The real estate agent urged Maggi Davis and her husband to make a full-price offer for the home. Another customer might beat you to it, he cautioned. They listened and bought. Later, they found out that they’d actually paid more than full price. The agent had tacked his commission onto the sale price of the new home in Fredericksburg, Va.
Looking back on it years later, Davis wishes that they’d had someone working for them in that sale, to get the best deal possible. “Everybody was working for the seller in those days.”
These days, Davis is working just for the buyers. She’s an exclusive buyer broker, representing them in locating, negotiating and closing deals. In November, Davis started her own firm, Buyer’s Broker of Hampton Roads, Va.
Lots of real estate companies employ buyer brokers. In fact, a National Association of Realtors survey found that three-quarters of firms employ them. But less common are exclusive buyer-broker firms like Davis’, which don’t take property listings. Davis said that approach guarantees her firm will always be on the buyer’s side.
Davis’ company is one of only seven Virginia firms in the National Association of Exclusive Buyer Agents.
The group formed three years ago and now has 500 members across the country. Merrill Ottwein, the group’s president, calls it a “leap of faith” to get rid of the listings, but says it’s the only way brokers can totally commit to buyers.
The group argues that buyers and sellers should each be represented by their own agent and that both agents should be from separate firms. Otherwise, there’s a risk that agents will share information or won’t be totally loyal to a buyer. Traditional real estate firms dispute that there’s a conflict of interest in having both kinds of agents working for the same company. They say agents have to follow ethical guidelines and wouldn’t breach their clients’ confidentiality.
Buyer’s Broker is small–it’s just Davis and her two agents working with the clients. While agents who represent sellers might accumulate a large inventory of homes, Davis typically focuses on one or two clients.
Davis said she’s out to get the best price and best terms for buyers–the same job that other agents do for sellers. When she’s showing a home, she’ll point out both the ups and downs of the property. Seller’s agents, on the other hand, are required to point out known structural problems with the house, but they don’t have to reveal if a convenience store is going in across the street, Davis said. Craig and Lori Lambert were still living in Quantico, Va., when they discovered Davis over the Internet. The Lamberts, who have four boys, were preparing to move to Hampton Roads. A lot of their early discussion went on through e-mail.
“We just felt like she would be looking at it more from our point of view, instead of the seller’s point of view,” Lori said. They ended up buying a four-bedroom home in Chesapeake.
When buyer brokers close a deal, they typically split the commission the seller pays–a method of payment that some consumer advocates have criticized. The larger the sale price, they say, the larger the commission–and the larger potential conflict for the broker who is supposed to represent the buyer.
Davis counters that getting a seller to lower the price by, say, $10,000 isn’t going to change her commission much. She argues it’s more important to end up with a satisfied client and positive word-of-mouth about her business.
Liz Moore, president of Cale & Co., agrees. “I think that’s starting to split hairs, when you see what kind of money you’re talking about.” Cale employs both traditional real estate agents and buyer brokers.
“Buyer’s agency has required sellers to do a better job,” Moore said. “They’ve got to be on their toes.”
