The Journal
 
BUYER BEWARE: UNDERSTAND WHO IS REPRESENTING YOU
by Jo Gordon
 
In just two weeks, Kim Caldwell went from being a renter in Alexandria, Va., to a homeowner in Silver Spring, Md. She credits the speed with which she found her house to the help she received from a buyer's agent.

"I chose a buyer brokerage to avoid any type of conflict," Caldwell said. "As a first-time homeowner, I'd heard a lot of stories about conflicts at settlement." Caldwell was in a rush to find a house, but wasn't sure if she wanted to settle in Virginia, Maryland or Washington. So she enlisted professional help, from the Buyer's Edge, a Bethesda- based buyer broker. "My broker was able to come up with a complete list of available homes for me that matched my needs," she said. Buyer's agents are relatively new to the real estate profession. Traditionally, real estate agents were hired by sellers and represent the seller's interests-- a fact that many buyers do not understand. Although seller's agents show homes to prospective buyers and may be friendly and helpful, they are working to help the seller get the best price for the home. This means that if prospective buyers reveal how high a price they are willing to pay or how much home they can afford, the traditional agent will pass on this information to the seller. The seller then has the negotiating advantage. A buyer's agent, on the other hand, is hired by the purchaser to represent his or her interest. The buyer's agent researches the market value of a home, gives advice on negotiating the best deal, suggests appropriate offers for the property and leads buyers to unlisted homes or homes being sold by owners. When a home is sold, the buyer's agent typically shares the commission with the seller's agent. Some require up front fees, which may be credited against future commission. Some real estate brokerages work exclusively for buyers. Others work for firms that represent both buyers and sellers. Exclusive buyer's agents say their customers avoid the problems of dual agency--a situation in which an agent lists a property and also represents a buyer interested in that property. Stephen Israel, president of the Buyer's Edge, says the purchaser who uses an exclusive buyer brokerage can be 100 percent assured of avoiding a situation in which their agent is representing the seller's interests or in which someone else from the same firm is representing the interests of the seller. "What people want is to be represented by someone who is obliged to tell them everything they know about the other party's position," Israel said. Dual agency is contrary to this level of expected agent representation, he said.

Israel says buyer agents recognize that dual agency will never completely go away. In small towns, for example, there may only be one broker. But, he says, buyers in almost every market can find exclusive representation.

Some agents disagree. Denise Kempton, a agent with Long &; Foster Real Estate Inc. in Centreville, argues that conflict does not necessarily arise. "Today's laws are very different. You're only a dual agent if you're selling your own personal listing," she says. "As the designated representative of the buyer, you'll do everything you can for the buyer. There is no pressure on agents here to show Long &; Foster properties exclusively. "We want the best house for our client, and clients want to see listings across the board." Kempton acknowledges that agents can earn bonuses if they sell homes listed by their companies, but said it's still in the broker's interest to show all available properties. Chris Christensen, vice president of marketing for Arlington, Va.-based American Homeowners Foundation, argues that unless an agent exclusively represents buyers, there is still a potential for conflict. "Buyer brokerage is a no-lose proposition," he said. "A buyer's agent's entire focus is for the buyer's benefit only." The foundation, a national, non-profit homeowner education foundation, maintains a national database of exclusive buyer agents.

Foundation President Bruce Hahn says, "No amount of artificial intracompany separation can completely assure that both buyers and sellers are getting full fiduciary services," foundation President Bruce Hahn said, "such artifices are unnecessary since the solution is already out there: either represent the buyer only or the seller only."