By Mike Bodeen · 24 September 2018
This past Saturday, my clients, found a home online in the Scottsdale Country Club for sale that they wanted to see. The listing agent was holding an open house so they went to view it – and really liked it. It was at this point that the husband called me. His question? Is it better to use the listing agent, or a buyer’s broker to represent them?
The husband and I had spoken back in August for the first time. I had not yet met him in person, but we connected well on the phone. He and his wife were relocating from the Tucson area, but thought it wouldn’t be until the first of the year before they would actually begin looking – that is until they saw this home.
I personally knew the listing agent. Once upon a time, we worked for the same company. He’s a good and ethical agent, and we’ve both been in the business together for many years.
So here’s the down and dirty answer. It’s pretty darn near impossible to represent both the buyer and seller well. Our brokers, for good legal reasons, strongly discourage us from representing both parties. In fact, we must have our clients sign a “Limited Dual Representation” form if our company represents both parties, even if it’s with two different agents within the same company.
“…It’s pretty darn near impossible to represent both the buyer and seller well.”
So, my answer to my client, was that using a Buyer’s Broker was in their best interest. In single agency, where I am representing only the buyer, I’m obligated to disclose to my client any information rightly or wrongly passed on to me by the listing agent. For example, if I learn that the seller is willing to take less, I’m obligated to inform my buyer of that. It’s then up to my client as to how they want to proceed knowing that information. In a dual agency situation, the agent representing both buyer and seller cannot pass on any information to either customer/client that could be detrimental to the interests of the other party.
In a single agency situation, I’m also obligated to disclose ANYTHING I learn about the property, even if it would result in the deal “going south.” Single agency means that what I know, my client must know. To put it simply, I’m fighting for their best interests alone, not that of both parties.
In this instance, things became more complicated. We made a strong offer very close to their asking price. Another broker also brought in an offer following ours. We were rightly not made privy to anything about that offer. I called my client to inform him that another offer had come in on the home and to see if he wanted to adjust his offer accordingly. He said no. They would stick with their offer and didn’t want to get in a bidding war.
It was at this point that I wondered if my clients might regret not using the listing agent, as that agent would get up to double the amount of commission if he “double ended” the deal. When this happens, a listing agent may be encouraged to push one offer over another if it means more commission for him. So when competing against multiple parties, it may be the only situation where being represented by the listing agent instead of their own buyer’s agent could give them an advantage.
Knowing the other agent to be ethical, having worked with him before, I’m comfortable saying he probably would have done his job and presented both offers fairly to the seller. So I don’ think in this case it would have made much of a difference. Some agents, believe it or not, may allow greed to enter the picture, and when that happens, either the buyer or seller will get short changed.
In this instance, the other offer that came in was for more money and cash, versus my client’s need for financing, so my clients probably wouldn’t have gotten the home either way.
Mike Bodeen