Buyer or Tenant Brokerage (or Buyer agency as it is also known) is the practice of real estate brokers (and their agents) in the United States and Canada representing a buyer or tenant in a real estate transaction rather than, by default, representing the seller either directly or as a sub-agent.
In most US states and Canadian provinces, until the 1990s, buyers who worked with an agent of a real estate broker in finding a house were customers of the brokerage, since, by most common law of most states at the time, the broker represented only sellers. Only in the last fifteen years or so have states passed statute law to create buyers' agency.
Today, if the tenant or buyer is working with a broker other than the brokerage which "lists" the property, he may choose to enter into a buyer-brokerage or tenant representation agreement to be represented. (In some cases where dual agency is permitted by law, even the listing broker may represent the buyer). If the buyer/tenant does not enter into this agreement, he/she remains as a customer of the broker who is then the sub-agent of seller's broker.
Buyers and Tenants as clients
With the increase in the practice of Buyer Agency in the US, especially since the late 1990s in most states, agents (acting under their brokers) have been able to represent buyers and tenants in the transaction with a written "Buyer Agency Agreement" or “Tenant Representation Agreement” not unlike the "Listing Agreement" between brokers and sellers (often referred to as seller agency). The real estate licensee, upon entering into a written agreement with a Buyer or Tenant, agrees to work solely for the buyer/tenant, and, in return, the buyer agrees to exclusive representation.
At this point, a real estate brokerage owes the buyer the duties of:
Loyalty to the buyer/tenant by acting in the buyer's best interest.
Confidentiality by not disclosing facts that could influence the buyers/tenants ability to negotiate the best terms.
Disclosure to other parties in the transaction that the licensee has been engaged as a buyer's/tenant’s agent.
The broker negotiates price and terms on behalf of the buyers or tenants and prepares standard real estate purchase and leasing documents by filling in the blanks in the contract form. The buyer's agent acts as a fiduciary for the buyer.
Buyer Agency Agreements
Like the listing agreement with sellers, the Agreements with buyers and tenants must have a starting and ending date as well as specifying how the buyer's broker is to be paid (by the seller or by the buyer himself). In addition, it should spell out the duties and obligations of all parties.
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