Estimated study time: 45 minutes
Content:
Buyer agency is a formal representation relationship in which a real estate broker or salesperson represents the interests of the buyer — not the seller — in a real estate transaction. Prior to the buyer agency movement of the 1990s, nearly all real estate agents legally represented the seller, even when working closely with buyers. The shift to buyer agency resulted from recognition that buyers deserved their own representation and that the traditional subagency model created undisclosed conflicts of interest. Massachusetts mandated buyer agency disclosure effective January 1, 1998, ensuring all buyers understand who represents them at every stage of a transaction.
A buyer agency agreement (also called a buyer representation agreement) is a written contract between the buyer and the buyer's broker establishing the agency relationship. Key terms include: the scope of services the broker will provide, the duration of the agreement (a specified period or through a specific transaction), the buyer's geographic search area and property criteria, and the compensation arrangement. Most Massachusetts buyer agency agreements specify that the buyer's agent will seek co-broke compensation from the seller's broker (MLS compensation); if the offered co-broke is below a minimum agreed amount, the buyer may be responsible for making up the difference. Buyers must sign and receive a copy of the agency agreement; the broker retains the original for three years.
The buyer's agent owes full fiduciary duties to the buyer: loyalty (working exclusively for the buyer's interests), confidentiality (protecting the buyer's financial capacity and negotiating strategy), obedience (following the buyer's lawful instructions), disclosure (informing the buyer of all known material facts about the property and the transaction), accounting (handling the buyer's funds properly), and reasonable care (applying professional skill and knowledge). These duties mean the buyer's agent must volunteer information harmful to the seller's position — such as market comparables showing the property is overpriced, or knowledge of defects affecting the property's value — without waiting to be asked. The buyer's agent also assists with coordinating inspections, reviewing disclosure documents, and monitoring contingency deadlines.
Buyers may encounter agents who claim to work as "facilitators" or "transaction brokers" rather than as buyer's agents. A facilitator assists both parties without representing either; they owe limited duties of honesty and fair dealing but not fiduciary loyalty. Buyers working with a facilitator should understand they do not have an advocate in the transaction. Under the Massachusetts mandatory disclosure law, the agent must clearly identify their role before any substantive discussions begin. A buyer who is unrepresented (dealing directly with the listing agent) should understand that the listing agent represents the seller and has a duty to obtain the best outcome for the seller, not the buyer.
Key Terms:
Quiz Questions:
Q1. A buyer signs a buyer agency agreement with ABC Realty specifying a 90-day term and a minimum commission of 2.5%. The listing agent offers 2% co-broke through MLS. Who pays the 0.5% difference?
A) ABC Realty absorbs the shortfall at no cost to the buyer B) The seller's agent reduces their commission to fund the shortfall C) The buyer pays the 0.5% difference per the buyer agency agreement terms D) The transaction cannot proceed if the co-broke is below the agreed minimum
Answer: C — The buyer agency agreement specifies that if the offered co-broke is less than the minimum, the buyer is responsible for the difference. This is why buyers should understand their buyer agency agreement before signing.
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Q2. A buyer's agent learns during a showing that a neighbor told the seller the property flooded during a storm three years ago, but the seller did not disclose this on the disclosure form. The buyer has not asked about flooding. What must the buyer's agent do?
A) Say nothing — the buyer did not ask about flooding B) Disclose the information to the buyer immediately as a known material fact C) Report the seller to the Board of Registration without telling the buyer D) Inform the seller that the information was disclosed and ask the seller to add it to the disclosure form
Answer: B — A buyer's agent has an affirmative duty to disclose all known material facts affecting the property's value or desirability, whether or not the buyer asks. A flooding history is a significant material fact that must be disclosed immediately.
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Q3. A buyer working with a buyer's agent wants to offer $10,000 below list price on a property. The buyer's agent believes the list price is already below market value. What should the buyer's agent do?
A) Refuse to submit a low offer that will not be accepted B) Follow the buyer's instructions and submit the $10,000 below-list offer, after providing professional advice about market value C) Submit the offer at the list price without telling the buyer D) Disclose the buyer's maximum price to the seller to facilitate a quicker deal
Answer: B — The buyer's agent owes obedience to the buyer's lawful instructions. The agent should provide professional market analysis and advice, but ultimately must submit the offer the buyer authorizes. Disclosing the buyer's maximum price would violate the duty of confidentiality.
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Q4. An agent at XYZ Realty has a listing for 100 Oak Street. A buyer calls XYZ Realty and asks to see 100 Oak Street. The buyer has not signed a buyer agency agreement. What is the agent's relationship with the buyer at the first showing?
A) The agent automatically becomes the buyer's agent when showing properties B) The agent is the seller's listing agent; the buyer is unrepresented unless they sign a buyer agency agreement C) The agent becomes a dual agent by default when showing a property to an unrepresented buyer D) The buyer is protected by the mandatory disclosure rule as if they had a buyer's agent
Answer: B — The agent represents the seller under the listing agreement. An unrepresented buyer who calls the listing agent has no representation. The mandatory disclosure form must be provided immediately, explaining that the agent represents the seller. The buyer should be offered the opportunity to sign a buyer agency agreement or seek independent representation.
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Q5. Under Massachusetts law, for how long must a broker retain a signed buyer agency agreement?
A) 1 year from the date of signing B) 5 years from the date of the transaction C) 3 years from the date of signing or transaction, whichever is later D) 7 years — the same as IRS record retention requirements
Answer: C — Massachusetts regulations require brokers to maintain transaction files and agency agreements for a minimum of three years. The three-year period typically runs from the date of the transaction or the date of the agreement, whichever is later.
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