Like everything with real estate transactions, the laws vary by state. It is worth looking into what the laws are in your particular state. Some states are more protective of buyers than others. Some states have a distinction between buyers and sellers agents and others do not.
What Does Buyers Agent Mean?
For states that recognize this concept, it basically means that a realtor cannot represent people on both sides of a home sale. They can’t be the agent for the people selling the house AND the people buying that same house. If you think about it, it makes sense – buying a home is a negotiation and if the agent is negotiating for both sides, they have what I’d characterize as “inside information” about both parties. It does not make for an ideal situation for the same person to be representing both sides in a deal.
NOTE: It is not unusual, nor is it the same kind of conflict for the same agent to help you sell your home and help you find a new one. In that case they are only representing you.
Here in PA, we do have Buyers Agents. Typically, when you decide that you want to work with a realtor here, they have you sign a simple document that basically says they will be acting as your buyers agent. It also usually says that you won’t be working with other agents as the buyer and is typically for a short period of time (I think our first one was for 3 months). You can sign a new one at the end of the time period if you have not completed a home purchase or you can decide not to and then work with a different agent.
If an agent agrees to be your Buyers Agent, they are supposed to put your interests above all else. Having an agreement between you and them, even if it is just a simple one, will create that professional relationship between you and them. REMEMBER though, that you don’t have confidentiality with a realtor like you do with your lawyer or a doctor. The agent is expected to keep your information confidential and not to share things with the agent on the other side of the deal that is not part of the information that you have to share in the process of making an offer and doing all of the paperwork – like they should not tell the other side something like “they have an extra $10,000 that they are willing to spend, so keep that in mind when you talk to your sellers”.
Should you end up in some kind of legal dispute where you are suing your realtor, your emails and texts to your realtor will be part of the evidence provided. Remember this as you communicate with them. You will also be able to get access to all of the emails they sent to the sellers agent as part of the discovery process too.
Realtors Are People Too
Here is the piece that realtors don’t want you to think about too hard – at the end of the day the more you pay for a property, the more they make. The whole system is set up with the conflict baked right in. I’m not saying that all realtors are shady people who don’t care at all about their professional ethics or their clients and are only out for the almighty buck for themselves. In the vast majority of cases, I don’t think this even comes into play.
I do think it is more subtle than that. Realtors don’t get paid until deals close, period. All of the hours they put in showing you homes, sending you listings, doing deal paperwork, etc. is unpaid time until you actually complete settlement on the property. If you’re at the point of making an offer on a property or a counter offer or even negotiating after inspections are completed, it is not impossible to believe that your agent is at least partially motivated by getting the deal to close. This might mean that they advise you to pay a little more or push back a little less to keep the deal from falling apart.
In the end, there isn’t really any way around this. But it is something to be aware of. When you’re at those points in the negotiations when decisions need to be made about what you want to offer or counter offer or ask for as adjustments don’t be afraid to ask your realtor for justification or data to back up what they are recommending to you. It’s always better to ask “Why do you think that is what we should do?” than to not ask that question.
Realtors are professionals and it is their job to know the market(s) they work in. They absolutely should know how to pull together what they will call “comparables” or “comps” to show you at what price similar homes have recently sold for in the same area. If they are experienced, they may also have a feel for where deals can fall apart and can advise you accordingly. It’s likely that the agent on the other side has given them at least some clues if not outright told them where the sellers sticking or stubborn points are. A good realtor will help you to figure out the right offer for you and for the specific situation.