talk to the agent or broker early in your working relationship about his/her agency status. You may also want to consult your state association of REALTORS® to gain a better understanding about agency laws in your particular state, or contact the agency charged with regulating real estate professionals in your state, often referred to as the state real estate commission.

Details vary from one state to another, and each brokerage has its own contract terms within these broader guidelines. But for purposes of illustration, this table outlines how your status may affect the level of service to which you are entitled:

Are you a buyer-customer or a buyer-client?
Services will vary, depending on your agency status*

* This chart is for general illustration purposes only. Agency laws vary by state; and specific terms of individual agency contracts will vary from one agent to another.

YOU MAY NOT KNOW IF YOU’RE A CUSTOMER OR A CLIENT

If you have formalized an agency relationship, typically by signing a buyer’s rep agreement with a buyer’s rep, you can expect him or her to:

• Understand your specific needs and wants and locate appropriate properties.
• Assist you in determining how much you can afford (pre-qualify your mortgage).
• Preview and/or accompany you in viewing properties.
• Research properties, to identify any problems or issues you should consider.
• Advise you in formulating your offer.
• Help you develop your negotiation strategy.
• Provide a list of potential qualified vendors (such as inspectors, attorneys,
  lenders, etc.) for other related services that may be needed.
• Keep track of all the details throughout the entire transaction—to closing and
  beyond.

In other words, a buyer’s rep should make your home buying experience go as smoothly and successfully as possible.

But not all buyer’s reps are equal. A buyer’s rep who has earned the Accredited Buyer’s Representative (ABR®) designation has made an extra effort to raise the bar, with additional training and experience in serving you, the homebuyer. If you work with an ABR®, you can feel more confident that you’ll receive the highest level of buyer-representation services.

WHAT ABOUT DUAL AGENCY?

In some cases, it will become necessary for your real estate professional to deviate from the single agency model. For example, a buyer-client may become interested in a house that also happens to be offered for sale by a seller-client of their buyer’s rep, or by the same brokerage firm. How can a buyer’s rep, in this instance, maintain complete loyalty to their buyer if he or she also owes complete loyalty to the seller?

Obviously, they can’t. But, depending on the real estate license laws in your state, and your status with the brokerage firm, the manner in which this situation is handled will vary. To get concrete answers, you should read and discuss the brokerage services disclosure statement, which should reflect your state’s agency law. If your agent hasn’t supplied a disclosure statement, you should ask for it. It spells out the different categories of agency services they provide and how they address dual agency.

Almost all states require disclosure of dual agency and often require that a buyer’s rep (or his or her brokerage firm) only act as a dual agent with the written consent of all parties to the transaction. In such a situation, the brokerage agrees to endeavor to be impartial between both parties and will not represent the interest of either party to the exclusion or detriment of the other party. Neither will they share the confidential information of one party with the other party. This is how brokerage firms and their agents strive to create win-win situations for everyone involved. There are a few states that prohibit dual agency even with disclosure and consent.

OTHER TYPES OF RELATIONSHIPS

Some states also allow different types of relationships beyond agency relationships. For example, a transaction broker assumes responsibility to facilitate the transaction, rather than represent one side over the other. Further obligations may also be set forth in a written contract with a client.

Even though the laws concerning agency can vary from one state to another, one thing that is constant throughout the U.S. is the obligation for all REALTORS® to comply with the National Association of REALTORS® Code of Ethics.

ISSUES TO DISCUSS WITH A BUYER’S REPRESENTATIVE

Real estate agency relationships, like all business relationships, can be formed in a number of ways. In order to help talk through your options, here are several questions to ask your buyer’s rep:

• Do you represent buyers, sellers or both?
• What services are provided to (or excluded from) me, based on my status as a buyercustomer or buyer-client?
• When does representation begin? When does it conclude?
• If I’m not ready to commit to your normal term, can you offer me a one-day buyer agency agreement or a 24-hour opt-out clause?
• How is dual agency addressed in your firm?

BUYER REPRESENTATION AGREEMENT

If you’ve started looking for a home—and a real estate professional to assist you—your buyer’s representative may ask you to sign a Buyer Representation Agreement. What is this form? Why should you sign it?

A Buyer Representation Agreement is a legal document that formalizes your working relationship with a particular buyer’s representative, detailing what services you are entitled to and what your buyer’s rep expects from you in return. While the language used in the document is formal, homebuyers should view it as an important and helpful tool for clarifying expectations, developing mutual loyalty, and most importantly, elevating the services you will receive.

1. Receive a higher level of service. If you’ve formalized an agency relationship with a buyer’s rep, you can expect to be treated like a client instead of a customer. What’s the difference? Clients are entitled to superior services, relative to customers. While the details vary from state to state, and from one buyer’s agent to another, you can generally assume that being a client means that you’ve formed a fiduciary, or agency, relationship with your buyer’s rep.

2. Get more without paying more. Oftentimes the listing broker has already agreed to pay a buyer’s broker’s commission. If they haven’t, you can ask your buyer’s rep to avoid showing you any such homes. Or you can still view the home, knowing that you’ll need to factor your broker’s commission into any offer you may write.

3. Avoid misunderstandings. A Buyer’s Representation Agreement clarifies expectations, helping you understand what you should and shouldn’t expect from your buyer’s rep, and what they will expect from you, which usually centers on loyalty.

4. Agency relationships are based on mutual consent. While most representation agreements specify a time period, they can be terminated early if both parties consent. Most buyer’s reps are willing to end the agreement early if the working relationship isn’t going well. Some buyer’s reps also offer representation agreements for as little as one day, for the purpose of giving both parties a brief trial period to explore working together.

5. Strength as a team. When you and your buyer’s rep work together within a formalized agency relationship, you have created a team dedicated to helping you achieve the best possible home-buying experience.