A Dedicated Buyer’s Agent has a fiduciary responsibility to represent the home buyer’s best interests in all aspects of the purchase process: the home search and property valuation counseling; purchase offer strategy and negotiation; the due diligence phase of disclosure, investigation and inspection; any renegotiation of price and terms; and all other aspects of the transaction.
The buyer’s choice of an agent to represent them in this large, complicated financial transaction is extremely important: the difference in results between having a very good agent and a mediocre one can be enormous. Since in the vast majority of real estate sales in San Francisco, the seller pays the buyer-agent’s commissions, you might as well take advantage of having a dedicated agent to represent you as soon as possible in the process.
A Listing Agent has a fiduciary responsibility to the property seller. The listing agent may assist the buyer, but does not represent the buyer. The listing agent must put the seller’s interests first throughout the purchase negotiation and transaction—while still complying with statutory requirements for honest and fair dealing, and material disclosure to the buyer.
Generally speaking, it is not in the best interests of buyers to use the listing agent to represent them in the purchase – in which capacity, the listing agent would then become a Dual Agent (see below).
A Dual Agent has a fiduciary responsibility of utmost care, integrity, honesty and loyalty to both buyer and seller, and thus cannot represent the best interests of either. The dual agent must have the consent of both parties to act in this capacity, and must safeguard the confidentiality of both parties during any negotiations.
Because of a dual agent’s responsibilities to both parties, he or she can play little role in the negotiations besides facilitating communications. This is a significant drawback because a good agent’s negotiating skills can easily make a difference of 3-5% in the sales price, and sometimes more. A dual agent must not provide any information – such as the buyer’s willingness to pay more or the seller’s willingness to accept less – that might be used to the advantage of one party over the other.
If a listing agent tells you, as buyer, that he or she can get you a special deal because of their inside relationship with the seller, it is probable they have already violated their legal responsibilities and the Realtor Code of Ethics.
Unlike a listing agent, or a dual agent, a dedicated buyer’s agent has a fiduciary obligation and loyalty to the home buyer alone:
- To attend to the buyer’s needs, preferences, priorities and special requirements.
- To negotiate the best possible price and terms of purchase on buyer’s behalf.
- To solely represent the buyer’s best interests throughout the search, purchase, due diligence and escrow processes, and to render counsel accordingly.
- To disclose any and all information that might affect the buyer’s desire to buy a particular property or the price the buyer is willing to pay for it.