Understanding Buyer & Seller Agency in Northern Virginia Real Estate

Understanding Seller Agency – Seller is Protected
When a seller in Northern Virginia desires to sell their home at the maximum price and in the shortest amount of time, their first step is usually to contact an exceptional real estate agent who specializes in this market.  The sale of a home begins with the seller hiring a real estate broker-agent through a written Listing Agreement.  The Listing Agreement establishes Seller Agency and outlines all of the contractual duties required by the Broker like what price to sell the property, how the property will be marketed, and how the Broker will act as a fiduciary for the seller and protect their best interests at all times.  The Broker then lists the property for sale and cooperates with other Broker-buyer agents to solicit offers from ready, willing and able buyers. 

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Understanding Sub-Agency; Seller is Protected
There are two types of buyers who will come into contact with a home listed for sale.  Those buyers (clients) represented by an agent who have a written Buyer Agreement, and those unrepresented buyers (customers) who do not.  Buyers who have a Buyer Agreement with an agent are protected and have an exclusive advocate working on their behalf.  However, for all other buyers who are unrepresented, any agent they come into contact with operates as a sub-agent for the seller.  This includes agents from a different brokerage as the listing agent, and even an agent family member or friend of the buyer.  In Virginia real estate transactions, all agents are sub-agents of the seller, meaning they represent the best interests of the seller, until the time the buyer and agent have a written Buyer Agreement.

Unrepresented buyers should know a sub-agent can only perform ministerial acts for the buyer-customer during sub-agency.  Of course, buyers aren’t usually interested in ministerial acts like answers to how old is the home, how many bedrooms and bathrooms does it have, what is the school district, etc.  Buyers want to know how much the home is really worth compared to other homes sold, under contract and active in the neighborhood.  They want to know precisely what are all the elements needed to make a winning offer and gain seller acceptance on this home.  The problem is nothing like that can be discussed by the sub-agent, because it would be considered not in the seller’s best interest.  In fact, many buyers make the mistake of walking into new construction without buyer-agent representation during their first visit.  In the event this occurs and they want to buy the home, it’s commonplace for builders to prevent outside buyer-agent representation.  The buyer would have to work exclusively with the Listing Agent who operates solely on behalf of the builder.  That’s a terrible way for a buyer to purchase a home.

Buyer Agency & Brokerage Relationship; Buyer is Now Fully Protected
In Virginia, before an agent can write an offer for a buyer, the agent and buyer are first required to have a written Buyer Agreement.  That’s why it’s vitally important for a buyer and agent to discuss buyer agency and the broker duties early in their working relationship.  Establishing Buyer Agency changes everything for a home buyer.  The buyer is now considered a client and has a professional advocate working on their behalf – sub-agency doesn’t exist in this relationship.  That agent can now offer the full benefit of their solid business experience and advanced training.  Equally as important, the agent is contractually required to perform specific duties for buyer clients.  These duties include:

  • Perform in accordance with the terms of the Buyer Agreement.
  • Promote interests of the Buyer.
  • Seek property of a type acceptable to the Buyer and at a price and on terms acceptable to the Buyer.
  • Prepare written offers and counteroffers.
  • Negotiate terms and conditions of real estate purchase contracts.
  • Maintain the confidentiality of a buyer’s personal and financial information.
  • Account for all monies received.
  • EXERCISE ORDINARY CARE.

Doesn’t this list of duties sound like much better representation than just the ministerial acts of sub-agency?  Highly effective agents can explain the differences and benefits to buyers.  I’m happy to spend whatever time is necessary with a buyer so they can get comfortable with me before entering into a Buyer Agreement.  Before even discussing a Buyer Agreement, I will be able to show my value-add and convince a buyer how I’m uniquely qualified to be their best advocate while we collaborate together to reach their desired outcome.  In my experience, stepping into the Buyer Agreement together becomes just a natural extension of this comfort level.

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