Unknown to most home buyers, the agent showing you homes can offer you two forms of representation. Your real estate agent could be working directly for you as in a buyer brokerage arrangement or they could be working in the vendor’s best interest if it is a sub agency arrangement.

In the buyer brokerage arrangement the real estate agent’s sole allegiance is to the buyer, not the seller. In a sub agency arrangement the real estate agent’s legal and fiduciary responsibility is to the seller, not the buyer. The reality is that hardly any buyer agrees to a sub agency arrangement now a days, it is almost exclusively a buyer brokerage arrangement.

A buyer’s real estate agent is usually compensated by the vendor through the listing broker. The buyer brokerage agreement that you sign will clearly outline the payment of commissions. As the purchaser it is your responsibility to discuss these different arrangements with you real estate agent.

In the vast majority of cases the selling agent also gets paid by the vendor through the listing broker. Commission is normally discussed and agreed upon when the vendor lists the property and it covers the purchaser’s and vendor’s agents. When this is the arrangement (as it is in the majority of situations) than as the purchaser it does not cost you anything to use a real estate agent.

Dual agency is another possible arrangement you may find yourself in as a buyer or seller. This is when an agent brings both sides of the deal together. One of his/her clients wants to buy the property of another one of his/her clients.

As the buyer what you should do to avoid any conflict of interest is keep the highest price that you will pay confidential from your real estate agent. As your agent has a legal obligation to disclose to the vendor any know price information. This works both ways though, as the vendor you would have to keep your lowest price confidential as your agent would have the responsibility to disclose that information to the purchaser.

In a dual agency situation most of the vendor’s information will remain confidential. The agent does not need to disclose the vendor’s motivation to sell, number of offers, value of other offers, or negotiation strategy. On the purchaser’s end some of the information will remain confidential. The agent does not need to disclose the buyer’s your urgency to buy, details about other offers they have made and their negotiation strategy.

The single greatest impact of a dual agency situation is that you as the purchaser or vendor should not disclose your final price to your agent. It may sound like a sticky situation but in the end it is pretty straight forward and should not impair your ability to buy the property that you want.