And Why Should I Consider It Before Looking?
Understanding Buyer’s Agency
(An explanation of line 1 in the Offer to Purchase)
On line 1 of the Offer to Purchase the Broker drafting the offer must declare in whose interest the Broker is drafting the offer. Taylor & Associates REALTY , as a general rule, prefers that the drafting Broker represent the Buyer’s interest in the Offer to Purchase and throughout the home purchasing process. A Broker who represents a Buyer is called a Buyer’s Agent.
“Buyer Agency”, often called “Buyer Brokerage”, is a relatively new but important form of agency that has emerged in the last couple of years to provide buyers with the type of contractual loyalty that has generally been available only to sellers. Traditionally, all agents worked for the seller, as “sub-agents” of the listing agent, and consequently provided representation for and loyalty to the seller, even if there was no previous relationship with the seller, and despite any relationship with the Buyer. All Buyers were “customers” and all Sellers were “clients”. This is probably how most people purchased their homes in the past. However, virtually all real estate companies in Tennessee are now using Buyer Agency, and many Buyers are taking advantage of their new opportunity.
Buyer Brokerage is an agreement between a Real Estate Broker and a Buyer wherein each makes certain promises to the other in exchange for goods or services. The Broker generally promises to locate a particular type of real estate, and negotiate for the Buyer the best possible price and contract terms. The Buyer would generally promise to purchase the property through this Broker upon performance of these services.
Duties Owned by All Brokers to All Parties–Both Customers and Clients
- Honesty, fairness and good faith
- Reasonable skill and care
- Disclosure of material adverse facts
- Confidentiality*
- Provide accurate information upon request
- Account for all property received
- Objective and unbiased presentation of offers
Duties Owed to the Client ONLY (e.g. Buyer’s Brokerage)
- Provide accurate information upon request
- Account for all property received
- Objective and unbiased presentation of offers
Traditional Seller Sub-Agency vs. Buyer Agency
There are three main stages in the home purchasing process. Each of these stages is handled somewhat differently by a Buyer’s Agent and a Seller’s Agent.
- Locating Properties:
While the traditional Seller Sub-Agent may or may not work hard to locate you a property, the Buyer’s Agent is contractually obligated to exercise diligence and creativity in locating the right property for you. - Negotiating The Offer to Purchase:
While the traditional Seller Sub-Agent may draft an offer for you, he or she has an agency relationship with the Seller and as such is obligated to negotiate in the Seller’s best interest. The Buyer’s Agent, on the other hand, works for the Buyer and is obligated to represent the Buyer’s best interest in all negotiations. - Closing the Transaction:
The closing process will includes the removal of various contingencies,such as a third party inspection. The removal of these contingencies will often require additional negotiating between Buyer and Seller. While the Seller’s Agent will likely be conducting these negotiations from “the Sellers side” of the table, the Buyer’s Agent will be looking out for the Buyer’s best interest.
