For years I have wondered at the hesitation and reluctance of buyers to put their trust in a buyer agent. It is a question that comes up from time to time, yet I still don’t have a satisfactory answer.
I understand that buyers may be hesitant to commit to an agent without establishing a relationship first. I also understand that buyers may want to utilize open house visits to interview listing agents as potential buyer agents. However, I don’t quite understand why a buyer would want to use the listing agent of a home to also represent them as their buyer agent for that same home. Many agents will cringe when they read this as ‘Double Ending’ a deal is like winning the real estate lottery, however, when it comes to providing the best service for a buyer, the listing agent is often not the best option.
To help bust a few myths surrounding this situation and to help buyers make more informed choices about 1) if they should use and agent and 2) what kind of agent they should be using, I have put together a list of the most common misconceptions to shed some light on the buying process. I will start with the myth that puzzles me most. Stay tuned for more Real Estate Myth Busters in the weeks to come.
Myth #1 - I will get a better price if I use the listing agent to buy my house.
Many buyers believe that they will save money if they buy directly from the listing agent. Commission is predetermined in a listing agreement signed between the seller and the agent at the time when the house is listed. A portion of that commission is allotted to pay the agent who represents the buyer in the transaction and the other portion goes to paying the listing agent. If a buyer cuts out the buyer agent, it only results in the listing agent getting both portions of the commission. No savings are passed on to the buyer by going direct.
It is also important to remember that when the initial listing agreement is signed between the seller and the listing agent, they have entered into a legal relationship where the agent is bound by fiduciary duty to benefit the seller.
So, the question then becomes: ‘As a buyer, what is the benefit to ME in using the listing agent to buy my home?’:
1) The listing agent has an established relationship with the seller.
2) The legal responsibilities of the listing agent rest with the seller.
3) If a contract is signed and the buyer and seller both enter into dual agency or multiple representation, the agent is limited in the information that can be transferred as the agent is now legally representing both parties in the transaction.
4) The listing agent is always trying to get top dollar for the sellers.
The listing agent will (or should) be fair, honest and professional. But when comparing who to trust with the buying of your home, listing agent or buyer agent, ask yourself who will work harder to get the best price?, who will dig deeper into issues with the home to ensure you are buying a quality home?, or who has YOUR best interests at heart?, the answer should be clear.
A listing agent’s responsibility to their client is to sell the house. Therefore, a listing agent will be SELLING you the home which usually means a hard sell on the great features of the home while glossing over the deficiencies (if mentioned at all). A buyer agent’s duty is to establish a trusting relationship with their clients, understand their needs, and to search for properties that best meet those needs. The listing agent is not interested in the wants and needs of the buyer as the objective is to sell the house that is listed.
It should be clear I am not saying listing agents shouldn’t be trusted, as I am one myself. Agency laws prohibit the listing agent from giving you all the information and professional advice you would receive from a buyer agent. Listing agents are not trying to be dishonest or withholding, but they are bound by legal obligations to the parties they have entered into contract with. In most cases, their duties are to the seller first. A different set of rules apply once they engage in a multiple or dual agency relationship with both buyer and seller, however, those changes still do not benefit the buyer. Listing agents can be wonderful buyer agents, just not if the buyer is looking to use them as their agent to purchase the property they have listed.
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