The pros and cons of buyer agency

Reader question: What are the pros vs. cons of buying with a buyer agent representing me on the buying transaction?

Monty’s answer: Buyer agency (and seller agency) is a concept in the law.

Agency law varies somewhat in the statutes from state to state, but my experience is that interpreting the meaning is often challenging. Here is a true story that demonstrates the difficulty of an agent executing on keeping the client’s interests ahead of their own.

It also exposes the weakness of the law and consumers relying on agency for protection of their best interests.

The client entered into a buyer agency agreement.

The client’s needs required an investment up to $1.5 million, and the search began.

Several showings later, the client identified a property they wanted and submitted an offer of $900,000 on the $1.4 million home.

The seller (Seller A) rejects the offer without a counter, which causes the buyer to withdraw from the negotiation and continue searching.

Subsequently, the buyer agent’s invested at-risk hours continued to accumulate.

Another property surfaces (Seller B) that is a lesser property, but still meets the client’s requirements.

The client makes an offer that is accepted, and they deliver the $15,000 deposit.

It is a cash transaction, subject only to inspection, and preparations to close began immediately.

Two days later the agent takes a phone call from Seller A, who is now experiencing remorse for not negotiating two months earlier, and intimates they will now accept $1.1 million.

What should the agent do next? What would most buyer agents do?

It is highly likely the bulk of buyer agents would tell Seller A it is too late, and may or may not communicate to their client that Seller A called.

Many agents may not even realize there were options on how to handle this situation.

Seller B accepted the $15,000 deposit and signed the release and the client purchased Seller A’s house.

Had the agent withheld the phone call, the chances of the buyer client ever learning of the conversation would be very low, and agency law would be very perplexing in offering a clear solution.

If this buyer agent had gone the other way, the buyer would not own the home they really wanted.

The clear driver here was know-how and honesty.