Five Types of Real Estate Agents -- Engage the Right One

Agents play a big role in real estate transactions. If you are a seller, your agent will present the property in the best manner so it will be sold at the best price. If you are a buyer, your agent will help you in research to find a wide array of choices and will assist you in negotiation so you can buy the property at the lowest possible price.

Whether you are a buyer or a seller, if you go into the market ring without agent representation, you will most likely end up defeated.

Therefore, I strongly suggest, be represented by the appropriate type of agent of your choice.

There are many agents out there, but the appropriate agent for you is not necessarily the one you personally know, nor the one who is referred to you by a friend, nor the one who is aggressively pursuing you.

The best agent is one who possesses the qualities, license, and registration of a professional broker. Select your agent sincerely though interview, just like a job interview, so you will know how he operates and what is in his mind. The moment you show that you do not know how to say a firm "NO" to an agent you are not comfortable with, you are already doomed to regret it in the end.


1. Demand your right to 100% loyalty representation from your agent. Your agent works for you, you pay him, therefore he is obliged to protect your interest.

2. Claim your right to be represented by your own agent. Get a professional one and let him do the work of dealing with the agents of the other side of the transaction.

3. Do not tolerate your agent to work with conflict of interest. You have a right to terminate your business relationship with the agent immediately if you detect that he does something (convinces you to do something or releases crucial information) that you believe is more favorable to the other side and less favorable to you.

Before anything else, I would like you to watch the YouTube short video clip by book author and consumer guru Jean Chatzky. She will be discussing the different types of real estate agents in the U.S.A.


In the U.S. however, they have only classified four types of real estate agents because there are no Colorum Agents being tolerated there. But in how I see things around the Philippine market, there are actually five types of Real Estate Agents that exists.

Real Estate agents switch characteristics from one type to another for various reasons. Among which is their search for better earning opportunity or greener field of pasture (they just simply want to earn for a living).

1. Traditional Listing Agent (TLA)

2. Non-Exclusive Buyer Agent (NEBA)

3. Dual Agent

4. Colorum Agent

5. Exclusive Buyer Agent (EBA)

I. Traditional Listing Agents

Traditional Listing Agents or TLA are in the business of "selling" real estate. The TLAs are trained in sales persuasion and negotiation. They are the marketing experts and skilled in the art of salesmanship. TLAs represent the sellers or the developers. TLAs work for sellers who are willing to pay a commission. They normally secure an Authority to Sell from the property owner (seller) with a stipulated commission. Some agents are authorized by the seller to offer the property at an overprice.

If you are a buyer and you contact anyone who is advertising a property for sale or lease, you will most probably be encountering a TLA or the seller himself. The brokers who work as full-time employees of developers fall under this TLA classification. These are the type of agents who are heavily trained on marketing techniques on how to entice and court buyers. TLAs are rationally not interested to pull the price down because they are bound to represent the price mandated by the seller and their commission is based on the final price.

The three kinds of traditional listing agents are In-House, Independent, and Dealers.

In-House Agents work exclusively in a realty firm or a developer, they only present and sell properties that are carried by the developer or the firm. In-house agents earn salaries from the developer or realty firm.

Independent Listing Agents are sometimes called external brokers or freelance brokers. They are agents who sell whatever projects and properties come into their opportunities.

Dealers are agents who have a lot of financial resources, they buy good properties at a very low price and sell it at a profiteering price.

These three types of agents are highly recommended if the client is a property owner who wants to sell his property and willing to pay a commission. However, if the client is a buyer, it is best for him to get a representation of an Exclusive Buyer Agent before contacting any listing agent.

II. Non-Exclusive Buyer Agents

Non-Exclusive Buyer Agents or NEBA are two agents from the same firm are representing the buyer and seller in the same transaction (double-blade). NEBA are agents within a realty firm who has two departments of agents within the company - a marketing staff and a customer representative. The marketing staff is the selling agent. The customer representative is assigned by the company to capture the needs of buyers and represent buyers in their dealings with the firm. It is like two agents in the same firm playing bad-guy-good-guy on a buyer. It is the firm who employs the non-exclusive buyer's agents and will assign him to negotiate with listing agents within the firm. In short, the NEBA can only present and negotiate listings that are within the firm. A NEBA type of agent is almost similar to a dual agent except that his being a buyer's agent is directed by the management of the firm and it has a switch on/off characteristic. We recommend that if the client is a buyer, he can settle to a NEBA if he cannot find any EBA.

The best reference about NEBA is the YouTube - Spencer: on Buyer's Agent (Part 1), and Spencer: on Buyer's Agent (Part 2). Alternatively, you can just play the embedded YouTube below.

III. Dual Agent

A Dual Agent is an agent who offers representation services for the buyer and seller in the same transaction (balimbing - two faced agent). The dual agent tailorfits his service to capture the trust of the customer.

A dual agent is capable of switching characteristic from listing agent to buyer agent (back-and-forth) in response to the opportunity to earn a commission. When facing his seller customer, he will present himself as seller's agent. When facing his buyer customer on the other side, a dual agent will pretend will all his might to appear like a buyer's agent.

If the negotiating table is likened into a boxing ring, a dual agent shows that he plays three roles simultaneously like a trinity -- the role of a referee, a boxer of the left corner, and a boxer of the right corner. He is like alone in the ring and the customer is watching a show.

This type of agent is the one any wise buyer must avoid because of conflict of interest. A dual agent most often (if not always) get his compensation from sellers who are willing to pay commission. His loyalty is most likely on the seller. If you ask a dual agent to help you find a property to buy, the dual agent will do the search but will normally not present a possible property to the buyer if the seller is not willing to pay a commission.

From the point of view of buyers, in terms of loyalty, a dual agent is an epitome of conflict of interest. He is sent out by the buyer to look for properties and he connive with sellers on the overprice -- very unethical.

For the buyers, in dealing with a dual agent, all I can say is Caveat Emptor (buyers beware). At the moment the buyer divulges his "budget" to a dual agent, the buyer is already deemed to be defeated on the negotiation table. The dual agent would look for properties with lower value than the budget and then present it to the buyer at budget price -- with profiteering intent.

Even Exclusive Buyer's Agents are very very very very careful and cautious when they deal with dual agents. Dual agents are very flexible, resourceful, and effective in looking for properties but also very opportunistic to the vulnerability of buyers.

IV. Colorum Agents

Colorum Agents are those without license and registration who pretend that they are traditional listing agents, dual agents, non-exclusive buyer agent, and exclusive buyer agent. Colorum agents compose at least 95% of the real estate agents all over the Philippines. Colorum agents are illegal, punishable by 4 years imprisonment and fine not lower than P200,000. The irony is that the government tolerates them in such a way that if you complain them to HLURB, you have to pay PhP 1,010 filing fee and shoulder the investigation effort and expense (funny huh).

Most, if not all, of colorum agents are being exploited by in-house traditional listing agents. You can easily spot these colorums in malls handing out marketing fliers of condominium and subdivision house and lots. You can easily detect them by just looking at the back of their fliers where they write their own name without professional license and HLURB registration.

Colorum Agents come in two types. First is what we call "underground agents", those who have no license from the government agency regulating the real estate service. The second is the "informal agents", or those who have licenses but are not complying with the government's registration and office set-up requirements for real estate service practitioners. Aside from these two terms I am using here, the other similar terms referring to colorum agents are illegal agents, illicit agents, backdoor agents, and quack agents.

To detect a colorum, the key words we are looking at here are license and registration. Now here is the rule, which applies similarly to individual and independent brokers. The proof of license is a DTI/HLURB/PRC License Registration Certificate. The final proof of registration are DTI Business Name Registration, Mayor's Business Permit, Principal Place of Business (office), and BIR-registered Official Receipts.

Although colorums can be easily detected, it is very difficult for buyers to avoid them because they comprise around 95% of the agents scattered all over the places you can imagine. You can easily spot these guys in the malls, street-side, and project sites, distributing fliers. They usually have no performance bonds, no offices, no receipts of their own, no proper schooling in real estate service, no ethics, no reputation to protect. These are the kinds of agents who simply want to earn commission, they don't care about government regulation on the real estate profession.

Colorums, just like in the medical world, are like ordinary persons posing as dentists. The colorum have no professional license and no registration of the service they are offering to the public. Well, they colorum dentists have the capability and long experience of extracting people's teeth, they can show you a plastic-bag full of teeth and will promise you that they can do it faster than anyone else. But you will notice that their methodology and facility is different compared to the professional dentists. The colorums can't explain service contracts, can't explain things in that field, will not tell you the cons or the possible after-operation "infections", but yes they sure can extract you teeth fairly fast with a set of rusty pliers. Would you allow these guys to work on your body? The hell, big NO!

If you are willing to pay extra two thousand pesos to get the services of a real dentist, instead of a backyard witch dentist; then I think you should get a professional broker instead of a colorum agent because what we are talking about in a real estate transaction is hundreds of thousands and even millions of pesos. Do you get what I am trying to emphasize here?

Cautious clients (sellers and buyers) don't deal with colorum agents. Even if the agent is representing himself as in-house agent, you must always look for his personal professional license and HLURB registration as broker or salesperson.

Watch out guys, in September 2009, I launched a research to determine if those people handing out fliers in the malls and streets are colorum or not. The findings of the study is shocking, only one out of one thousand is a licensed and registered broker or salesman. I have concluded that even prestigious developers illegally employ colorum agents. They send out colorum agents to capture clients in the field. So you have to be very careful.

Watch your back also, there are a lot of real estate agents in the Philippines who can show IDs as Licensed Brokers but cannot show their offices. These are called fly-by-night agents and the mere fact that they do not have official receipts as professionals, they are already showing that they can get away from their duties to the government.

Colorum agents are already used to eluding their obligation to government, therefore they can easily elude their obligation to ordinary customers. No wise customer would want to deal with this kind of agent.

Now the classic question is, "is it cheaper to engage the services of the colorum compared to a licensed agent"?

My perpetual answer is straightforward. You pay more to colorums and get unskilled service. More often, you will regret about the price you paid for the property later on, because colorum agents have this bank-robber mentality, they want one big hit out of any rare opportunity to capture a buyer.

Colorums are not skilled in perfecting transactions before clients sign the documents. If your transaction will end up into an unexpected "infection", you can't run after colorums because they have no offices and they have no performance bonds, colorums can't help you fix the problem -- you will have no choice but to go to lawyers and courts and end up paying even more.

V. Exclusive Buyer Agent Exclusive Buyer Agent (EBA) is also known as Personal Shopping Assistant or Price Bargaining Assistant who is not tied up to any seller or real estate developer. An EBA is a professional real estate agent who renders 100% loyalty representation services on the buyer side only and never on the seller side. The word "exclusive" refers to his "entire career", which means that an EBA is an agent who has made a decision and choice to represent buyers only and never sellers in his entire career. In the U.S., the number of Exclusive Buyer Agent has already increased to at least 4,000 members. They have an organization called National Association of Exclusive Buyer Agents (NAEBA) and their website is at http://www.naeba.org/. In the Philippines, as of today, December 3, 2009, I am the one and only Exclusive Buyer Agent yet so far; and I have been an EBA since 1998. I am recently starting up a group called EBA Society, hoping I could pass on principles of consumerism to more real estate brokers so that more buyers will enjoy our loyalty-based services. While Traditional Listing Agents train hard on salesmanship negotiation, EBAs train harder on purchasing negotiation. Through the years of experience, he sharpens his skills in negotiation, concentrates his research in knowing where to get best-value listings, and focuses his learning activities in this specialized field of price bargaining. An EBA is not a product of an overnight reading on how to become an EBA, but a product of years of experience and study in this specialized field. Exclusive Buyer Agents (EBA) represent the buyer in case the buyer have after-purchase complaints against the seller or against the seller's agent. These complaints are lodged and settled in the arbiters' offices of the Housing and Land Use Regulatory Board (HLURB), wherein only licensed real estate professionals can make representation. The HLURB is also the place where complaints are filed against colorum agents who sell real estate projects.

The Part-2 of this article, which is the most important blog of all my blogs, is entitled Exclusive Buyer Agent (EBA), which is a detailed description of the EBA. xxxxx REFERENCES and RECOMMENDED READINGS The Buyer Broker. http://www.fool.com/homecenter/find/find02.htm Choosing Your Agent. http://www.fool.com/homecenter/find/find03.htm Buying Without an Agent. http://www.fool.com/homecenter/find/find01.htm

No comments: