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This article provides a brief overview of “typical” representation in a real estate transaction, and describes a buyer’s agent and the valuable contributions that they can make helping a home buyer to purchase a home.

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realtor, buyer realtor, buyer agent, buyer broker, real estate

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When purchasing a home, most people will have an opportunity to interact with one or more real estate sales people (often referred to as real estate agents or “realtors”). It is very important for a home buyer to understand the roles and responsibilities of a real estate sales person, especially who they represent in the real estate transaction. This article provides a brief overview of “typical” representation in a real estate transaction, and describes a buyer’s agent and the valuable contributions that they can make helping a home buyer to purchase a home.

A real estate sales person acts as an “agent” for one or more of the parties (buyer and/or seller) in a real estate transaction. An agent is an individual who works on behalf of another individual. Under the law of agency, which governs client/agent relationships, an individual acting as an agent for another individual must work to protect the “best interests” of their client (the person for whom they are acting as an agent). They are said to have a “fiduciary” responsibility to their client.

Typically in a real estate transaction, a real estate agent will obtain a listing from the seller of a home. The realtor and seller enter into a listing agreement whereby the realtor agrees to act as the agent for the home seller to help them to sell their home (listing their home in a listing service, marketing their home, holding open houses, showing their home etc.). This realtor is often referred to as the listing agent, listing realtor, or listing broker. In the listing agreement the home seller agrees to pay the listing agent for their services, typically a percentage of the selling price of the home. Since the listing agent often is not the individual to actually sell a home, the home seller also typically agrees to pay the agent who actually sells their home (the selling agent) for their services, also typically a percentage of the selling price of the home.

It is important for a home buyer to understand, that in the absence of any disclosure to the contrary, the listing agent acts as an agent of the home seller. The selling agent acts as a sub-agent to the listing agent. This means that both the listing and the selling agent are working for, and looking after the best interests of the home seller. Many buyers mistakenly assume they are being represented by the real estate agent who is showing them homes, when in fact that individual is usually working for the home seller. For this reason, many states require by law that real estate sales people disclose who they are working for to all parties to a real estate transaction at the beginning of any relationship. The National Association of Realtors (NAR) also requires in their “Code of Ethics” that realtors disclose who they are working for at the first meeting between a realtor and a seller or buyer.

Many home purchasers are not happy with the typical “arrangement” whereby real estate agents are representing the seller, and they are left to represent themselves. Many home buyers prefer to have a trained, experienced real estate professional representing them in their real estate transactions. It is for this reason that many home buyers choose to hire a buyer’s agent (also referred to as a buyer’s broker or buyer’s representative). A buyer’s agent is an individual who is hired by a home buyer to represent them in a real estate transaction. Similar to a home seller, a buyer typically enters into a contract with the buyer’s agent. The contract should stipulate what services the buyers agent will provide, and what compensation the home buyer will give to the buyer’s agent if they successfully help them to purchase a home. Buyer’s agent compensation is typically a percentage of a home selling price. Buyer’s agent contracts typically have a term and provisions for how either party (the buyer or the real estate agent) can sever the contract.

A buyer’s agent acts as the agent for the buyer in a real estate transaction. Services that they provide include:

  • Understanding a buyer’s home buying needs and desires.
  • Helping buyers to understand what they can comfortably afford.
  • Researching and helping to locate suitable homes in the appropriate communities that meet their buyer’s needs.
  • Answering questions about homes, communities, the home buying process, and more.
  • Helping a buyer to understand if a prospective home is fairly priced and helping them to formulate an offer for a home.
  • Filling out all of the appropriate purchase offer documents and presenting them to the selling agent and home seller.
  • Helping the buyer with negotiations or negotiating on behalf of the buyer.
  • Providing lists of qualified individuals for other services needed such as attorneys, and home inspection services.
  • Facilitating the flow of contracts between seller and buyer attorneys.
  • Assisting the buyer in obtaining financing for their home purchase.

A buyer’s agent should not, however, provide advice on matters for which they have no training or expertise. They should not, for example, be providing legal advice. Buyers should work with qualified attorneys for legal advice. Buyer’s brokers can, however, assist a buyer in finding an appropriate attorney.

For their services, a buyer’s agent is compensated by the buyer. What typically happens in practice, however, is that the buyer and buyer’s agent will build into the offer a provision for the seller to provide the compensation to the buyer’s agent. Remember that a typical seller has already agreed to pay a selling agent commission when they entered into a listing contract. That means that there is typically money available to compensate the buyer’s agent for their efforts on behalf of the buyer. If the seller has made available less money than the buyer’s agent is entitled to by contract with the buyer, then one of several things can happen:

  • The seller can agree as part of the negotiations to pay the discrepancy in order to sell their home.
  • The buyer pays the additional amount out of their own pocket.
  • The buyer’s agent agrees to accept less compensation than was originally agreed to to allow the transaction to go through.

Dual Agency, A Special Condition

A special condition can sometimes arise where a real estate agent is contractually obligated to both parties in a real estate transaction, as would be the case of a buyer’s agent showing one of their own listings. In this case “dual agency” is said to exist. The real estate agent is an agent to both parties. When this condition arises, a realtor should disclose the dual agency condition and obtain consent from both buyer and seller that they accept this condition. In many states, failure to disclose dual agency is a violation of the law for which a real estate agent can lose their license, be fined, and potentially receive a jail sentence. In a dual agency condition, the real estate agent acts as a neutral third party, not representing the interests of either party, but simply facilitating the transaction. Many consumer advocates are not happy with such arrangements because nobody is looking after the best interests of the consumers, in this case the buyer and the seller.


Buyer’s agents serve a very useful purpose helping to protect the interests of real estate buyers in real estate transactions. Individuals seeking to purchase a home who do not have a lot of experience with real estate should seriously consider hiring a buyer’s agent to represent them, and help them through the process, negotiations, and real estate transaction.