You amble into an open house and meet the seller’s agent, who seems really cool. You want to make an offer, but you don’t have anagent of your own. So what’s the harm injust working with the seller’s agent? In the real estate biz, one agent representing both the seller and the buyeris calleddual agency. Although it’s legal in some states, many real estate agents-and house hunters, too-see dual agency as a conflict of interest. Let’s dive into why working with a seller’s agent is actually a bit more complicated than it sounds.
Dual agency: Know what you’re getting into
A dual agent, who will be responsible forexecuting the transaction for both the buyer and the seller, is legal in states such asCalifornia andTexas, butbe wary before jumping into business with one.
It can be a fine line for an agent to walk, saysTeri Andrews Murch, a Realtor with Lyon Real Estate in Auburn, CA. As the buyer, you need to be comfortable and trust you are getting the representation you deserve.
Whether you’re a first-time buyer or a seasoned investor, you need to be clear on who is truly working for you, saysOlgierd MinkiewiczofTriplemint in New York City.
Advantages of working with aseller’sagent as a buyer
There are, however, some benefits to working with one agent.
The first thing that comes to mind is easier communication between the parties, says Minkiewicz. Ordinarily, thebuyer communicates with the buyer’sagent, who then talks to the seller’s agent, who then talks tothe seller, and vice versa. With just one agent, that chain of communication gets shorter. So theoretically it speeds things up a bit, and possibly even cuts down on misunderstandings.
There’s also the potential to save money on the transaction, becausecommissionis not split between two brokers. This does not mean you should assume the agent will work for less, Minkiewicz says. Occasionally the agentwill reduce the commissionfee by a percentage point or two.
If we use an example of a million-dollar property, then that’s 10or 20thousand dollars less that the seller needs to pay, which then can be reduced from the asking price, and the buyer saves a little, Minkiewicz says.
Be sure to discuss these details with the agent and have them explicitly written in your contract before you sign.
When working with a seller’s agent can go wrong for a buyer
The biggest issuewith dual agency is that having the same person represent both sides can be seen as an ethical dilemma.
If a listing agent has already established a relationship with the seller, they may want to settle with a higher price, says Minkiewicz.
The agent’s role can get a little confusing for the buyer and the seller, saysLee Dworshak, a Realtorwith Keller Williams LA Harbor Realty in Rancho Palos Verdes, CA. In a real estate transaction, you need to know your agent is representing your best interests.
A dual agent cannot have an undivided loyalty and cannot provide a full range of fiduciary duties to both parties, she says.
Think about it. The seller wants the highest possible price for the property. The buyer wants the lowest possible price. There’s an inherent conflict of interest in a dual agency transaction.
As the buyer, you mightthink you can cut your costs and speed the deal byworking with a dual agent. But if you get a good agent of your own, that personshould be able to negotiate a better deal that outweighs a reduction in commission, says Minkiewicz.
Tips on makingit work with a dual agent
Still determined to proceed with the seller’s agent? There are a few things you can do to make sure you leave the transaction satisfied. In the few dual agent deals Murch has handled, he’s always offered to have his manager or another agent in the office represent the buyer. That way,the deal is still handled by the same brokerage, but you’re more likely to have the undivided loyalty of an individualagent.
Still,dual agent transactions remain rare for a reason.
I find most buyers or sellers feel more comfortable with their own representation, says Murch.
But if you do work with the seller’s agent, Minkiewicz points out that the agentcan’t pick sides or give advice.
And in a transaction that sometimes involves millions of dollars, having somebody who really has your back, is only in your corner, and is coaching you when things get bumpy is probably the best thing a buyer can do.
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