Seeing the whole picture

There's a growing awareness of the Buyer Agency idea among real estate offices and agents and the public they serve, but -- if I can be forgiven for once again riding a favourite hobby horse -- there are some aspects of it that certainly give me cause for concern.
One of them, of course, is the question of whether a Buyer Agency Agreement is necessary. Its use is certainly recommended by the Canadian and Ontario Real Estate Associations, but, as I argued in my January newsletter, I have decided reservations about the fairness of it. Indeed, if I allow my cynical side to get the better of me, I can suspect that far too many offices and agents have latched onto the document simply as a means of ensuring a commission when a potential buyer shows up.

I have no worries about the implications of a Listing Agreement. Things immediately happen when it's signed. Lawn signs get put up. Ads are placed. Previews by the listing agent's colleagues are usually arranged. Open Houses are frequently held. Thus, whether a quick sale ensues or not, there's undoubted effort and activity aimed at generating an offer. Moreover, the property's availability is widely circulated through the local MLS system -- which means that something can eventually occur even if the listing agent sits back, takes it easy, and, in effect, does next to nothing after the Listing Agreeement has been signed.
In contrast, however, there's no guarantee that signing a Buyer Agency Agreement will lead to anything. There's only the agent's word for it. He or she is just one person and there's no one else going to take an active interest in finding a suitable property.
There's nothing in the way of an MLS broadcast that a particular type of property is being sought. At most, you'll see an occasional ad in which an agent mentions he/she has a buyer looking for something -- but the cynic in me surfaces again and I cannot help thinking that the real purpose is to generate another listing rather than fulfilling the promise to someone who's signed a Buyer Agency Agreement!

I do, of course, agree with the need to make an agent's role clear when someone is looking for a house. The growing emphasis on consumer protection justifies the idea that buyers should know whether or not their best interests -- as opposed to the vendor's -- are going to being served. Nevertheless, I'm far from convinced that people should be tied down to an agent who has yet to give any evidence of his/her intention, knowledge, ability, and ongoing effort to find a property for the buyer.
One of the real keys to success in the real estate business is trust, and I'll argue strenuously that it has to be earned before an agent has a right to an assured commission.

A different way of looking at things
Apart, though, from what I see as the unreasonableness of the Buyer Agency Agreement, I think there's another point that cannot too easily be ignored.
It's true that CREA and OREA now include recognition of Buyer Agency in their agent education courses and require written acknowledgement of the relationships between the principals and agents involved in every Agreement of Purchase and Sale.
Nevertheless, there's also no more than a limited discussion of the mechanics of properly looking after buyers. There's simply an assumption that they will be both understood and forthcoming. The expectations include "looking after the client's best interests and not harming his or her negotiating position" -- but this code of behaviour is in fact exactly the same as the one that's required when the vendor instead of the buyer is seen as the client.
Without doubt, a Buyer Agent will -- or certainly should -- tend to get a better price for the client and will have less hesitation about making demands from the vendor. However, the traditional focus on getting listings and taking care of vendors is, at least in my opinion, too deeply ingrained for many agents to readily understand what looking after a buyer's best interests really entails.
The harsh truth is that the task goes beyond simply finding a house for someone to buy. It extends to fleshing out the reasons why a particular house should not be bought. This requires a mindset that's in total opposition to what agents are used to and to the industry's primary interest in getting listings and looking after vendors.
In other words, making sure that a buyer doesn't overpay for a house and that its features correspond with what the buyer is looking for is only part of the responsibility. There's also a need to take a jaundiced look at everything and thereby ensure there are no surprises. At the very least, it involves getting answers to such questions as:
* Why are the people selling?
* How long have they been trying to sell?
* What previous price(s) have they asked -- and why didn't they get a sale then?
* When did they buy the place, and at what price?
* What else is on the market at the same price (not to mention for less)?
* What have similar properties recently sold for?

Seeing the whole picture
Understandably, the listing agent and the vendor aren't likely to volunteer information that may reduce the chance of a sale, and admittedly a prudent buyer may have the sense to obtain it. However, a Buyer Agent who's doing a thoroughgoing job will not just make sure of this. Quite apart from looking for suitable and properly priced houses, he or she will also bring a perspective to the task that's less focused on selling something and more on determining whether it ought to be bought. Or, to paraphrase an old ad slogan, the objective will be to ensure that more than the price is right.
In many regards, Canadian real estate companies are better regulated and observe higher standards than is sometimes the case in the USA. Both sellers and buyers run much less risk of being badly treated and then finding the courts unwilling or unable to correct the wrongs that have occurred.
However, when it comes to Buyer Agency, the National Association of Realtors is much further ahead in both its definitions and practices. The expectations are more completely spelled out. The public is better informed about how the industry is supposed to behave (even though there's less chance of misconduct being redressed!). And it isn't unusual for companies to have agents who specialize in serving only sellers or buyers but never both.
There's also an Accredited Buyer Representative designation that has no equivalent in Canada. It involves a detailed study of the critical differences between what a listing agent and what a buyer agent must do and requires evidence of sales that demonstrate the application of them.
Not the least, there's a well recognized association of Exclusive Buyer Agencies that work only for purchasers and leave the listing side of the business to other companies -- something that isn't, as far as I can tell, being given a moment's thought in Canadian real estate circles.

In any case, despite the best intentions of those agents who favour the use of a Buyer Agency Agreement, you can be quite sure that it doesn't contain a single a word about all this!