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 of 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
Two-hatted agents stopped laughing. This was serious. Two-hat agents were in danger 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.
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 the marketplace.
Epilogue
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 any more 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.