NYT article on buyer representation

Posted by nithi.vivatrat on March 17, 2009

On Sunday, the New York Times had this article about the growing use of buyer’s agents on Long Island.  The article implied that buyer’s agents are fairly rare there; my feeling is this is less true in the DC area.  Regardless, my focus is on this issue: the article cites real estate brokers who now focus exclusively as buyer’s agents to eliminate “the ’smoke and mirrors’ and ‘dual-agency conflict that has caused so much mistrust among consumers and real estate agents.’”

It is true that when there is a documented and disclosed (this is important) relationship between a buyer-client and a real estate broker, then the broker representing the buyer has a fiduciary responsibility to represent the buyer’s interests.  This is clearly stated in Article 1 of the NAR Code of Ethics (Standards of Practice 1-1 and 1-13).   Classes for agents pursing an Accredited Buyer’s Representative (ABR) designation.

That being said, it is hard to ignore the reality that, in a traditional commission model, the buyer’s representative gets paid a commission amount stipulated by the listing agreement and only at the consummation of a transaction.  Sure, this means that buyers don’t have to pay any fees unless a purchase actually occurs.  But as I have pointed out in earlier posts, the commission model, even for buyer representation, creates real potential for conflicts of interest that the SmithAdams fee-for-service model avoids.  And by the way, most buyer representation agreements keep open the potential for dual-representation, should the buyer agree (I wouldn’t).

So, of course I think it is better for any buyer to have his or her own representative.  I just think buyers should be fully educated on dynamics that the NYT piece glossed over.

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