Calling the Listing Agent?
Karen, a junior executive at a publishing company, and her husband, Mark, an entertainment lawyer, lived the first three years of their married life in a downtown apartment with a beautiful view of both the skyline and, in the distance, the lake. Their home had brought them much happiness, and it was convenient, too. Their building was located on a charming little street, with charming little shops in renovated 19th-century buildings. However, their home presented one major problem: the rent kept increasing steadily, as rent prices are want to do, and Karen and Mark wondered if renting was still the best option for them. It's not that they couldn't afford it; both of them had high salaries, and rent money, even with the yearly increases, wasn't an issue. But they felt that taking out a mortgage, buying a home, and making monthly mortgage payments was a better long-term decision than continuing to rent. They'd recently been approved for a new joint line of credit, so they knew that their credit history was in order. They then approached their local bank and got pre-approved for a mortgage. Then, they decided to spend the next few months getting to know the real estate market.
Karen and Mark knew they wanted to keep living in the downtown core, close to both of their office buildings. They kept their eyes peeled for properties for sale, and visited model home viewings and open houses almost as a weekend hobby. However, they didn't really expect to find anything they liked anytime soon. But everything changed with a fateful visit to a townhouse for sale in one of the city's trendiest midtown neighborhoods. Karen and Mark fell in love with the property; they just knew it was the place in which they wanted to build a home. Without hesitation, they approached the real estate agent and made an offer. The agent agreed to handle their side in addition to the seller's side of the deal.
Karen and Mark's situation was a little different than that of the typical real estate agent. Usually, real estate deals involve two agents: the listing agent, and the selling agent (also known as the buyer's agent). The listing agent represents the seller, and markets the property to buyer's agents who suggest the property to potential buyers. The selling, or buyer's, agent represents the buyer, and arranges for the buyer to view properties for sale. Both the listing agent and the buyer's agent receive commissions from the seller. Commissions are usually a percentage of what the seller receives for his or her property.
Because Karen and Mark made an offer directly to the listing agent, only one agent was involved in the deal. Their situation worked a little differently, as will yours, should you decide to make an offer directly to the listing agent, and should that listing agent agree to represent you.
Dual Agents
In situations where the buyer makes an offer directly to the listing agent, the agent will disclose the potential working relationships that can occur. Generally, there are two possible scenarios. In scenario one, the listing agent will agree to represent both the buyer and the seller. In this situation, the listing agent becomes a dual agent. In scenario two, the listing agent will choose to represent the seller only.
Note that many, many agents choose to represent one side or the other in a real estate deal. Some agents even focus on one side or the other for the entire duration of their career. For this reason, scenario two is more common.
Let's get back to scenario one, Karen and Mark's situation. The listing agent they spoke to in the townhouse relayed their offer back to the seller. The seller accepted the offer, and the listing agent agreed to act as a dual agent. The first thing the dual agent must do is have both parties, the seller and the buyers, sign a document called an 'agency disclosure.' This document will state the relationship the dual agent has to both parties. The purpose of the agency disclosure document is to ensure that all parties understand that the dual agent has duties to both parties, and that they understand what those duties are.
As you may have read on other articles on this website, a buyer's agent represents the interests of the buyer, while a listing agent represents the interests of the seller. Because he or she must represent the interest of both sides, a dual agent is more of a facilitator who ensures the transaction runs smoothly. Basically, a dual agent works to ease communication between the buyer and the seller, and to provide information to both parties. However, he or she does not act as an advocate for either side.
If a buyer has his or her own agent, then that agent works to get the best deal for them. This includes tips on how willing to negotiate the party is. For example, if a buyer's agent knows that a seller needs to get rid of his or her property quickly because of an imminent divorce, the agent may suggest the buyer try haggling down the price a bit. A dual agent will provide the buyer with no such advice. Similarly, he or she won't offer any advice to the seller on how willing to negotiate the buyer seems. The dual agent will communicate offers and counter-offers between the two parties, but wont provide additional tips or advice. The dual agent will gladly answer questions, explain elements of the transaction, and advise on technical aspects like home inspection, but her or she will sit firmly in the middle. His or her main job is to ensure that the transaction goes smoothly, rather than to fight for the interests of either side.
Listing Agent Only
In scenario two, the agent discloses that her or she will remain the listing agent only--meaning, he or she will serve as an advocate for the best interests of the seller. In this situation, you have two choices. You either hire a buyer's agent to act as your advocate, or you go through the deal on your own. Getting a buyer's agent at this stage might be tricky, because the fact that the buyer's agent did not actually lead you to the property and present the offer might affect his or her commission from the seller. In this situation, you may have to pay the buyer's agent a fee-if you manage to find one at all. Chances are, you'll have to handle the transaction on your own.
Don't be surprised if a listing agent refuses to act as a dual agent. Even though most real estate transactions run smoothly most of the time, it is not unusual for a bump or two to arise along the way. Many listing agents would prefer to speak to a trained real estate agent than an irate buyer who doesn't really know the industry, and understandably so. Furthermore, in disputes, buyers tend to accuse the dual agent of siding with the seller. This is often not the case, but because the seller is the one paying the commission to the agent, buyers tend to automatically assume that the agent will side with the seller in spite of the neutrality that dual agency requires.
So, the question remains: should you contact the listing agent? Unfortunately, the best answer we can give you is, it's up to you. Weigh the pros and cons. Weigh what you're forgoing by not having an agent to yourself against what you're gaining by making an offer directly to the listing agent. Then, decide if this is a risk you're willing to take.
