The Real Estate Broker who represents the buyer – not the seller – in a transaction. If an agent works for the buyer, why is she called the “selling” agent? It is a very old term that originated back when all agents worked for the seller.
Real estate brokers arose with the rapidly expanding urban areas of the late 19th Century. From the 1890’s until the 1990’s, there was no such thing as a “buyer’s agent.” One broker (the listing agent) assisted the seller, while the other broker (the selling agent) assisted the buyer. But both agents worked for and were paid by the seller.
Originally a Selling Agent worked for the Seller
This diagram shows how the system worked for a long time – right up until the invention of the internet. Before the web, the only way to advertise a house for sale was via a network of real estate brokers who knew possible buyers. So the seller hired a listing agent, who cooperated with selling agents, who went out and found a buyer for the property.
This network of brokers was called a Multiple Listing Service, or MLS. Things haven’t changed. The MLS system remains the dominant method for selling a home. In the MLS, the term “selling agent” is still used. Indeed, it is common for real estate agents to talk about “bringing a buyer.” Even though that’s not the way the world works anymore.
Today the Selling Agent works for the Buyer (but is still paid by the Seller)
The internet brought change. Go figure. Even Realtors recognize that the internet has changed the industry. Today, the listing agent posts the listing to the internet. Potential buyers see it and are interested in possibly buying it. They then connect with an agent, who may or may not assist them further in searching online. Today, the MLS works like this.
Even though the seller still pays the commission, a broker assisting a buyer must represent and work for for the buyer, not the seller. This creates what is known as a conflict of interest. Unlike pretty much any other profession, real estate deals with this conflict of interest by… pretending it doesn’t exist. The law says an agent helping a buyer is a “buyer’s agent” and works for the buyer, even if paid by the seller. Voila! Conflict of interest resolved. If only it were that simple.
In reality, this conflict of interest is frequently the source of friction. Don’t believe me? Ask someone, particularly a buyer, who was unhappy with the services they got from a real estate agent. Almost every time, that dissatisfaction can be traced back to the conflict of interest at the heart of the agent-buyer relationship.
So the “Selling Agent” works for the buyer. But is paid by the seller. Sometimes, language can be illuminating.