Let’s say you are driving down the road just looking at homes for sale in the area when you come across one that catches your eye! You want to see the inside of the house, but you think to yourself “should I call the agent on the yard sign?” Consider the following…
When calling the name on the yard sign, which is the listing agent, you are asking that person to do work for you by showing you the house. When a person does work, they expect payment. Payment in this situation could very well be that this agent now expects to represent you. That agent also represents the seller. This is called dual agency. Dual Agency or a single-agent transaction is when one agent acts as both the listing agent and buyer’s agent in the sale of a property (also called “double-ending”). If this is allowed in your state, then you need to know that the agent that is on the yard sign is contractually obligated to work on behalf of the seller. You are the buyer. How is that going to effect you? Legally, at that point the listing agent becomes impartial to either party. Then the question becomes how will negotiations work? Well, the agent will fight for the seller to get the most out of the property. If that is the case, then how can they fight to get you the best deal? This is not a good situation for the you, the buyer. It is also not a good situation for the agent. There is just no reasonable way that one person can act in the best interest of both parties, and the agent has obviously had a relationship with the seller longer. You would be much better off calling another agent that can work on your side.
“I’ve heard too many war stories about buyers who think they’ll get a better deal by going directly to the listing agent of the property,” says Bill Golden, a Re/Max agent in Atlanta. “Most often, they do not get a better deal, and they end up not being represented properly in the negotiations.”
There is also a conflict of interest. On top of the hard position of being in the middle, there is also a conflict that arises regarding commission. The listing agent is concerned with getting the house sold, and the larger the purchase price, the larger the commission. Not all agents will work just for the larger pay check, but that does add some stress to the situation. You, as a buyer, can’t be sure that the agent is not out for what they will get out of the deal.
“Because of the conflict of interest, there is a real chance that the agent doesn’t have the buyer’s best interests in mind,” according to associate professor Eric Chen, who teaches business at the University of Saint Joseph in West Hartford, Conn. “It doesn’t necessarily happen every time. However, the pressure, opportunity and rationalization are all there for the seller’s agent to act in their own client’s interest and against the interests of the buyer.”
If you intend on using your own agent when you are ready to write an offer and to represent you through the home buying process, the best thing for you would be to not ever call that listing agent. If you call them to show you the house, then they see another agent involved in writing the offer, it may not set well with them. Often times when a buyer is represented by another agent, that buyer’s agent will be the one to show the house. As mentioned before, when work is done, payment is expected. Yes, the listing agent will be paid some commission either way, and ultimately they want to do what they can to get the house sold. It just gets a little bit sticky when they have been working for both parties, and then all of the sudden there is another agent in the mix. It may have been a little bit misleading to that listing agent.
Having one agent working on behalf of both the buyer and seller is obviously not advised. Whether on purpose or not, it is very hard for the agent not to lean toward one side or the other (and the side that brings the agent the larger commission will likely win out). A dual agent is supposed to do what they can to remain independent of either side and not give any advice or opinions. As a buyer, however, you want someone that can be honest with you and share their real estate expertise. To summarize, if you plan on having a buyer’s agent once you are ready to write the offer, go ahead and choose one now. Let them start showing you houses. It will make things go much smoother later on. You will also have time to build a relationship with that agent as you all work together to find your next home.
Wondering where to find a buyer’s agent? Look no further. We have a great team of skilled professionals waiting to represent you!
Sources: about.homebuying.com, bankrate.com