What is an Exclusive Buyer’s Agent (EBA) and why should I care? Those are questions I asked myself when I recently accepted a position here at Housing Solutions as their Marketing Director. I had to understand what it was I would be marketing before I could actually attempt the task of persuading potential buyers to choose Housing Solutions to represent them. I have purchased 5 houses in 4 different states, and sold 4 during my lifetime, and I have never been exposed to an Exclusive Buyer Agency, but I have always been uncomfortable with the inherent flaws presented by a traditional real estate agency representing buyers AND sellers. It never made sense to me- if I were selling my home and had chosen an agent who then also brought a buyer to me, who was that agent really representing? As it turns out, they were really representing me as the seller. However, once I became a buyer looking to replace the house I just sold, that same agent could now potentially be representing the seller of the house I was now looking to buy! Makes no sense. If you were getting divorced, you wouldn’t hire your soon-to-be-ex spouse’s attorney to represent you- why would hiring an agent who potentially represents the buyer and the seller be a good idea? It seems like a conflict of interest waiting to happen…
By hiring an Exclusive Buyer’s Agency like Housing Solutions, a buyer is protected by an agent who is representing only the buyer, never the seller. That agent has a fiduciary responsibility to the buyer to protect the buyer’s interests. There is no additional cost to you to utilize an EBA. If the property is listed with a sellers agent, Housing Solutions will receive the “co-broke” fee that is offered to agents who cooperate in the sale. This co-broke fee is set between the seller and the sellers agent and paid at the closing. This is Housing Solutions only compensation in the transaction.
Below are several examples outlining significant differences between traditional real estate agents who represent buyers and sellers and Exclusive Buyer Agents (EBA) who only represent buyers*:
- A Seller’s Agent must do everything possible to gain an advantage for the Seller. An EBA must do everything possible to gain an advantage for the Buyer.
- A Seller’s Agent must comply with all lawful instructions from the Seller, but is not obligated to obey instructions from the Buyer. An EBA must comply with all lawful instructions from the Buyer, but is not obligated to obey instructions from the Seller.
- The Seller’s Agent must reveal any known physical and material defects in the property but may NOT reveal important information such as traffic problems, declining property values, poor school systems, bad neighbors, etc. since these items might make the property less desirable to the Buyer. The EBA must tell the Buyer everything they can discover about the Seller and the property including the reason for selling, and any reasons the Seller may have for wanting a quick sale. The EBA must also research any inconsistency in property information and concerns deemed important to the Buyer and disclose the findings to the Buyer.
- The Seller’s Agent must tell the Seller everything they can find out about the Buyer including any financial details that they have lawfully obtained. The Seller’s Agent must conceal anything about the Seller that would help the Buyer gain an advantage. This could include details such as pending divorce, need to move quickly, etc. The EBA must keep all information about the Buyer confidential, including the Buyer’s willingness and/or ability to pay more for the property than they are offering.
- A Seller’s Agent must prepare themselves through education, study and licensing to competently represent the Seller. The EBA must prepare themselves through education, study and licensing and experience to competently represent the Buyer.
This answers the question “Why use an Exclusive Buyer’s Agent?” , so now let’s talk about what to expect from your Housing Solutions’ EBA. Your Housing Solutions agent will:
- Explain the forms of Agency available to you in the Upper Valley area of VT and NH, and explain how different relationships may affect the level and scope of service a Buyer may receive from a traditional real estate agent vs. an Exclusive Buyer Agent.
- Review our written Agency Agreement with the Buyer to include beginning and ending dates, fee structure and payment method, and the responsibilities of both parties
- Pledge absolute loyalty and confidentiality to a Buyer when representing him/her
- Advise the Buyer throughout the entire home purchase process
- Develop the target property profile by discussing preferences in size, location, styles, age, floor plans, etc.
- Search the entire real estate market, including, but not limited to, the Multiple Listing Service (MLS) and properties for sale by owners (FSBO)
- Disclose to the Buyer any defects, weaknesses or potential problems observed or discovered regarding the property
- Prepare a comparative market analysis (CMA) using comparable sales to determine the property’s fair market value
- Explain the choices available to develop an offer to purchase and explain the alternatives available to the Buyer
- Advise the Buyer to seek immediate legal counsel when appropriate
- Prepare the offer to purchase in a manner which will protect the Buyers interest to achieve best price and best terms; provide proper disclosures and any other matters as required by law
- Develop negotiation strategies with the Buyer, including pre-set limits on key points of negotiation when the Buyer wishes to do so
- Counsel the Buyer regarding the time requirements in the contract and encourage the Buyer to have professional inspectors inspect the property if the contract is accepted
After the Offer to Purchase Is Accepted
- Counsel the Buyer about property inspections, and provide the names of real estate inspectors; will encourage the Buyer to be present during all inspections
- Review options available to the Buyer regarding items in the inspection report
- Where appropriate, notify the Seller or the Seller’s Agent in writing of inspectors’ findings and the Buyers choice of any options available to the Buyer
- Maintain contact with the Title Company and Mortgage Company to insure that the Buyers interests are being protected
- Review the settlement statement with the Buyer at or before closing
- Conduct a final walk through inspections of the property prior to closing
- Attend the closing with the Buyer and be prepared to answer questions the Buyer may have
I hope I haven’t made this seem more complicated that it really is! The bottom line is that in legal matters requiring negotiation, knowledge and representation, you want the person representing you to be 100% loyal to you and not conflicted or restrained by legal obligations to the opposing party ( in this case, the Seller) . Hopefully, the next time you consider buying a house, you will contact Housing Solutions for a free, no obligation consultation as your first step. As your Exclusive Buyer’s Agent, we will guarantee loyalty and confidentiality and we will protect your interests.
Let the house hunting begin!
* Information taken from http://www.exclusivebuyersagents.com/ and edited for use in this blog.
Funny coincidence: Housing Solutions is an EBA located next to EBA’s. It must be a sign of some sort!