If you are a buyer, the brokerage industry provides you with a choice of whether you want representation by a broker or not. If a broker is representing you, the agent and his or her broker is called a “buyer’s broker” or “buyer’s agent”. If the agent who is finding you a home does not represent you, that agent is called a “seller’s agent”.
Some brokers represent only sellers. Some brokers represent only buyers. Some will represent either a buyer or a seller depending on the particular property and other circumstances. Regardless of which type of representation you choose, all brokers are required to be honest, ethical and knowledgeable. All brokers are required to disclose to you any material facts of which they are aware pertaining to the property.
Generally, if you employ a buyer’s broker, you will be asked to sign an agreement which will obligate you to work exclusively with the one broker for a stated period of time. The amount of the commission and the method of payment is negotiated between you and your broker. Quite often, the buyer’s broker will offer the option of being compensated by sharing in the commission paid by the seller. The agreement can also require that you pay the buyer’s broker a commission. The agreement can also require you to pay the buyer’s broker a retainer.
Dual agency is created when a broker represents both the buyer and the seller. Dual agency can be created in one of two ways:
- the agent representing the buyer also represents the seller.
- or, the agent representing the buyer is licensed with the same broker as the agent who represents the seller. In both of these situations, the same broker represents the buyer and the seller and a dual agency is created.
Dual agency poses potential conflicts of interest for the broker and, therefore, it is permitted only if both you and the seller agree, after disclosure, to the dual agency.