Will the REAL Exclusive Buyer's Agent Please Stand Up?
What is an Exclusive Buyer's Agent?
A: An agent who does not practice dual or designated agency and represents only the buyer's
best interests on any home the buyer wants to purchase.
B: An agent who gets the buyer's permission in advance to also represent the best interests
of the seller (or a competing buyer) if the buyer wants to purchase a home listed by the agent's company.
C: An agent who signs an Exclusive-Right-to-Represent-Buyer Contract with the buyer
regardless or whether or not the agent gets the buyer's permission in advance to also represent the
best interests of the seller (or a competing buyer) if the buyer wants to purchase a home listed by the agent's
company.
Buyer agency has become very popular since it was introduced to consumers in the early 1990s. However, consumers need to better understand the level of representation they will be getting and whether the buyer agent's company practices dual and/or designated agency. Dual and/or designated agency is when the buyer agent's company also represents the seller's best interests if the buyer wants to purchase a home that is listed by the buyer agent's company. Buyers should also be aware of the important differences between the three ways that the term exclusive buyer's agent is used by real estate agents in NC before they select an agent to represent them on their next home purchase. Let's discuss each of the three definitions above:
A: An agent whose company represents only the buyer's best interests on any home the buyer wants to
purchase, including homes listed by the buyer agent's company.
According to the National Association of Exclusive Buyer's Agents, (NAEBA), this is the only correct answer. This is also the definition you would find for Exclusive Buyer's Agent in Don't Risk It! A Broker's Guide to Risk Management, published by the National Association of Realtors® (NAR) in 2000: "Exclusive Buyer Representation - Also called exclusive buyer agency, this is the practice of representing only buyers, never sellers. The company never lists a seller's property and thus never has a seller as a client."
The definition above is also the definition used by the news media in articles written for the benefit of home buyers who are looking for consumer advice in preparation for the purchase of real estate. Internationally acclaimed finance specialist Suze Orman endorses the National Association of Exclusive Buyer's Agents in the "Finding a Buyer's Agent" section of her popular web site, www.suzeorman.com. Consumer advice columnists Ilyce Glink and Robert Bruss recommend exclusive buyer agency as an alternative to buyer agency for consumers who want to avoid the risk of dual or designated agency - when the same company represents the best interests of opposing parties. Ilyce Glink advises: "If you're trying to eliminate potential conflicts in your deal, you may want to try (exclusive buyer agency). Exclusive buyer's agents never represent sellers. They only represent buyers, and they typically will take buyers wherever they want to go in a metro area." Robert Bruss differentiates between the different types of buyer agency services in his article Do Home Buyers Need Their Own Agent?: "Any real estate agent can be a buyer's agent to help locate your home purchase. In addition, there are a few exclusive buyers' agents who represent only home buyers, never accepting listings from home sellers."
And June Fletcher from the Wall St. Journal.com writes:
"Home shoppers who use exclusive buyers agents don't run the risk of falling in love with one of their agent's own listings. When that happens, the agent becomes a dual agent -- beholden to both the seller and the buyer, and thus, beholden to no one. Because this limits the amount of advocacy and advice the professional can give either party (for instance, a dual agent can't tell the seller the highest price that a buyer is willing to pay), dual agency is illegal in some states."
B: An agent who gets permission from the buyer in advance for the agent's company to also represent the best interests of the seller (or a competing buyer) on the same home.
The news media is doing a great job of advising consumers to ask for an exclusive buyer's agent in order to avoid the the conflict of interests that exists with dual and designated agency (which is legally a form of dual agency in NC), since the same company is getting paid to represent each party's best interests on the same home. But now that consumers have started asking for an exclusive buyer's agent, listing agents are representing themselves to consumers as exclusive buyer's agents, and are advising consumers they can provide exclusive buyer agency representation - even when their company is getting paid to represent the seller too! The reason for this is that the NC Real Estate Commission does not recognize the definition for exclusive buyer's agent published by NAR in 2000. As a result, many real estate agents whose companies practice dual and/or designated agency advertise themselves to consumers as "exclusive buyer's agents".
C: An agent whose buyer signs an "Exclusive-Right-to-Represent-Buyer" Agreement regardless of whether or not the agent gets permission in advance from the buyer for the agent's company to also represent the best interests of the seller (or a competing buyer) on the same home.
The NC Real Estate Commission allows real estate agents to call themselves "exclusive buyer's agents" if their buyers sign an "Exclusive-Right-to Represent-Buyer" Agreement, even if their company will be paid to also represent the seller on the same home that the agent's buyer wants to purchase. So just because you have an "Exclusive-Right-to-Represent-Buyer" Agreement with your agent, that doesn't mean that your agent's company is only going to represent you. Your agent may start out representing only you, but in the future if you wanted to make an offer on a home listed by your agent's company, you would be required to permit the company to represent the seller, too.
The NC Real Estate Commission does not consider it a deceptive practice for agents to use the term: exclusive buyer's agent in this way because this usage is so pervasive throughout the real estate industry in NC. So the doctrine of Buyer Beware still applies to NC consumers who want an exclusive buyer's agent to represent them on their next real estate purchase transaction.
A refreshing exception is Ohio, where their state legal disclosure, "Consumer Guide to Agency Relationships," was developed jointly by the Ohio Association of Realtors and the Ohio Division of Real Estate & Professional Licensing. Under Ohio license law, each brokerage must disclose which of five agency policy options their company practices and offers to consumers, including an option for exclusive buyer agency: "Under this policy, your brokerage only represents buyers, and does not take listings, practice subagency or dual agency."
Since there is no legal regulation in NC over how real estate agents can use exclusive buyer agent, consumers are advised to question their real estate agent's interpretation of this loaded real estate term before hiring a self-proclaimed "Exclusive Buyer's Agent".
Julie P. Tuggle is broker-owner of Carolina Buyer's Agent, an exclusive buyer agency in Charlotte, North Carolina that represents only buyers, never sellers, on the purchase of Charlotte real estate with no risk to their buyer-clients of dual or designated agency on any home they want to buy. Contact Julie.
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