Most people understand what a real estate agent is and does. A real estate agent is not just simply a job but a licensed position that requires continuing education to maintain their license and keep their job.For most people, the legalities and details of buying and selling property is not something that they want to deal with on their own. Many homeowners feel that they can try to sell their property on their own first, and if that doesn’t work, hire the help of a real estate professional. Many first-time homebuyers don’t even realize that it can benefit them to have their own agent when buying a property, rather than going with the listing agent of the home they chose. This is where a buyers agent, a listing agent and dual agency come into play.
The listing agent is exactly that; the real estate agent that actually lists and markets the property for a homeowner. They are the agent that has been contracted by the homeowner for a set amount of commission and percentage on the sale of the property to list the home on the local MLS (multiple listing service), market to potential buyers and sit open houses or show the property when necessary. The listing agent also helps facilitate the transaction and becomes the mediator between the buyer, the buyers agent and the homeowner or seller. The listing agent receives a percentage of the sale of the property earned as a commission once the property actually sells and closes.
The listing agent can also bring the buyer. However, most buyers can really benefit by having their own real estate agent facilitate the transaction on their behalf. This is called a buyers agent. A buyers agent does not work for the homeowner or seller of any particular property but for the buyer themselves. Their interests, goals and focus is solely for the buyer, not the seller or anyone particular property. One of the best things about buyers using a buyers agent is that it cost them absolutely nothing for their services. This is because the buyers agent receives a split commission or half of the commission of the sale of the property of which ever home the buyer chooses. You might think that the buyers agent would have an ulterior motive to sell a particular home but for the majority, all buyers agents works solely for the buyer and they realize that whatever home the buyer chooses the agent will get paid on the commission of the property sold. This means that a buyers agent is truly free for the buyer. The commission for that agent will come out of the closing fees and costs that the seller will need to pay upon closing.
For instance: if a listing agent sets up a contract with a homeowner to sell the property for certain amount they will state that 3% of the commission will go towards the buyers agent and 3% will go towards the listing agent. If the seller agrees, at closing, 3% of the sale price of that property will go towards the agent that facilitated the sale for the buyers behalf.
Now, here’s where it gets interesting. If the listing agent also brings the buyer and there is no other agent involved, that listing agent technically will receive the full commission or 6% (or whatever the homeowner and the listing agent negotiated upon). You can definitely see why listing agents would want to sell their own properties to their own buyer getting twice as much commission have they sold it with the help of a buyers agent. This is why it is very tricky for buyers to use the listing agent to help by the property. That listing agent has one goal in mind; to get this property sold. They’re not going to offer the opportunity to get your own buyers agent as of course they would want the full commission. This is what I’ve tried to tell buyers for years; use your own buyers agent. A buyers agent is unbiased, they have no agenda to sell any one particular property, and they facilitate the transaction on the buyers behalf, not for the benefit of the seller.
This is where the term “dual agency” comes into play. An agent acting on behalf of the buyer and the seller is considered a dual agent. This is where the same agent, broker or Realtor®, represents both the seller and the buyer in the same real estate transaction. This is unlike many other types of businesses such as attorneys where it is prohibited for the same law firm to represent both the plaintiff and the defendant. This is legal but it may not necessarily be the best option for buyers and sellers. A dual agent cannot fully satisfy the duties of loyalty, full disclosure, obedience to lawful instruction that is required to both the buyer and the seller. It is very difficult if not impossible to give the same type of service to both buyer and seller.
In my early days as a real estate agent I worked with a listing broker that loved acting as a dual agent. Of course he received the full commission on every home he sold and he simply told the buyer that because the seller found him first, he’s legally obligated to the seller over the buyer. He made the sound like a simple decision, however, it was usually the buyers the got the short end of the stick. The sellers trying to get the most out of the sale of the property with the best terms on their behalf. It’s almost impossible to get the best price for the buyer and the best terms when you’re trying to get the best price and terms for the other side as well.
Again, this is why I stress it is highly important to use your own buyers agent when looking at property, writing up an offer and facilitating the transaction. Buyers agents work just as hard at helping facilitate, show property and answer questions for buyers as a listing agent.
For more information or answers to any of your questions about a listing agent, buyers agent or dual agency contact my office today.