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I ONLY WANT TO WORK WITH THE SELLERS AGENT!
Working with a seller's agent is always an option when you're buying a house, but should you?
Picture it: 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 an agent of your own. So what’s the harm in just working with the seller's agent? In the real estate biz, one agent representing both the seller and the buyer is called dual agency. Although it's legal in Arizona, 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 for executing the transaction for both the buyer and the seller, but be wary before jumping into business with one.
“It can be a fine line for an agent to walk,” says Karla Osmun, a Realtor® with Platinum Living Realty in Scottsdale, AZ. “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.
Advantages of working with a seller's agent 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, the buyer communicates with the buyer's agent, who then talks to the seller’s agent, who then talks to the 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, because commission is not split between two brokers. This does not mean you should assume the agent would work for less. Occasionally the agent will reduce the commission fee by a percentage point or two.
“If we use an example of a million-dollar property, then that’s 10 or 20 thousand dollars less that the seller needs to pay, which then can be reduced from the asking price, and the buyer saves a little.
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 issue with 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,” says Lee Dworshak, a Realtor with 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 might think you can cut your costs and speed the deal by working with a dual agent. But if you get a good agent of your own, that person should be able to negotiate a better deal that outweighs a reduction in commission, says Minkiewicz.
Tips on making it 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 individual agent.
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 agent can'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.”
Karla Osmun is dedicated to realizing the real estate visions of families and investors. In the real estate business since 2004, formerly licensed in Hawaii and now in Arizona, Karla has a keen eye fo....