Question 1

What is a Buyer's Representation Agreement?

Accepted Answer

A Buyer Representation Agreement is a legal agreement, which formalizes your working relationship with a particular buyer’s representative (i.e., real estate broker), detailing what services you are entitled to and what your broker expects from you in return. While the language used in the agreement is formal, buyers should view it as an important and helpful tool for clarifying expectations, developing mutual loyalty, and most importantly, elevating the services you will receive.

Receive a higher level of service. If you have formalized an agency relationship with a buyer’s rep, you can expect to be treated like a client instead of a customer.  The difference being that “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, one can generally assume that being a “client” means that you have formed a fiduciary, or agency, relationship with your buyer’s rep.

Get more without paying more. Oftentimes the listing broker has already agreed to pay a buyer’s broker's commission. If they have not, 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.

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

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 is not 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.

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 property-buying experience.

Question 2

What are the most common types of "Agency" and what do they mean?

Accepted Answer

Seller Agency: A broker from Brokerage A represents the seller in a transaction. This broker looks out for the best interest of the seller in the transaction and owes the buyer honesty and any material facts about the listed property that are needed to make an educated decision.

Buyer Agency:  A broker from Brokerage B represents the buyer in a transaction. This broker looks out for the best interest of the buyer in the transaction and owes the seller honesty and any material facts that are needed to make an educated decision.

Dual Agency:  One broker from Brokerage A represents both the buyer and the seller in a transaction. This broker represents the buyer and seller equally and owes confidentiality to both parties. Brokers in a dual-agency relationship facilitate the entire transaction and may not provide full advice to either party due to confidentiality.

Designated Agency: Real estate Brokerage A represents both the buyer and seller, with one associate broker from Brokerage A representing the seller and a separate associate broker from Brokerage A representing the buyer. The brokerage represents the buyer and seller equally, owes confidentiality to all parties and may do nothing to the detriment of either the buyer or the seller.

Representation is straightforward if the buyer and seller agents are affiliated with different companies. However, when the agents on opposite sides of the transaction work for the same brokerage, representation and agency become more nuanced and complex.

Question 3

What is a Transaction Broker?

Accepted Answer

A transaction broker is a mutual resource in a real estate transaction. Technically, they do not represent either the buyer or the seller. Instead, they can give both parties information and advice.  The role and purpose of a transaction broker can vary from state to state.

For example, in the state of New Mexico, if a buyer does not sign an agency agreement with an agent, then the agent is automatically just a transaction broker. If the buyer wants the agent to work intentionally on their behalf as a buyer's agent, then they must sign a buyer agency agreement.

Question 4

Are Transaction Brokers legal?

Accepted Answer

When learning about transaction brokers, some people are initially confused and wonder if transaction brokers are legal.  They might wonder: If a transaction broker is someone who assists both the buyer and the seller of a home, how is that legal? Isn't that the same thing as dual agency?  The answer is: “No, it is not the same thing.” There is one key difference between a dual agent and a transaction broker.

A dual agent represents both the buyer and the seller in a real estate transaction. Because of this, the real estate community usually accepts that they cannot really keep both parties’ best interests in mind simultaneously – despite their best efforts.

The key difference between the two is that a transaction brokerage represents neither party. This means that when an agent is acting as a transaction broker, they are not invested in the deal at all. So, they can provide neutral advice and assistance to both parties.

Question 5

What does a Transaction Broker do?

Accepted Answer

A transaction broker provides neutral advice and assistance, which can apply to many different parts of the property selling process and buying process.

Here are just a few of the things that a transaction broker can help you out with as a buyer:

Preparing a competitive offer on a home
Communicating with the seller
Writing the purchase agreement
Helping with the closing process

Transaction brokers can also be of great help to sellers. Here are some of the things they can do for sellers:

Setting a competitive list price
Communicating with the buyer
Writing the purchase agreement
Helping with the closing process

A transaction broker is also not considered a dual agent. Dual agency involves an agent or broker that represents both parties simultaneously. Quite the opposite, a transaction broker does not represent either party.

Question 6

What is a Seller's Agent or a Listing Agent?

Accepted Answer

A Seller’s Agent is a real estate professional who helps prepare and list a property for sale (the latter being the reason they’re also known as listing agents). They represent the person selling a property and must work in their best interests.

Seller’s Agents handle many tasks involved with selling a property, including:

Helping you analyze the market to figure out if it is a good time to sell
Giving you advice for maximizing your property’s value
Connecting you with other professionals to help prepare or improve your property
Staging your property (if needed)
Listing your property on multiple listing services
Helping you price your property
Marketing the property: running tours, organizing open houses, showings, etc.
Serving as the go-between in negotiations with buyers
Drawing up the purchase agreement