Comments on: Are Buyers Customers or Clients?

By: Greg Swann

Greg Swann — Wed, 19 Jul 2006 04:12:07 +0000

Here’s one for the rest of the nation (or at least those place that still have sub-agency): What do they teach in your ABR courses? I have always thought of ABR as being about exlcusive buyer representation. That’s maybe 70% of the first two days if you take the course in Arizona. What do they teach elsewhere?

By: sellsius°

sellsius° — Wed, 19 Jul 2006 02:08:47 +0000

christine - excellent examples!

you provide a very interesting analogy. the irony of this example however is, that the buyer is ultimately paying the commission, but doesn’t get the status as client and is owed no fiduciary duty yet they have to foot the bill.

-rdb°

p.s. yes, generally speaking - buyer brokerage and dual agency are compeltey different.

By: sellsius°

sellsius° — Wed, 19 Jul 2006 01:01:45 +0000

greg- thanks for sharing arizona’s position on implied agency, it sure seems interesting.

it’s just amazing to see how virtually every state has different laws regarding agency. no wonder there are so many confused people out there.

-rdb°

By: Christine

Christine — Wed, 19 Jul 2006 00:42:39 +0000

Well, the dollar signs seem to get in the way because the buyers feel that the commission is already factored into the sales price, which it is - but the buyers seem to think that the sellers are paying 100% of the commission - failing to realize that they are in actuality paying the commission. Even though the commission gets paid/claimed from the sellers end, the sale would never take place if the sales price + the commission are not acceptable to the seller. Let me give this example - I go buy a pair of shoes - I the buyer pay the tax - correct? BUT the store is the one who claims it and pays directly to the IRS. But in the end - I the buyer paid the tax on it. The store would never allow me to take the shoes without paying the tax. Correct?
With a TRUE buyers broker agreement - the buyer is AGREEING that if YOU the sales person get them the house that they want for a certain price (it would be greatly lower than the asking price) and represent them and only them therefore, they will pay your commission, directly to you. I have never in my experience seen that done -
On our LI MLS - the selling broker commission is X amount of dollars and out of every 100 MLS listings you will see 99.9% the Buyer Broker commission will be 0%.
Go outside of MLS - if there was an EXCLUSIVE listing that ABC realty had - I as a TRUE buyer Broker could show that house - because I am not getting paid from the sales price - I would be getting paid by the buyer.
Agents tend to confuse the Buyer Broker and the Dual Agency. They are completly two different things.

By: sellsius°

sellsius° — Wed, 19 Jul 2006 00:11:55 +0000

christine - you did one heck of a job with your post!

i too would like to hear from buyer agents in new york about their experiences. when you say that “but the dollar signs seem to get in the way”, what do you mean?

-rdb°

By: sellsius°

sellsius° — Tue, 18 Jul 2006 23:35:34 +0000

ardell - fixed the link. thanks!

yeah, the state of washington , along with many other states, most certainly have a different approachs to agency than new york does. i’m not sure what is the best model. i would have to understand peoples real life experiences in each type of agency for both pro and con in order to have a solid opinion on the matter.

there seems to be no “best” method that would be fair to both buyer and seller. maybe there should be some sort of standardized system for agency. maybe someone is already working on it…

-rdb°

By: Ardell DellaLoggia

Ardell DellaLoggia — Tue, 18 Jul 2006 22:08:38 +0000

The link you posted “DOJ-Exclusive Buyer Agency” doesn’t show the source of the writing. It was written FOR the DOJ, but by whom? It could be the White Paper submitted by Tom Early as the Master of NAEBA, but it also could be Tom Hathaway, given the references to Tennessee. Can you identify the source of the writer in this link, as some might think it is the DOJ if you do not. Thanks.

By: Ardell DellaLoggia

Ardell DellaLoggia — Tue, 18 Jul 2006 20:54:16 +0000

In the State of Washington, all licensees represent buyers at first contact, with a few exceptions. One being if the licensee already represents the seller. That’s “licensee” not “broker” as we are a Designated Agency State where the buyer is represented at first contact. At least that’s my read on it.

By: Greg Swann

Greg Swann — Tue, 18 Jul 2006 20:48:06 +0000

I need to write more about this at my own place — for one thing I owe a reply to Ardell. But your remarks here are interesting, and highlight how jurisdiction-dependent all this is.

In Arizona, Buyer Brokerage exists as a default ground state. It hasn’t been legislated, so far, but the Arizona Association of Realtors has written Sub-Agency (what I would call the situation you describe in New York) out of existence.

Moreover, our courts consistently rule on the doctrine of Implied Agency: If the customer thinks you’re his agent, you are, and he is de facto your client. This, as you might guess, results in some nice judgments for Undisclosed Dual Agency.

A key precept of all of this is this: Representation Is Not Compensation. I owe a fiduciary duty to my buyer client even if he elects to buy a FSBO with no broker participation. I owe a fiduciary duty to my seller client even if he turns down four nearly-perfect offers and then cancels the listing.

You can write around this in your employment agreements, but if you just “wing it” — as many, many Realtors do with buyers — the Arizona courts are always ready to clip your wings.

By: Christine

Christine — Tue, 18 Jul 2006 20:31:19 +0000

I appreciate the mention - thank you! Great post by the way. I do wish that in NY we would practice more of the buyer broker senerios - if buyers knew why it is in their favor, but the dollar signs seem to get in the way. I would like to know if anyone has been paid as a buyer broker and how well that worked out.