How Exclusive Buyer Agents Get Paid

Feb 27, 2024Buying Basics, First-Time Home Buyers

The National Association of Exclusive Buyer Agents was formed in the mid-1990's in an effort to offer home buyers full representation in real estate transactions.

Recent efforts to decouple real estate commissions could dramatically alter buyer representation, leading home buyers to choose between exclusive buyer representation and dual agency. 

At this time, in most areas of the United States, the cooperative commission is in place and offers buyer brokerages compensation for their services. 

Who are the Agents in a Real Estate Transaction?

Listing brokerages represent the seller in a real estate transaction. The real estate professionals who work for traditional real estate firms are listing agents and buyer agents. Traditional real estate agents can represent buyers and sellers sometimes in the same transaction. 

Exclusive Buyer Agents only work for home buyers. These agents work for brokerages that choose one side, the buyers, in all real estate transactions. 

Exclusive buyer brokerages do not represent sellers and do not have housing inventory to sell. Exclusive buyer agents understand the perils of dual and designated agency and avoid them.  

How are Buyer's Agents Paid?

The listing brokerage and the seller have a signed agreement, which allows the brokerage to market and sell the property. Included in the negotiated agreement is an offer of compensation to the buyer agent, or in our case exclusive buyer’s agent. The buyer agency compensation pays the agent who brings a qualified home buyer to the property and transaction. In most cases, the buyer has a signed buyer brokerage agreement with their buyers or exclusive buyer’s agent. 

  1. The buyer pays the seller for the home at settlement (also referred to as a “closing”)
  2. The seller pays the listing brokerage
  3. The listing brokerage pays their listing agent
  4. The listing brokerage pays the buyer's brokerage
  5. The buyer's brokerage pays their buyer's agent commission (the buyer's agent fee)

Remember: There is no set fee for service. Buyers and Sellers should discuss compensation with their real estate representative.

Understanding “Procuring Cause”

What is ‘procuring cause’?  When an agent claims their advertising, marketing, open house, signs or conversations are the reason a buyer is purchasing a property. 

How does procuring cause happen?  ‘Procuring cause’ happens, for example, when a buyer contacts Agent A, the listing agent, to discuss or tour a property and then contacts Agent B to put together an offer.

How can buyers avoid ‘procuring cause’ issues? Have a signed buyer brokerage agreement with your exclusive buyer’s agent. Contact your agent for all questions and tours of homes for sale. 

Note to consider

Many home buyers assume the listing brokerage and agent know everything about a home for sale. While they should disclose all material facts about a property, they are not required to answer questions from home buyers. Remember, the listing brokerage and listing agent represent the seller. They have a signed agreement with the seller to get the best price and terms for their client. 

Exclusive buyer agents and brokers work for home buyers. These agents have a signed agreement with the buyer to get the best price and terms for their client. 

Avoid Dual Agency

Dual agency is a single agent, or sometimes a brokerage, ‘representing’ a buyer and seller in a transaction. In order for dual agency to occur, buyers and sellers must sign a dual agency agreement. Here’s an excerpt from the Northern Virginia Association of Realtors blog on dual agency. 

  1. The agent will be unable to advise either seller or buyer as to the terms, offers or counteroffers (except, however, that the dual agent may have already provided such advice to the seller prior to representing the buyer);
  2. The agent cannot advise the buyer as to the suitability of the property, its condition (other than to make any disclosures as required by law of any licensee representing a seller), and cannot advise either party as to repairs of the property (to make or request);
  3. The agent cannot advise either party in any dispute that might later arise relating to the transaction;
  4. The agent will be acting without knowledge of the client's needs, client's experience in the market, or client's experience in handling real estate transactions unless he has gained that information from earlier contact with the client.

NVAR Realtors blog

Who is best served with dual agency ‘representation’?  Certainly not the buyer or the seller.

Dual agency is illegal in some states. But the workaround is called ‘designated agency’. This happens when two agents working for the same brokerage ‘represent’ a buyer and seller in a transaction. The broker acts as the dual agent. 

Would lawyers from the same law firm represent the plaintiff and defendant in a case? Of course not! That would be illegal. Yet this type of representation happens every day in real estate. 

Working with an Exclusive Buyer Agent

  • Always make it clear to other agents that you are represented by an exclusive buyer’s agent 
  • Have a signed exclusive buyer-broker agreement with your agent. This gives your exclusive buyer’s agent the ability to fully represent you in all transactions. 
  • Avoid contacting a listing agent directly for information, leave that to your agent.
  • Remember, the agent at an open house works for the seller. Any information you share with the agent may be used for the seller’s best interest in negotiations. The listing agent does not owe you any duty of confidentiality. 

Latest Posts

Beware of Competition

The hardest part of the spring market is that there are more buyers in the marketplace. There are...

Share This