Those of you who have read my articles in the past understand my stance on real estate buyer agents. I firmly believe that a buyer will not only receive better representation but will also achieve a better deal when utilizing the services of a buyer's agent, as opposed to buying directly through the listing agent. I was inspired again to reiterate this feeling when I received an inquiry on a property today from a buyer. Once the buyer realized I was not the listing agent, they (respectfully) told me they had been working independently, doing all the legwork to find their next home. They feel they will be able to negotiate a better deal working directly with any given listing agent. While I respect and appreciate their honesty, I have to shake my head in disagreement.
Will You Get a Better Deal Working With a Listing Agent?
Doing all of the legwork to negotiate your deal, what will you achieve? (Besides tired legs?) At what expense will you save? First, let me clarify that I am a listing agent; however, I work primarily with buyers. I seldom sell my own listing, and I have never pushed any of my listings onto any of the buyers I work with. It is my opinion that it is impossible to assist a buyer with obtaining the best deal possible when in fact, your fiduciary duty is now compromised by being obligated to both parties. I have a former client who happens to be an attorney, his view is similar, and I'd like to quote him (the best that I can from memory) from a recent conversation. He said 'real estate is just about the only profession that dual agency representation is allowed. What other profession will allow you to compromise the very one standard you are held by (fiduciary duty)'? He is correct. If you contact an attorney for legal advice, how would you feel if you found out that he was also speaking to and advising the other party involved? Is your listing agent representative going to point out unusual cracks the homeowner may be oblivious to or the fact that the kitchen cabinets were hung too high? (You'd be shocked at what buyers do not realize when searching for a property).
Limited Agency Issues
When the listing agent takes a listing, they offer advice to stage the home to minimize the flaws and maximize the attributes (like turning on the lights in the kitchen, so they won't realize how dark it is). Abnormalities are not necessarily "defects"; therefore, the homeowner (or agent) has nothing to disclose. Let's hope you get a good home inspector; I'm sure that same listing agent has a great inspector that "THEY" use. Will the listing agent show you the pending listing that is an excellent comparable and happened to be listed a few thousand dollars cheaper than the home you are looking at? If they do, they could technically be undermining their fiduciary responsibility to their seller. They are obligated to net the seller the most amount of money possible, yet they are obligated to obtain the best possible deal for you? Hmmm…how will your legs come in handy now? After all, you won't see any "pending" listings on the MLS. Will you have that listing agent show you market statistics for comparable homes that have sold in the past few months? Since you do not have access to the comps, how will you know they didn't miss a comparable (by accident, of course)? Will the listing agent volunteer the seller to pay for a home warranty, carpet allowance, or other items that could be legally (and commonly) requested? My specific callers' theory was that the listing agent would reduce their commission, allowing the buyer to obtain a better deal. The irony of the call was that this particular home was a short sale; the seller does not pay the commission…the bank does.
I had a buyer last year express the same theory. After showing them homes, he says, "the builder said if I do not use an agent, he will give me $5,000 off the home". Later, I ran a set of comparable sales in that very development. I don't know why the builder didn't mention to the buyer that his next door neighbor bought their home for $10,000 less…and used a buyer's agent…oh, and that agent was able to get the builder to include $3,000 in upgrades for carpet and other features. The point of this article is to reinforce my position on Buyer Agency. Of course, I genuinely hope that my particular caller (as well as any other buyer seeking no representation) achieves a great deal. Just keep in mind that you will not necessarily reach the "best deal"; you are only guaranteed to achieve a mutually acceptable agreement, not to mention a buyer's agent will do all of the legwork for you saving you money and time. I realize there will be many agents who disagree with me...but my guess is it will be the listing agents who make a ton of money by double siding your deals (meaning collecting a full commission for listing and selling) that disagree with my opinion. If you'd like to search for all MLS-listed property, check out our advanced St George Utah property search page.
