An Exclusive Buyer Broker (EBB) is a real estate brokerage, agency or office that represents buyers only. Agents working for an EBB are buyers' agents exclusively.
An EBB or associated broker does not take or hold listings or represent the seller or landlord in any way, nor do the agents working under or for him. This includes advertising "for sale by owner" properties.
In many states, by law, the broker or agent must have a written agency agreement to represent the buyer exclusively. Without one, the broker or agent may be working for the seller or in a limited capacity.
It costs no more to hire or use an EBB. In fact, under most state laws, the buyer broker must ensure that he is doing everything he can to benefit the buyer, even if it means abandoning the sale (and losing a commission) when it is in the best interests of the buyer.
In many cases, EBBs get paid in the same way as traditional agents: a percentage commission based on the proceeds of the sale. In other words, the agreed-upon commission is determined based on the price of the property, and the agent is paid after the deal closes.
These guidelines vary from state to state, area to area, and city to city -- and may be governed by law in some case.
In 1983, a Federal Trade Commission study revealed that more than 72 percent of home buyers nationwide mistakenly believed that the agent who was showing them homes was representing their interests. As a result, laws requiring agents to disclose whom they actually represent have been passed across the U.S. As consumers generally became aware that most agents worked for the seller, many began demanding their own representation.
As a historical sidebar, the first national franchise to offer Exclusive Buyer Brokerage was The Buyer's Agent Inc., which was formed by Tom Hathaway, a former state highway patrolman and investigator/compliance officer for the Missouri Real Estate Commission. It was formed in July 1988, specifically to develop and practice the art of exclusive buyer representation. From the beginning, the company promoted three key elements for a successful real estate transaction: service, savings and satisfaction.
The individual franchise withstood legal challenges, lawsuits and ethics complaints intended to put an end to the concept of buyer agency in general.
For Example see: Snider v. Oklahoma Real Estate Commission 1999 OK 55 987 P.2d 1204 70 OBJ 1834 Case Number: 88917 Decided: 06/01/1999 Mandate Issued: 09/17/1999 Supreme Court of Oklahoma