Exclusive Buyer Agents

Home Buyer Alert: Working with an exclusive buyer agent is the only way to make sure you're getting 100-percent dedicated, loyal representation.

All REALTORS are not created equal. This is not a value judgment or an assessment of character. It's simply an acknowledgement that there are different ways REALTORS can work with customers.

Most REALTORS are not in a good position to give effective real estate representation to home buyers. Again, this says nothing about conduct or intent. It's just recognizing that the type of relationship an agent has with a home buying client makes a big difference.

The best type of REALTOR to engage when buying a home? An exclusive buyer agent or EBA. Although rare and home buyers are free to engage any type of agency they choose (plus, finding a true EBA will take some diligence and probing questions), this is the only type of relationship that doesn't split the REALTOR's loyalties between home buyer and seller.

Muddying things up even more: An agency may not be a true EBA just because it says it will represent home buyers as well as sellers. But there is a way to tell when agents are stretching the truth. Thanks to the clear meaning of the word "exclusive," you don't have to work very hard to weed out agencies who ever list homes for sale. If they do, they may not fairly call themselves exclusive buyer agents.

The focus here is on Minnesota and will be especially helpful for those buying homes in Minneapolis and St. Paul, as well as in North St. Paul, Bloomington, Edina, Minnetonka, Woodbury and the rest of the greater Twin City metropolitan area. Even so, most of the information should prove indispensable to home buyers in all fifty states.

• EBAs offer the best home buyer representation

• How EBAs benefit home buyers

• Making sure it' a real EBA

• EBA: Ten years in the news and still breaking

EBAs Offer Best Representation

One way to see why exclusive buyer agents are the home buyers best choice is to compare them to other types of REALTORS .

Types of REALTORS?

That there are different types of relationships a home buyer can have with their real estate agents is news to many. You contact the agent listed on a for sale sign, call the phone number from a bus stop bench or click-through a name on a referral page. Chances are you never realized that each could lead to a distinctly different type of relationship. And, even though Minnesota and most other states require that you see the Agency Relationships in Real Estate Transactions form at the "first significant contact," many home buyers can miss the form's meaning or its consequences.

Not all agents take care to describe the implications of each type of agency relationship. It's not unheard of, in fact, for the form to buried in the stack of papers you might sign in quick succession at closing, all while your REALTOR explains that they're "just a formality."

While a real estate agent may act like it's just one more bureaucratic detail, the Agency Relationships in Real Estate Transactions form aims to stress that there are distinct options for home buyers and that the option they use can make a big difference.

As directed by the Minnesota Department of Commerce, the Minnesota Association of REALTORS defines five options for agency relationships in its Agency Law Governmental Regulations. But, from a home buyer's perspective, you can boil the options into three basic categories.

Taking representation choices for buying a home from the least beneficial to the most:

Sellers Agent

The name should tip you off that this is not the type of relationship you want with your REALTOR when buying a home.

Dual Agent

A dual agent attempts to represent both the seller and the buyer, or attempts to represent the buyer while another agent licensed to the same broker represents the seller.

Common sense suggests that having a single agent or agency represent opposing interests can bring trouble. Making things worse for home buyers, the law of agency , licensing laws and the REALTOR code of ethics put the dual agent's fiduciary duties legally and ethically with the seller. And that's just one reason home buyers should beware dual agency.

Almost all agents work this way and unless a real estate agency advertises that it is one of the few that represents home buyers exclusively, you're safest if you assume it is a dual agency.

Two of the five options described by the Minnesota Associations of REALTORS could, more or less, fall into the dual agent category: A "subagent" works with a buyer but, as far as the law is concerned, represents the seller. A "facilitator" might work with both seller and buyer on a real estate transaction, but remains aloof from fiduciary representation.

Buyers Agent

Because buyers agents act solely for the interests for the buyer, this is clearly the type of relationship you'd want when buying a home.

Making things even less complicated, a few agencies have gone the next step. They reassure, providing full representation to the interests of the home buyer by working as exclusive buyer agents and never listing homes for sale.

This the type of REALTOR home buyers will want to seek.

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How EBAs Benefit Home Buyers

Exclusive buyer agents work for the home buyer. But there's something even more important than who EBAs work for. The biggest deal is who they don't work for.

EBAs never work with sellers and never list homes. They don't work for agencies that ever represent sellers.

This benefits home buyers in many ways.

Legal and Ethical Obligation to You

Since they never list homes for sale, exclusive buyer agents are liberated from the legal and ethical obligations that put the focus on the seller and distract from the homebuyer. Instead, their fiduciary responsibility is to you.

From Customer to Client

You're no longer a mere customer, of interest only as a potential buyer of product. Instead, you become a client engaged in a consultative relationship, sharing the goal of finding you the exact right home.

Full Representation

Now you're the one benefiting from the Law of Agency and the REALTOR code of ethics. That puts the agent's full focus on you. And, it makes sure you get complete, 100-percent real estate representation throughout the home buying process.

Clear Code of Confidentiality

Unlike a dual agent, all the information about you, from the amount you'd pre-qualified for to when you must close on your current house, considered clearly and completely confidential by an exclusive buyer agent.

Increased Privacy

Harder to define than what dual agents must tell their clients is what they might reveal. An innocent comment, and nothing generally considered confidential, can tip the scales in a cutthroat negotiation.

Maybe you think the large, fenced in yard would be perfect for your dog. Or the house is only one you found that could cut thirty minutes off your commute.

Since your exclusive buyer agent is not having regular contact with the seller, this private information won't even have a chance to slip out.

Negotiating Partner

As your advocate, responsible only to you, an exclusive buyer agent can be a powerful negotiating partner. With a practiced eye, an EBA can share whether the home is overpriced. He or she knows the signs that reveal a motivated seller.

In case you're wondering why an EBA working for a percentage of the sales price would want to you reduce the commission, let's put things into perspective. Say your exclusive buyer agent helps you knock a full $10,000 off of a home's asking price. That favor, if you consider a commission of three-and-a-half percent, cost him or her $350.

You're agent just bought $10,000 worth of word-of-mouth for $350. Considering the value of a satisfied client, that's a bargain.

Aggressive Advocacy

Freedom from all ties to the seller removes any incentive, subconscious or otherwise, for agents to misrepresent. Instead, exclusive buyer agents work in their own best interests by making sure you know everything you need to.

That assures you accurate and objective information about a home's value, physical defects, neighborhood and market conditions.

Nothing Out of Pocket

Choosing to work with an exclusive buyer agent costs you nothing out of pocket.

As with most real estate transactions, an EBA's pay comes out of the seller's proceeds at the time of the sale.

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Making Sure it's a Real EBA

Exclusive buyer agents are understandably proud of their fiduciary representation. They make no secret of their loyalty to home buyers. If a REALTOR is an EBA, that fact will be touted on letterhead, business cards and ads.

You still need to be careful. Some agencies may say they have buyer agents or buyer brokers and that they keep them far away from the agents who represent home sellers. But that doesn't matter.

No one doubts that a dual agency has the best intentions. But, printing "buyer representative" on their business cards doesn't change the reality. The firms seller and buyer agents could work in separate counties, keep their names secret from each others and wear hoods to hide their identities at staff meetings.

None of this changes the most critical consideration: Their legal and ethical duty is not to you, the home buyer, but to the seller.

The best way to be sure is to ask a simple question: "Do you or does your agency ever list homes for sale?"

Unless you get a simple "no" you're not talking to an exclusive buyer agent and unless you'll settle for less than 100 percent representation when buying a home, this is not the real estate agent for you.

Another way to make sure you're dealing with an EBA is to check the "find an agent" page maintained by the National Association of Exclusive Buyer Agents.

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Ten Years in the News; Still Breaking

With differences between exclusive buyer agents and other brokers so stark, and the impact on home buyers so huge, you might wonder why so few know about it. It's not like the existence of EBAs is breaking news.

Or rather, it's the news that's been breaking for decades.

More than ten years ago, a story in the July 2, 1995, New York Times tells how New Jersey is "Making a Buyer Aware" by joining 44 other states in adopting an agency disclosure law for real estate brokers. Minnesota adopted a similar law at about the same time.

A December 31, 2006, New York Times article, "Spelling Out Agents and Brokers' Duties suggests why, a decade later, so many home buyers don't know that exclusive buyer agents offer much better real estate representation than most other brokers. The article announced improved disclosure forms "designed to provide expanded, clearer definitions of the different agency relationships."

Coverage of exclusive buyer agents has hardly been limited to a few articles. Extra noteworthy is how consistently it receives positive press.

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Here's hoping this information helps you get the superior real estate representation and all the other benefits an exclusive buyer agent offers when buying a home in the Twin Cities of Minneapolis and St. Paul, as well as in Bloomington, Edina and the rest of the greater Twin City metropolitan area.

More Resources
For Home Buyers

Note that these resources are included because of their potential value to home buyers in Minneapolis and St. Paul, Minnesota. Inclusion does not imply endorsement of or by these resources.

The No Dual Agency Home Buyer Alert from The Home Buyers, Inc. illuminates the risks of working with a dual agent, as well as how many Minnesota REALTORS (most) operate that way.

As the leading MN exclusive buyer agents, The Home Buyers, Inc. assures home buyers of 100 percent representation.

The National Association of Exclusive Buyer Agents provides home buyers with tips, tools and an EBA locator.

While not focused on advocating exclusively for home buyers, the National Association of REALTORS stands as a broader resource for home buyers and sellers.

Aimed at REALTORS licensed in Minnesota, the Minnesota Association of REALTORS allows home buyers to review some pertinent laws and regulations.

Twin Cities Relocation Guide serves new arrivals and residents alike with links to virtually every city, county, school, sports, entertainment or other resource in the Minneapolis / St. Paul metropolitan area.

Select Communities

Still More Resources

The New York Times Real Estate section includes information of interest to home buyers throughout the United States.

The "business tool for real estate professionals," REALTOR Magazine includes information of interest to home buyers.

BuySelf saves home sellers thousands by charging an economical flat fee to list houses for sale on the MLS.

Exclusive Buyer Agency Minnesota is one in a series of educational resources made available by Bloomington-based The Home Buyers, a Minnesota REALTOR to those thinking about or in the process of buying a home. Content for Exclusive Buyer Agency Minnesota was developed by WriteIntuit.

We welcome your feedback at feedback@mnexclusivebuyeragents.com

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Home Buyers Advice - MN Exclusive Buyer Agent