Exclusive Buyer Agents are true and committed believers in Exclusive Buyer Agency. To operate as a true EBA office, all agents must agree not to market homes for sellers. As a result, we pass up a huge source of visibility and potential income that taking listings provides. EBAs sacrifice this potential income because we want to offer the best service and representation possible to home buyers. We know that we can only do that by declining to represent sellers in our practice.
Exclusive Buyer Agents are a Rare Breed
EBA companies are a rare breed because they depend on finding good real estate agents that will work exclusively with buyers. Those who will are committed to providing specialized service to their buyer clients. Our commitment to the concept of the EBA office is a huge part our efforts to help our clients get safely home. That’s what we’re all about.
We Love Sellers Too
As EBAs, we have nothing against people who are selling their homes. Without sellers, our buyers would have nothing to buy! We respect and value sellers' agents as well. A good listing agent can help make the purchase process go smoothly for their sellers and for our buyer clients. In fact, our past buyer clients are someday likely to become sellers. We’re happy to refer them to good listing agents who will protect their interests.
The Technical Answer
Since any Colorado agent can represent buyers under a buyer agency agreement, what’s special about an Exclusive Buyer Agent?
What is special about the EBA concept? In traditional real estate offices, that represent buyers while marketing properties for sellers, agents constantly face conflicts of interest. On the surface, an environment where brokers have homes to sell and buyers who want to buy seems like an ideal situation. In practice, a broker's obligations to his sellers can create impediments to first rate representation of his home buyers.
Obligations to Sellers
Traditional real estate agents have moral and legal obligations to aggressively market the homes they have listed for their sellers. They also have substantial financial incentives for pushing these homes to their buyer clients. In these transactions, they may double their income when those homes sell. In fact, many sellers expect their listing agent to "bring them a buyer." This obligation to sellers is in direct conflict with the buyer’s interest in having unbiased exposure to the whole market.
If you become interested a property listed by your buyer agent, she will no longer be able to provide true buyer agency representation on that transaction. Remember, she’s agreed to represent the seller too. In situations like these, the broker will transition into the neutral role of a transaction broker for both parties. It is precisely here that the buyer most needs the loyalty, fidelity and good faith an agent provides — which the buyer has now lost.
Traditional real estate companies bank on their reputation for marketing homes quickly and effectively for sellers, obtaining a good price on the seller’s terms. This image may be hard to maintain if the company’s agents are known for bargaining hard for their home buyers and/or discouraging them from making offers on bad properties.
Conflicts in Practice
Brokers in traditional offices face conflicts of interest which can impede first rate representation of home buyers.
As part of our service to buyer clients, we often mail a few hundred letters to neighborhoods to find unlisted properties. We often get several replies from homeowners who are preparing to put their homes on the market. This strategy can sometimes provide our buyers with the opportunity to buy properties before they are listed. The information also stays confidential while they decide if they want to buy. But what if we worked for a traditional real estate company?
Traditional Real Estate Companies Focus on Listings
When a traditional agent discovers a "For Sale by Owner" situation for their buyer, their agencies expect them to try to list the property. A deal like this has the potential of making a double commission for the broker and her company. Traditional practice is to list the property with the Multiple Listing Service for a 6% commission. Neither the buyer nor seller would have an agent, just a broker who handles the transaction. In contrast, we simply ask for a 2.8% buyer agency fee, saving everyone involved the remainder. Because we don't list, we only represent the buyer in the transaction, and the seller handles his side, avoiding all conflicts of interest.
EBAs Have Fewer Conflicts of Interest
We know that many of the brokers acting as buyer agents with traditional companies take their buyer agency responsibilities very seriously. That’s a good thing, because EBAs are rare and many buyers wouldn’t have the option. All real estate agents must deal with conflicts of interest, but the buyer agent working for the traditional company faces with a whole host of potential conflicts that simply don’t exist for the EBA.