Do I need a buyer's agent or can I use the seller's agent?
This question is posted daily on many consumer sites across the country such as Zillow and Trulia. We are going to barely scratch the surface of this subject for our blog readers.
To answer this question directly, in Pennsylvania, you do not "need" to have a buyer's agent represent you. You can ...
1) Use the seller's Realtor/ representative
2) You can represent yourself (hopefully you have experience with Real Estate contracts)
3) You can use a legal consultant (preferably one that specializes in Real Estate)
Your decision should be made based on your individual needs and circumstances. Are you a first time buyer and feel a little green about the process? You may want your own representation. Are you a savvy developer/investor and know your way around contracts blindfolded? You may prefer to use the seller's agent. It all depends on your unique circumstances.
The question is a good one and has uprooted a lot of debate amongst the Real Estate community as well as buyers and sellers. Some states in the US do not allow "dual agency". That is what it is called when one Realtor represents both the seller and the buyer of a property. It certainly speaks volumes when a state will not recognize dual agency as a legitimate representation in Real Estate. One can only assume there have been some very serious problems with dual agency in the past, thus the only solution for those states was to make it outlawed and completely illegal. That is some serious stuff right there!
In our state of Pennsylvania, dual agency is recognized, legal, and allowed though it must be openly disclosed by the Realtor and agreed upon by both parties. Chris and I are doing a dual agency right now. Since we are both licensed Realtors, I have taken the lead as the buyer's agent while Chris remains the listing agent. It is one way we feel comfortable approaching dual agency. The difficulty in dual agency (and it is difficult in some cases), is rooted in one simple word: LOYALTY.
Loyalty is based on trust and faithfulness, knowing that your interests and goals are your Realtor's only focus. When a Realtor has 2 clients in the same transaction, which is more important to them the seller or the buyer? We do not have the answer. It is difficult to be neutral which is why we personally split the duties of the dual agency when they pop up in our practice. Ask Chris, I am a passionate advocate for my client in our dual agency ; )
In our experience it can be difficult. It is challenging enough in a singular buyer or seller Real Estate relationship. When you do dual agency the challenges almost are more than double! The math may not substantiate that but on a skill and emotional level it is triple the responsibility ! So, dual agency is challenging but not impossible.
Some Real Estate investors, for example, use the dual agency as an opportunity to get a better price on a home. Typically these transactions are less complex (cash purchase, no contingencies or inspections...) We have been able to adjust our commission in a few of our dual agency contracts which allowed both buyer and seller to reach their goals where it would have been impossible if they had their own Realtor representation.
I must confess that my answer to this question is a little dual (if you will), in nature. I want to answer the question so that you are an informed and educated consumer. Yet, I also want to make a comment or rather ask a question for other readers and professionals in the industry who have a very strong position for or against dual agency.
My comment is this: Dual agency is clearly difficult and in states that allow, it should be entered into with 1) caution for some, 2) with confidence for others, and 3) completely rejected for yet others. But, is removing the option for the consumer to choose, the right answer to the complexities of managing a dual agency relationship? You can give a person a fish or teach them how to fish. You've all have heard that saying, right? In the same way, isn't educating the consumer always the best option? I am not saying it is the easiest option but isn't it better than removing the freedom to choose?
I hope what I have written is well received as an opinion and certainly not intended to force dual agency on anyone. Our blog readers are a pretty sharp and opinionated crowd. We are interested in your view and your opinion.
Other Similar posts:
Dual Agency - Are you an Advocate ?
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Considering I've rarely been a fan of dual agency, this is pretty darn good. This is solid advice from all sides. Education is typically the best option; I think you did it here. I may even consider and understand dual agency because of this. Again, I'm not a fan of it per se, but you've layed out the details in and about not only that... but of relationships and education in the transaction. Options should not be limited. Even if the option isn't one of my favorites.
It's a hairy issue. In some cases--as you've noted--I've been able to get a deal done and clients on both sides what they wanted, only because of the dual agency.
In one transaction, I knew both sides and their motivations. The deal hinged on a very small item, and I was able to take care of it BECAUSE I knew what each side wanted/needed. I truly believe if another agent had been involved, the deal probably would NOT have closed. In the end, buyer got the house, and seller was able to move on... and the deal was very smooth. Inject another agent who may have planted her feet in the mud and insisted on the one item, and it may have blown up.
I have been in the situation many times where agents on other sides cause more problems and don't help achieve the goal: buyer in the house, seller out.
Jason - Thanks for the comment. It is interesting, isn't it ? The dual agency may not be the best option, but the point being, is that it is an option in many states. And the consumer should have the abiliity to choose how they would like to be represented. Other times dual agency may be the best option and it is a benefit for the consumer to have that choice in those cases. I like what you said "Options should not be limited - even if the option isn't one of my favorites" .
Erica - You bring up an excellent point in terms of when there are huge benefits of Dual Agency. Often times, one extremely competent agent handling and managing the deal may be better than having 2 agents, where one is inexperienced or perhaps not competent. The buyer has his/her own representation which looks good on paper but if that agent is not good at what he/she does, than that could have been a detriment to the consumer. This is where it can get very interesting in this discussion. The flip side is having an agent who may be inexperienced who is representing both sides of the transaction which can be quite hairy. ~ Chris
Yes, an unexperienced or unethical agent in Dual Agency is like playing with fire.
I just handled a sale where the buyer's agent did not fully represent her client. I know this but the client doesn't know this. At the closing table there were hugs and gift baskets exchanged... and I am sure the client THINKS she had a buyer's agent. What she got was definitely subpar and not good representation.
We have disclosed duel agency here in Mass as well. When a duel situation arises I work it much like you guys do and hand the buyer off to one of my team members.
Erica - Good point. As far as your recent deal, I would not be suprised that deep down the buyers are probably aware of that. In those cases, often times when the person goes to sell the property they will not use the same agent that helped them purchase the property. Or they may think twice about referring the agent as well. Who knows, they might refer to you instead ! Consumers definitely know who did a good job (or a great job) in the representation. Even if they did not catch it with the situation you are referring to, it is just a matter of time that the other agent will experience negativity with subpar representation of his/her clients and will not experience the benefits of residual business and referral business.
Bill - That is a good strategy. It it one of the great benefits to having a team of buyer agents. Especially with all the internet marketing that you do (as do we) that often times buyers will come directly to us from the marketing.
I believe that the Listing agent is often time the best agent for a buyer to use. The listing agent knows the most about the home and the seller's situation.
Excellent post Somers!. It's good that you brought out the differences between the two and mentioned that it's recognized as in some states it isn't. A well experienced realtor should dual agency deals. We're flagging this for a feature (#18). :)
Sincerely, Castellum
Tina - You raise an excellent point. But I am sure that many will disagree just based on the basics of Agency Relationships and for a buyer to have their own advocate per se. Is a tricky subject : )
Castellum - Well thank you for the flagging ! Dual Agency certainly warrants an intelligent disucssion... of both its benefits and its disadvantages. This is an excellent forum for sure in the Active Rain community ! We felt important to stress both but more importantly, look at it as a "case-by-case" basis. Many states have something similar to dual agency as well, such as what we call "transaction licensee" in PA.
In Missouri, dual agency is common. If I have a home on the market, handling the seller and buyer allows me to stay on top of the transaction far better than waiting for the buyer's agent to inform me of problems. We do have buyer agency too.
Kay - Makes sense ! Sometimes having one agent involved allows for a more efficient process, especially if the buyers agent does not return calls or emails promptly. Sometimes one agent ends up pretty much doing the job of the other agent as well so it might as well be dual agency in those cases.
Chris & Stephanie, Mississippi allows dual agency and as long as both buyers and sellers understand the process, it works great. Your post is great in explaining how it works. My view is that it should remain an option.
Thank you for the kind words regarding real estate. I am humbled by this.
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