The Importance of a Buyer’s Agent
A little history…
During the 1950s and 1960s, the rise of consumerism forced a more formalized and cooperative brokerage system. These systems, known as the Multiple Listing Service (MLS), brought about the concept of subagency to explain how the agency duties worked with subscribers to the MLS. The listing broker was required to make the listing available to all cooperating brokers within the MLS. These cooperating brokers were subagents of the listing broker and agents of the seller. When the cooperating broker hired licensees, those licensees were subagents of the cooperating broker, who was a subagent of the listing broker, who was the agent of the seller.
Because this method allowed no agency relationship with the buyer, the buyer was unrepresented. The listing broker, in performing services for the buyer, was creating a risk of an accidental dual agency. The public assumed that the conduct or representations of the listing broker or their subagents meant that the broker was representing the buyer, instead of that buyer being the third-party beneficiary of the listing broker’s efforts on behalf of the seller. The listing broker’s fiduciary responsibility solely benefited the seller.
It wasn’t until the 1990s that public demand brought about buyer representation. Exclusive buyer representation agreements now permit a buyer to contract with a broker in order to find and negotiate the purchase of real property on their behalf.
Buyer representation is a response to the overwhelming demand by the consuming public for agency representation for the buyer, and the legally indefensible situation where licensees often found themselves in accidental dual agency relationships.
As an agent of the buyer, the Buyer’s Broker owes all the fiduciary duties (care, loyalty, disclosure, obedience and accounting) to the principal, the Buyer.