ABOUT REAL ESTATE
MORE AGENTS REPRESENT HOME BUYERS
By Diana Shaman
Real estate brokers who represent buyers of homes, and never the sellers, are growing in number.
Less than a decade ago, few brokers represented buyers. Tom Hathaway, president of the Buyer’s Agent in Memphis, which has 50 franchise offices in 26 states, estimates that there are now 1,500 exclusive buyer brokers in business nationwide. His company, founded in 1988, added 20 franchise offices just last year, he said. It recently helped create a National Association of Exclusive Buyer’s Agents.
Another franchiser, Buyer’s Resource, based in Denver and founded in 1989, now has 96 offices after adding 16 last year, according to a spokesmen, Gregg Stucker. Independent agents are also reporting an upswing in business. Bethany D. Marten, owner of the Home Buyer’s Resource Center in Baldwin, Long Island, for example, said her staff of 5 grew to 12 last year.
Although a seller’s broker, by law, is required to treat buyers fairly and reveal anything that might adversely affect the potential sale of a house, buyer brokers say they look for potential problems a seller may not have disclosed, or might not even know.
Buyer brokers say they can negotiate the best price for their clients. “We act in a sense like an attorney or an accountant to protect the buyer, so that they can make an informed decision and buy the best home for them, “Mr. Hathaway, the Memphis broker, said.
Although there are variations, the buyer broker generally receives the same amount as a seller broker’s subagent who produces a buyer. The amount that the seller receives for the home is the same as would be the case if the home’s purchaser had been found by an agent representing the seller.
Representation is something buyers could and should have had all along , said Maureen F. Glasheen, a former general counsel to the New York state Department of State and now a business and legal consultant in Albany. She plans to become an executive of Buyer’s Resource. “The custom of the industry was to not offer the service, and initially to not disclose that it wasn’t being offered,”Ms. Glycine said.
Under the law of agency, an agent has fiduciary responsibilities only to the client. Those responsibilities include undivided loyalty, confidentiality and full disclosure. Any information offered by a buyer to seller’s agent, for example, must be passed on to the seller.
Confusion often arises because many buyers believe that the agent who shows them houses works on their behalf. In fact, subagents of the listing broker–often they are agents who work for another office–also act on behalf of the seller. Disclosure laws that have helped clarify the issue were adopted by most states in the 1980’s after a 1983 report by Federal Trade Commission disclosed that three-quarters of buyers thought the agent who showed them houses worked for them, and that most sellers thought likewise.
Many consumers, now understand that subagents do not represent the buyer’s interests, and that buyer brokers make a great deal of sense,” said Stephen Brobeck, executive director of the Consumer Federation of America in Washington, an association of nonprofit consumer groups.
The National Association of Realtors takes the position that buyers should be given a choice of all options. A recent poll of homebuyers and sellers indicated that consumers most valued the representational aspects of a broker’s services, said Laourene Janic, general counsel to the association. “Buyers should be given the choice of having an agent represent them,” she said.
Listing brokers sometimes offer to act as buyer brokers, but critics say that creates a conflict of interest . A new development has been the emergence of the so-called transaction broker, a form of brokerage that has been proposed in many states and that is permitted in Colorado and Florida, among other states.
A transaction broker is an independent contractor who puts together a deal between a buyer and a seller without having fiduciary responsibilities to either, said Marie Powell, president of the Florida Association of Realtors, who endorses the idea. She called it a fair solution for everyone because, she said, it also reduces liability on the part of sellers and buyers for the actions of their agents, which in an agency relationship they would have. For example, a seller can be liable if the seller’s agent tells the buyer, without the seller’s knowledge, that the roof does not leak when in fact it does.
Ms Glycine, the Albany lawyer, called transaction brokerage a betrayal of consumer rights. Now that consumers have discovered that both parties in a real esate transaction are entitled to representation by their own agent, “this protection is being taken away by some legislatures,” she said.
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