he term "Exclusive Buyer Agent", often called "Buyer's Brokerage", came about in the mid-1980s from a lawsuit involving the Sunnyvale Association of Realtors and the National Association of Realtors. Real estate agents and state agency laws throughout the United States were affected.
Prior to the decision, SELLERS and their (listing) agents were stuck with the legal responsibility for any mistakes, half-truths or lies that were made by any one of hundreds of subagents who worked on seller listings which were acquired from the multiple listing service (mls). BUYERS were at the mercy of their own agents, who were really subagents of sellers. These subagents were getting paid by sellers and were legally working for sellers, even when "representing" a buyer. The law at the time mandated that they had to make every effort to get the HIGHEST possible price for their fiduciary, the seller. Any provable action to the contrary could involve them in a lawsuit and/or put their license at risk. Buyers were classified as customers. Sellers were classified as clients.
After the lawsuit ended in the mid-1980s, agents can choose to work as "buyers" agents regardless of who pays them, providing that certain prescribed paperwork is properly done. Buyers agents are now obligated to get the LOWEST possible price for THEIR fiduciary, the buyer.
Equally important, listing agents everywhere are now allowed to declare "No Subagency Offered", avoiding the consequences of any misrepresentations made by subagents.
But what happens when a buyer's agent shows their own listing to a buyer? Or, what if they show their office listing(s) to a buyer? Then, they have a legal and moral obligation to their other fiduciary, the seller. The question comes up, "Who are they really working for?" In this case they are working for the seller (when showing their own listings) or as a subagent (when showing company listings.) They can not also be agents of the buyer except when acting as a dual agent.
Although subagents or dual agents can work with buyers, they are not working exclusively FOR a buyer. To act as an Exclusive Buyers Agent, an agent must fill out certain disclosure forms for the buyer to understand and sign. Agents who are truly Exclusive Buyer Agents will guarantee exclusive representation and loyalty to the buyer, including best efforts to get the lowest possible price at the best possible terms.
It is estimated that only 1% of all agents in the Bay Area are Exclusive Buyer Agents. How does one know if an agent is an Exclusive Buyer Agent? Typically they will discuss the subject of agency up front, explain the laws, provide a copy of a state mandated agency disclosure form and put their commitment in writing with a "Buyer Broker Agreement", and guarantee that they do not take seller property listings. Any agent showing homes without doing these things is probably not an "Exclusive Buyer Agent".
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