Buying A Home
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Dual agency?
The person who saw our house tonight wants to use our listing agent to make an offer. He said we would have to sign a dual agency waiver and that the commission on the sale would not change (5.5%). I think this is a conflict of interest and I do not know why the potential buyer is declining getting her own agent. Can we force her to get her own agent or should we go ahead with dual agency?
Re: Dual agency?
Ask your agent and read your contract, but it seems completely within your rights to tell them to find somebody else.
I've done a couple dual agency agreements with agents I trusted completely who were veterans in the profession. I wouldn't do it with just anybody.
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I wouldn't do it. You can't force her to get her own agent, but you can refuse to sign your agent's waiver.
It is a conflict of interest, hence the need for a waiver. It's not even permitted in some states. Think about how much your agent knows about your situation, your finances, reasons for selling, etc. Now think about how he can use that (intentionally or unintentionally) in a transaction when he's trying to help the buyer get a good deal. How can he fight for both of your interests at the same time? It gets a bit muddled and that would make me uneasy unless I knew the agent REALLY well.
We used an agent once who was also the sellers agent. She was VERY clear w/ us - "don't tell me what you would pay because I would have to tell the sellers". She signed w/ the sellers first, her allegiance was to them and she was clear about that.
While we liked her and continued to use her (we didn't get the house), w/ that initial house, we were basically acting entirely on our own w/ no advice from her of what would be a fair price, etc.
We were fine w/ this. We felt confident in what we were doing.
ANd heck, our last agent (who we now hate!) wasn't a dual agent and she was constantly arguing the other persons side (she was helping us both sell and buy). We ended up not telling her ANYTHING because it was pointless.
So even w/ not having a dual agent, we had to treat her as such.
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If you're going to rely heavily on her, and she's going to be in close contact with your buyer, I'd probably refuse dual agency to prevent conflict of interest.
We used a dual agent to buy our current house. But she was little more than a courier for paperwork for us. She did not advise us on comps/prices, she did not know how much we were willing to spend (and our preapproval letter did not have a specific dollar amount listed on it, it simply stated we could get a mortgage for this house), and the seller was a bank in California that she wasn't much in contact with anyway. They weren't taking advice from her on prices or anything else, either. Add to that the fact that this was DHs fifth home purchase and he deals with budgets, negotiation, etc. for a living so he knew more than enough to handle things himself. We simply made sure we had a good lawyer to review the contracts; honestly we took far more advice from him than we ever did from the REA. In our case it was just the easiest way (since we'd been looking without an agent of our own when we stumbled across this house) and it worked out. But under different circumstances I wouldn't advise it.
The buyers of the house we are selling now are using our selling agent as well. We were somewhat concerned about the conflict of interest but our agent seemed so ethical and we decided we were okay with it. We did negotiate down to 5% for the commission from 6% though. In hindsight, I don't think we would be okay with this next time. While there hasn't been anything unethical going on, it seems like she is acting just as the middle man to relay our counter offer, etc., instead of GUIDING us, which is a large part of what I thought we were paying for. I feel like for the thousands of dollars that she will be getting, she should be telling us what an appropriate counter or concession would be rather than saying "It's up to you, and I will tell the buyers." I feel like she is afraid to advise b/c of the dual agency.
I wouldn't agree to it because I want to be able to bounce my ideas off my REA and know that she is ONLY working towards MY best outcome. I want her opinions based on her experience and do not want her just to be the "unbiased" negotiator.
Every REA I have ever worked with stated to us upfront that their organization did not permit dual agency so there would be not conflict of interest.
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It's not always a bad thing for you but honestly that completely depends on your agent. Because I don't know your agent I can't tell you if it'll be in your best interest or not but I'd suggest the following:
1. Present your concerns and see how he/she responds.
2. Specifically ask them how they handle dual-agency. Can you count on their confidentiality especially when negotiating with the other party?
3. Ask them for a referral. Has your agent done a similar deal in the past? Ask them to provide references so you can hear from their past clients how their transaction went when dealing with dual agency.
Hopefully your agent has a good reputation, is experienced, and generally good client satisfaction. If that's all the case dual agency can sometimes make a deal go smoother, but there are pro and cons to both situations.
Hope that helps!