Home buyers beware!
Make sure the agent working with you is also working for you!
Here’s a quick quiz:
While searching for a home on the internet, you find a new listing you would like to visit. The listing looks good, meets your requirements and seems to be priced well. The home is listed by an agent we’ll call Sammy Lister. You decide to contact Sammy. You reason that since Sammy has listed the home, he may be more knowledgeable about the property and may be able to help you more than any other agent.
Is this a prudent course of action?
NO!
Why? Because Sammy is not your agent. Sammy Lister is the seller’s agent. As such, Sammy must keep the best interests of the seller in mind at all times. Your best interests and the sellers’ best interests are often at odds: The seller wants to sell for the highest price possible, but you, as the buyer, want to pay as little as possible.
This is the idea behind buyer agency. Sellers have had agents representing their best interest for years…in fact as long as there have been real estate agents at all. Under the antiquated system of “subagency,” even if you contacted an agent who did not list the home you are viewing, that agent still worked for the seller. Crazy, huh? All those years, all those millions of transactions, and most buyers were not on equal footing with the sellers.
Buyer Agency
Buyer agency means that the agent you choose to work with has your best interests in mind. As a buyer agent, my duties to my buyer clients are:
- To help find the right property.
- To provide relevant facts as to property value, neighborhood conditions, market conditions, and obvious physical defects.
- To urge buyer clients to have the home professionally inspected in order to maximize the chances of finding non-obvious physical defects.
- Keep information regarding buyer preapproval amount confidential to maintain the strongest negotiating position.
- To put my buyer clients’ interests ahead of even my own best interests.
- To help my buyer obtain the property for the best possible price and terms.
But what about dual agency?
Sammy might tell you that dual agency is perfectly legal, and in Wisconsin, he would be right. It is legal as long as both parties agree to the arrangement in writing. What Sammy should also tell you is that his power to help either client is severely diminished under dual agency.
For example, let’s say Sammy has a home listed at 123 Main St. Joe Buyer sees the sign and contacts Sammy to view the home. Joe likes the home and wants Sammy to help him write an offer; Sammy agrees and is excited because he can get the entire commission by being a dual agent!
But wait! When Joe asks Sammy what the house is worth, Sammy cannot answer. Sammy’s hands are tied by the dual agency agreement. Sammy cannot say anything that would violate the sellers’ best interests. Certainly, telling Joe Buyer that the Sellers are relocating and have another child on the way would harm the sellers’ negotiating position.
Likewise, if Joe Buyer puts in a lowball offer, Sammy Lister cannot tell the sellers that the offer stinks. Doing so would violate Sammy Lister’s duty to help Joe Buyer obtain the property for the best price possible!
So you see, dual agency greatly reduces the power that an agent has to work for you. Now recall the quiz at the top of the page. I hope you now understand why, as a buyer, calling listing agents for showings is sort of like shooting yourself in the foot.
As a buyer, having a buyer agent work for you can be a powerful weapon to help you get the deal you are looking for.
Am I Different from other Real Estate Agents and Brokers?
Well, yes and no. It is true that as the broker of record for Eau Claire By Owner, I do list many properties. However, each and every one of my listings is for sale “By Owner.” For the most part, my clients’ yard signs don’t show my phone number, they show the owner’s phone number.
So if any of my buyer clients are concerned about dual agency when viewing one of my listings, they are welcome to contact the owner directly and simply go around me altogether. If the buyer client wants to buy the ECBO listing, they can call off our buyer agency agreement. I may also refer the buyer to other agents with whom I have worked in the past.
I may lose a few sales this way, but I believe it is a small price to pay for keeping my clients best interests intact at all times. To me, that is the most ethical solution, so that is the best solution.
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