"It's All About Hats"
Home buyers have recently begun signing multitudes of paperwork even before
they purchase a home. At issue is the relationship they have with the
Realtor they choose to work with. Because agents are bound under their
broker’s policies and obligations, agents must fully inform their customers
as to whether or not they can advocate for them in all or only some
It’s logical to assume that as a consumer you would desire the maximum
protection especially when making one of the most important purchases of
your life. However, because of a listing broker’s obvious conflict of
interest, the agent you are working with may have to switch horses in the
middle of a very deep stream.
This leaves you unprotected at a very critical point. Should you seek
additional help for your side? Is there time? What will you agency
relationship be without a definite strategy? Or, should you just let the
agent do his or her thing, letting price, terms and conditions fall where
The choices available to buyers can make your head spin so let’s attempt to
simplify the process. We are presenting you with your own special Buyer hat.
Where you hang your hat will determine who will represent your best
interests. Join with us now as we present:
The Traditional Agent ......................................
Works for a Broker in a company that lists homes for sale. Does a
wonderful job of "selling". Advertises, holds open houses and is legally
obligated to get the highest price for all the seller clients listed with
their company. The Traditional Agent will show you homes for sale,
preferably their listings or the office listings. Legally their loyalty must
be to the sellers. But, can they represent you? Protect your
confidentiality? Bargain on your behalf? No, they can’t because the
Seller's hat is already hanging in their office and they can't legally protect your interests.
Caution: Hold on to your hat!
The Dual Agent
Traditional Agent representing the seller doesn’t want to lose your business
so they have an option available that allows them to take your hat and hang
it right next to the Seller’s
hat and be a Dual Agent. You might meet this agent at an open house or call them
to see a company listing. The Dual Agent will tell you not to worry because
they can represent both you and the seller and that the Code of Ethics
requires them to be honest and fair. Hopefully they will “honestly” tell you
that under Dual Agency Laws they are prevented from doing anything to
benefit one party over the other. They can not give advice or counsel to
either party. You’re both on your own. The benefit to Dual Agency is that
the Broker and agent keep both sides of the commission.
SERVES NEITHER THE SELLER NOR THE BUYER WELL.
Caution: Hold on to your hat!
The Designated Agent
"a rose by another name“ for the Traditional/Dual Agent. The
Broker of a company can appoint one Traditional Agent as your "Designated
Buyer Agent and another Traditional Agent in the same company as the
"Designated Seller Agent". Now your hat will hang right next
to the Seller's hat. Because the Traditional Agents have “new names”
state law says that they are no longer Dual Agents but --- state law does
say that THE BROKER OF THE COMPANY IS A DUAL AGENT… THEY ARE ALL ON THE
SAME TEAM. Renaming agents in a firm that lists Seller’s homes for sale,
even though sanctioned by state law, is nothing short of “pulling a rabbit
out of a hat”.
Caution: Hold on to your hat!
The Transaction or Facilitator Agent
the Traditional Agent who elects to represent no one in the transaction.
They choose to have no “fiduciary” duty or obligation to the seller or
buyer. They and their Brokers can fulfill all the physical requirements to
complete the transaction but they choose not to protect anyone’s interest.
They will show homes, do as you tell them but, by law, can offer no advice
or counsel. You’re on your own. They refuse to hang any hat in their
office because they don't want to assume any legal obligation for anyone.
They’re safe – you’re not.
Caution: Hold on to your hat!
The Buyer's Agent
is the same Traditional Agent who works for a traditional company and broker
that lists homes for sale. They may personally “choose” to just work with
buyers. They may be a member of a “sales team”, and call themselves a
Buyer’s Agents. That works until you fall in love with one of their
company’s listings. Then, they will gladly take your hat and be a Dual or
Designated Agent. Is your head beginning to spin? What just happened to your
buyer agency relationship and isn't that your hat hanging right next to the
Caution: Hold on to your hat.
The ''Exclusive'' Buyer's Agent
agent works for a Brokerage that has elected to EXCLUSIVELY represent
Buyers. They don’t sign listing agreements with Sellers so they never have a
conflict of interest with their Buyer clients. They offer all the services
of traditional offices but do not list Seller’s homes. They have access to
all listed homes via the Multiple Listing Service or any other property
available for sale like For Sale By Owners and new construction. There's no
additional cost or fee for this service since they are paid, as are other
agents, from the
transaction at closing. They are committed to only representing
Buyer's so you will never find a Seller's hat hanging in their office.
No caution here. This is the safest place to
take off your Buyer’s hat and relax.
THE BIRTH OF A NEW BREED
In the mid 1980’s there were some agents and brokers who saw the unfairness
of the "traditional" system and said "This is wrong!" They formed real
estate companies that would only hang buyer’s hats in their offices. They
said "We won’t take listings." We will never represent sellers."
Consequently they would not be bound by law to tell the seller anything that
would compromise your interests. "Only ONE HAT will hang in our office
and it will be the Buyer's. We will protect their interests “EXCLUSIVELY." Traditional agents in the two-hat
business laughed at this new idea and continued to do business as usual.
Slowly but surely this new breed of "EXCLUSIVE" buyer agents and their
brokers grew from a handful to thousands nationwide. They offered price
evaluation and opinion, created contract clauses protective to the buyer,
offered counsel to the buyer rather than a sales pitch and ceased the "show
and tell the seller" game. Shortly thereafter, some major events took place.
The Federal Trade Commission did a study that showed a
tremendous amount of confusion by consumers as to whose hat was being worn.
A major two-hatter was sued by buyers for millions for dollars in a class
action lawsuit because the brokers and their agents didn’t make clear who
they represented. The Consumer Federation of America and consumer activist
Ralph Nader endorsed "EXCLUSIVE" buyer representation as the only legitimate
option for the home buying public. Large numbers of homebuyers said
"enough". They began asking for representation for their side.
A REVERSAL OF CONSEQUENCES
Whoa! Two-hatted agents stopped laughing. This was serious. Two-hat agents
were endanger of losing buyers so they began scrambling to take classes and
get "designations" so that, at the least, they could "look like" a
one-hatter. But they still kept their seller hats --- just in case you
wanted to buy one of their company listings.
"Traditional" real estate brokerages had worked both sides of the street for
years and already knew that having two hats and keeping transactions in-house
meant no splitting of commissions with another brokerage thus doubling the
income to their own company.
Across the country state legislatures felt pressure from consumers who
wanted to know who they could trust and who would be looking out for them.
Slowly real estate laws that had been in place for years began to change.
Written disclosures were designed in almost every state to assist consumers
in understanding the complexity of agency relationships and the risks
involved when agents wore more than one hat.
In Nevada, for example, consumers are to receive a Duties Owed disclosure
“as soon as practicable”. But “as soon as practicable” can be a gray area.
Timing for WHEN to disclose and WHERE your Buyer's hat could hang would ultimately have to
be implemented by real estate brokers and their agents. State regulatory
agencies just don’t have the manpower to oversee the thousands of agents in
Was it possible for brokers to police their own agents closely enough to be
sure they would properly disclose and "explain" agency relationships? Would
their agents wisely do it “right up front” and risk watching buyers take
their hats, walk out the door and lose a sale? Would agents be affected by
in-house bonuses that motivated them to sell company listings? Would it be
ever so tempting to take advantage of the timing for disclosure and, as
permitted by law, wait until even as late as the point of contract when
buyers were emotionally committed to a home they wanted? What do you think?
EXCLUSIVE buyer brokerage in real estate
came about because it was consumer driven and it survives because it levels
the playing field. Just ask yourself – if parties in a lawsuit don’t share
the same attorney, why should buyers and sellers share the same real estate
company, let alone the same agent? The bottom line is: Agents and their
brokers can’t wear two hats anymore than they can serve two masters.
There’s an old song that says: “Get your coat and grab your hat, leave your
worries on the doorstep, just direct your feet to the sunny side of the
street” or right to The Buyer’s Realty of Las Vegas. We’re happy to be an
EXCLUSIVE BUYER’S AGENT, only hang your hat in our office and always
protect your interests.
See what some of our clients
have to say about our unique service to home buyers...