More and more homebuyers have been asking "Who represents whom?" in thehomebuying transaction. Once they find out that, in most cases, they have norepresentation, many are hiring a buyer's agent who will represent themduring the house-hunt, into the contract-writing and negotiation, throughappraisals and inspections, and through closing. And the great thing aboutthis relatively new development in real estate is it doesn't cost the buyeranything, and often saves the buyer thousands.

Until a few years ago, real estate was sold the way it always had been -the listing agent obtained the listing from the seller and had the seller asthe client, and the selling agent brought the buyer to the table - but wasacting as a sub-agent of the listing agent, often unbeknownst to the buyer.The buyer was the customer, not the client, an important distinction underthe law. In this situation, even though the selling agent may have never metthe seller, she still owed a fiduciary responsibility to that seller, and hada legal obligation to report to the seller - through the listing agent - anyinformation the buyer revealed, or any information the agent found out aboutthe buyer's situation, that would help the seller's negotiating position. So,you had a buyer talking about "my agent" when, in fact, that agent worked forthe seller. The situation helped to give real estate agents the bad name theyhave today - buyers would offer $99,000 for the home, tell the agent theythought was representing them that they would go up to $102,000 and findlater, after closing on the home for $102,000, that that information had beencommunicated to the listing agent. Under the old system the selling agent haddone nothing wrong by providing that information and, in fact, was obligatedto do so, since she was the sub-agent of the listing agent and had afiduciary obligation to the seller.

But now, you have a choice. You can still work under the old system or youcan choose buyer representation. In fact, "disclosure of agency" is supposedto occur in North Carolina at "first substantive contact," although fewagents obey that law. And just what is "first substantive contact?" Whetherit is on the phone or in person, if you start telling an agent informationthat would compromise your bargaining position in any way she should stop youright there, tell you about agency, and give you a choice in how you want tomove forward. Unfortunately, few do, so its up to you to protect yourself.Frankly, I can't imagine not choosing the "buyer agent" option. Otherwise,your real estate sales contract will be written by either the listing agentor the selling agent (sometimes the same agent fulfills both roles). Sinceneither agent has you the buyer as the client, each agent is working for theseller (with the seller being treated as the client) and with you the buyer(with the buyer being treated as the customer). So, you can see why it isimportant, especially as you negotiate on the price and write the contract,to have a buyer's agent on your side. If you, the buyer, are bringing all ofthe money to the table, shouldn't you be represented?Any licensed real estate agent in North Carolina can legally act as a"buyer's agent," although few have experience doing so. In fact, some firmsthat plan to specialize in serving only buyers actually refuse to hireexperienced real estate agents, since those agents generally know how toserve only the seller as client, and not the buyer, and have littleexperience negotiating a lower price or better terms for the buyer.

A better bet is to engage an Exclusive Buyer's Agent (EBA). This is themost pure form of buyer representation you can get, but, unfortunately, onlyone or two firms in the Triad have been able to make a go of it representingonly buyers, since listings are the lifeblood of real estate, and listingsare what makes the phone ring. Therefore, many buyers who do get buyerrepresentation have to settle for the services of an agent who may representa seller in the morning and a buyer in the afternoon. Its like using as yourcriminal defense attorney someone who is a part-time prosecutor. You wonderabout her mindset at any given time. EBA firms aren't hard to find - at leasttwo of them regularly advertise in the local real estate magazines.

So, why "rock the boat?" Why insist on buyer's agency? While it is truethat any agent, including the listing agent and the selling agent, willarrange property showings, suggest sources of financing, provide accurateinformation, explain the forms and agreements, and monitor the entireprocess, a buyer's agent will do all that only with a bias toward the buyerrather than toward the seller. Buyer's agents perform services for you thatseller's agents and sub-agents can't, including showing you reasons not tobuy a particular property, negotiating the best price and terms for you,assisting in writing the contract to benefit you, and keeping confidentialany information about your situation that, if known to the seller, could hurtyour bargaining position.

And, of course, the buyer's agent will write the contract you submit to theseller. Of the contracts I see in my mortgage practice, buyer's agent-writtencontracts are by far the messiest (because more negotiation takes place and,hence, more line-outs occur) and always have more benefits to the buyerincluding more seller concessions in closing costs as well as more of areduction in the purchase price. Some buyer agents will also credit you 1% ofthe selling price (which works out to about a third of the buyer agent'scommission) because they don't have the high advertising costs that seller'sagents have. And good buyer's agents always include as part of the contract athird page called an "Additional Provisions Addendum" that has on one page ahost of contingencies that protect the buyer, contingencies which are notincluded in the standard contract.

Buyer's agents can assist you with the purchase of For Sale By Ownerproperties, properties listed in the Multiple Listing Service (MLS),properties being sold by builders, and even properties not yet for sale.Buyer agents should never "push" their own listings, although if you dodecide you want to buy a home listed by that buyer's agent's firm you willeither have to go to the "disclosed dual agency " model in which the agent"represents both sides," a true absurdity, or go the "designated agency"route, in which your agent continues to represent you while another agent inthe same firm represents the seller. Since information can leak too easilywithin an office, I don't think the designated agency idea is a goodsolution.

Of course, the question that always arises is who pays the buyer's agent?In every case I have seen, the seller does. The seller is going to give 6% ofthe sales price to a real estate firm anyway, so most sellers agree to allowthe listing agent to "share" or split the commission with the buyer's agent.Yes, that means, technically, that the seller is paying the buyer's agent torepresent the buyer against the seller, and many people think that whoever ispaying the lawyer or agent is the one getting the representation as theclient. But courts have made clear that paying an agent does notautomatically mean the payor is the client. But why, you might ask, would aseller agree to allow half of the 6% to go to a buyer's agent who isrepresenting a buyer against the seller? Simple - the seller wants to sell.And as some real estate agents concede, the transaction really funds thecommission. Yes, technically the seller is paying the commission, but thehouse might be 6% cheaper if no agent was involved, so the buyer is reallypaying the commission in the increased price of the home. The whole idea hereis fairness: if the buyer is bringing the money to the table to buy thehouse, shouldn't that buyer get representation? Finally, after nearly acentury, the answer is yes.