The November 2007 issue of Real Estate In-Depth, the monthly newspaper for Realtor members of the Westchester-Putnam County Board of Realtors, Inc., included an article written by the board’s legal counsel.  The article is entitled ‘New York State High Court to Define Disclosure Duties Of Buyer’s Agents’.   The article refers to a lawsuit filed by a buyer represented as a client in a buyer agency relationship from within a traditional listing company.  The buyer filed the lawsuit after learning that the home he was bidding on was purchased by another buyer who was also represented by a buyer’s agent from within the same company. 

The point of this post is not to discuss the actual case, but to describe the writer’s use of  ’exclusive buyer agents’ from Century 21.   His useage of ‘exclusive buyer agents’, referring to agents from a traditional listing company, is erroneous and very misleading.   Is the writer aware of the true definition of Exclusive Buyer’s Agent, as NAR defined it in the early 90’s?  Without a doubt.  

An Exclusive Buyer’s Agent is an agent from a company called an Exclusive Buyer’s Agency.  This is a company which pledges never to list property for sale, and therefore never represents sellers as clients in an agency relationship.  Sellers are always considered ‘customers’.  Dual agency and conflict of interest with ‘limited loyalty’ are not encountered in a company which practices true agency (ie.: Exclusive Buyer’s Agency, or an Exclusive Seller’s Agency).

The correct way to describe buyer agents from a seller’s listing company is to refer to them as ’non-exclusive buyer agents’.  The article encourages mainstream Realtors acting as buyer agents to use a written contract, known as an Exclusive Right to Represent Agreement, which is available from the Westchester-Putnam Multiple Listing Service.  This agreement, when used by non-exclusive buyer agents, serves mainly to protect the real estate company’s financial and business interests.  The buyer agrees to work only with that agent and company in the purchase of any property.  This obligates the buyer to that agency if he/she becomes interested in a property listed by that agent’s own company, as well as any property listed elsewhere.  The agent’s loyalty and advocacy to that buyer is compromised with dual agency on an in-house sale.  The issue of dual agency (conflicted agency) and the resulting diminution of loyalty, representation, and advocacy to the buyer are not discussed.  The buyer may be obligated to pay a higher fee to the agent for this type of non-exclusive buyer agency representation.

This is unfortunate for the home buyer, as the meaning and intent of  true ‘agency’, as a relationship between an agent and the agent’s principal (client) holds that the agent must place the goals and interests of the client above those of the agent and anyone else in the transaction at all times.  Non-exclusive buyer agents, utilizing an Exclusive Right to Represent Agreement, are contradicting the very meaning and essence of ‘agency’ for financial gain and control.    

Use of this contract by listing companies offering buyer agency is self-serving, as it allows the goals and interests of the real estate agency to be superior to the goals and interests of their respective ’clients’, for transaction control and maximum profit.  Use of this form enables the real estate company to retain the buyer as a captive client, regardless of the level of representation and loyalty the agent can provide.  

When a real estate agent from a listing company claims he or she can be your ‘exclusive buyer’s agent’, and insists that you sign an Exclusive Right To Represent Agreement, one should question that agent’s loyalty, their knowledge of duties owed to you, and ethics. 

The use of an Exclusive Right To Represent Agreement Form DOES NOT magically transform a non-exclusive buyer’s agent from a seller’s listing company into a legitimate Exclusive Buyer’s Agent!!

Be wary of signing an Exclusive Right to Represent Agreement with a non-exclusive buyer’s agent.