Every state in the USA has slightly different real estate laws. I am writing for Illinois law and describing what a designated buyer’s agent is for buyers and what you should expect in terms of paperwork, written agreements and what the agreements or notices mean to you, a property buyer.
The real estate law for Illinois applies to the entire state but the forms used by area may be different, especially Southern Illinois compared to the Chicago metro area in Northern Illinois.
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?What is a Designated Buyer’s Agent
Again I am only addressing buyers here and while it’s similar to sellers the paperwork is different. If you decide to buy a property and use the services of an agent, which most do because the majority of homes are listed in the MLS, the agent you work with becomes your designated agent. Although your service is being provided by the real estate brokerage, here in Illinois, you work with one agent from the company who is designated to be your agent.
A designated agent must provide you with a minimum level of service, must maintain complete confidentiality and must never discuss your details with anyone else, including other agents working in the same company. Before any agency work starts you should be given notices about:
- Who your designated agent is and what company they work under.
- What is the level of agreement between you and the designated agent.
For buyers the usual start of agency representation is showing homes but it can start earlier.
Here’s an example: If you interview with several agents to establish who you want to hire, once you start verbalizing financial information the agent representation can be deemed to have started. Of course it can also end in the same conversation but the agent is now bound by the laws of confidentiality, even if you hire someone else as you move forward.
It might all sound ridiculous to some of you but the reason it’s important to understand is because agency and who is working for who and when it starts resulted in a high proportion of complaints. Because of this new forms were implemented a few years ago.
Can you have more than one designated buyer’s agent? The answer is yes. The reason is simply because the brokerage is entering in the name of the agent they have that you’ll be working with. So head out and engage several agents with different brokerages and now you have several designated agents. Because none of them are exclusive, it’s possible to work like this. However it’s not advisable. Any agent that finds out you are working with several others can drop you if there’s no written service agreement and especially no exclusivity. From your perspective there’s no continuity either.
?What Forms do Buyers Get and When?
Notice of your Designated Agent. – This is a notice only and should be given to as soon as you agree to work together and certainly no later than when you view the first property. It is a notice and not an agreement. It declares who your designated agent is, who they company they work under is, and who you are. You are not required to sign it because it is not an agreement, but a good buyers agent will ask you to at least initial receipt of the notice and provide you with a copy.
These forms have to be kept by all real estate offices in Illinois and provided to the State of IL Department of Regulation when asked.
Level of Agreement. – There are several options here and not up for discussion today but you should understand the level of commitment to the job from both your perspective and the buyer’s agent. There may be a written agreement or not, there may be aspects to the agreement you need to remember. This form should be signed by you and the designated agent at the very start of your working relationship. Never just sign, always understand what you are getting and giving. You should be given a copy as well.
You my feel like it’s unnecessary paperwork and I can live with that but you’ll always get it from me. If you did not get it at the start of a current buyer’s agent relationship, ooops, the agent is skipping over important details and I wonder what else you won’t know about as you proceed to buy. Maybe it’s time to change to a buyer’s advocate!
?Let Me Be Your Designated Buyer’s Agent.
For further assistance or to start your home search, contact Corinne Guest, the only Barrington Buyer’s Advocate, call or text (847) 363-3686. Or send our quick form.
?My Word on Buyer’s Agent Rebates
There’s a lot of chatter these days about buyer’s agents giving rebates to buyers. Actually the money comes from the brokerages. This is legal in the state of Illinois but not in every state in the USA. There’s even a brokerage model that used to give 20% of the commission back to the buyer and another that actually gave 50%. Both of those brokerages gave up those rebates. One completely stopped it, the other has significantly reduced what’s given and now provides some closing cost help. The later is subject to lender’s approval as well, to stay within lending laws, so you may not get it anyway.
Neither of those companies is profitable. Gee I wonder why. Brokerages and agents both need money to run a real estate business. And while a buyer might see a sizeable check being given to the agent at closing remember they do not just head to the bank and deposit it. The amount is split between company and agent. Both use to pay operating expenses, gas, incomes tax, state income tax, unemployment taxes, social security taxes, health insurance policies, membership dues. What’s left is usually considerably less than the check you saw at the closing table and not enough to start giving buyers rebates.
Those that offer buyers rebates are either desperate for business or mediocre at serving buyers. Is that the kind of buyer’s agent you want to work with? I hope not, because buying a home is a large financial commitment and not something to be toyed with based on getting someone else’s income.
? Finally Dual Agency as a Designated Buyer’s Agent
This is where the listing agent who is employed to sell the house now becomes your designated buyers agent. Again legal in Illinois. The listing agent is already the designated agent of the seller. Now they become your designated buyer’s agent. The same forms are needed! Of course I would never recommend dual agency, legal or not, it’s a conflict of interest and the service you’ll receive legally has to be reduced. Buyers miss out!
When referring to agency in this post consumers should understand there are no salespersons or sales agents in Illinois now. We are either brokers or managing brokers. The managing brokers are licensed to run an office and hire other brokers. Corinne is a managing broker and also the owner of Barrington Realty Company.
And that concludes the law lesson on designated buyers agents for Illinois.