What is a Buyer's Agent
A buyer’s agent is an agent that represents the buyer or buyers exclusively in a real estate transaction. Typically, in a real estate transaction, the listing agent contracts with a seller to offer the property for sale on the market for a fee. In most listing agreements, that listing agent has agreed to offer a buyer’s agency commission to be paid out of the total marketing fee. The commission is typically offered to all buyers’ agents in a given market, regardless of which brokerage the buyer’s agent works for. When a buyer’s agent successfully procures a buyer for the listing agent’s listing, and that transaction closes, the buyer earns their commission.
Effectively, the buyer’s agent is paid by the seller. However, the buyer’s agent has a legal fiduciary duty to the buyer. The buyer’s agent must always act in the best interest of the buyer, and may only disclose to the seller or listing agent that which they buyer wishes them to disclose. So, it’s effectively the buyer’s agent’s job to get the best terms and price for the buyer, while they are paid by the seller.
Some buyers’ agents’ require a buyer to sign a Buyer’s Agency Agreement when they begin working together. This agreement spells out the buyer’s agency relationship and stipulates the commission the buyer’s agent will earn. It does not require the buyer to purchase a property, but stipulates the buyer will use that agent in a given market. Buyer’s Agency Agreements can be beneficial to both parties because it legally protects both parties’ interests throughout the process.