Dual Agency
This is from my (current and ongoing) personal experience of buying a house (going into contract now in Bed Stuy): with the advent of the internet, buyer’s brokers have been rendered useless (for the most part, for most people) because some decades ago, a knowledgeable buyer’s agent might have been a goldmine of listings unavailable to the public – now, everything is public and available. When I started house shopping, I realized this and didn’t expect my agent to turn up with listings I haven’t seen myself. However, I expected that the agent would have become integral and useful once negotiations would start, and provide some sort of strategy that I could not have come up with myself, based on their market knowledge. To my disappointment, when asked for advice regarding negotiating and what our next step should be, my agent would say “Well, what do YOU think? What do YOU want to do?”, like a bad therapist. That was his reponse to anything I asked – no input whatsoever. I feel like I have learned NOTHING from him, about real estate or about this house specifically or about laws/building codes. I learned more from interviewing lawyers over the phone for 10 minutes (when I was picking one), than the 6 months or so that I worked with him. I feel like I got to a point of no return regarding firing him (“procuring clause” – he showed us the house from the listing I found), and didn’t want to risk being pursued for the commission. He’s been like a fifth wheel – not really harmful, but useless. All he’s done is unlock doors (literally, not figuratively) and copy and paste my emails to the seller and his agent. Thankfully, the commission is not coming out of my pocket. Many real estate agents I’ve come across have been equally incompetent. If I did this over, I would not have an agent. People are so concerned about having someone with their interests on their side, but I’ve gotten the impression that the house buying process is very opaque in some stages, and even an agent with great expertise and the best intentions is not going to be able to read the seller’s or the seller’s agent’s mind to tell you if they are playing a game with you or if they really do have all those competing offers that they are boasting about. My agent’s been an extra middleman to relay information through to the seller and every time I did this, I hoped that the message would get across completely and the right follow up questions would be asked. Frankly, I would have much rather cut him out of it and dealt with the seller’s agent directly, which would also help me gauge his visceral reactions to offers, questions, etc… I say that if you have the time and the skill to do the research (market, laws, building codes, specific properties), you absolutely should go at it alone, in my opinion. Get a good lawyer and inspector – their expert opinions will ensure that you’re not getting duped in the physical condition of the house or its legality. You’ll just have to research the market to make sure you’re getting a fair price. Let’s say there’s an offer of 600k with a buyer’s agent – that makes 18k at 3% commission for the seller’s agent; and another offer for 500k without an agent, that would raise the commission to 30k for the seller’s agent. And who do you think a seller’s agent would root for – the higher offer with their own agent, or the lower offer with no representation? I would hope that no seller’s agent is as dishonest as to deny to relay an offer of 100k more to the seller, but I used those simple numbers for the sake of the example. You get the idea – even if there are 2 nearly identical offers, except for the represenation or lack thereof, you can probably bet the seller’s agent will try to steer the owner towards the one that would yield more commission for them. I hope my long post is somewhat helpful.
Kateruba
in Agents and Brokers 13 years and 6 months ago
5
Please log in, in order to post replies!
5 replies
CountChocula | 13 years and 6 months ago
I have read elsewhere that a dual agency (broker representing both the seller and the buyer) can be beneficial for a buyer. This seems right to me, as (I think) the benefit of depriving the seller of the normal scope of representation of a seller’s broker is worth more to the buyer than the detriment of depriving the buyer of the normal scope of representation of a buyer’s broker. As the seller’s broker now has a duty to the buyer, she cannot represent the seller as vigorously as she would in a transaction with a separate buyer’s broker or an unrepresented seller. In addition, the seller keeps the full comission on a closed dual agancy transaction – so if there are multiple offers she will naturally have an incentive to favor (and try to convince her seller of the merits of) the offer from the buyer she represents. Even if there are not multiple offers I think the seller’s broker has an incentive to try and close a dual agency transaction as quickly and efficiently as possible (to go to contract before other offers come in from buyers with other brokers, etc.). Converseley, a buyer’s broker always has an incentive to close the deal and get paid, so her interests are not always aligned with those of her client (who may want to walk away from the deal). If the buyer is sufficiently knowledgable in the market (i.e., in terms of selling prices/comps) then it seems the buyer’s brokers services/expertise mainly concerns the transaction process, and I don’t know why a dual agent could not perform those same services (i.e., I don’t think such performance would be hindered by the co-existing duty to the seller). Does anyone else have any thoughts on this? I am interested in putting in an offer on an apartment and was thinking about going the dual agent route. Thanks in advance.
rh | 13 years and 6 months ago
Dual agency or not, the listing broker should ALWAYS be representing the seller. That’s who hires them. If you’ve signed a contract with a buyer’s broker (separate from the listing broker), they will work for you, the buyer. You are correct that an agent will want their own offer to be accepted over an offer from another agency, however, if the agent in question has an ethical bone in their body, they will try to push the BEST offer for the seller, not what’s best for said agent.
slopegirl | 13 years and 6 months ago
Sellers broker has NO duty to the buyer even if you don’t have a buyers’ broker. The main reason to use just the sellers broker is the potential savings on not having to split the commission between brokers may be passed along to you as a buyer since. Your offer is effectively higher price. Also my opinion is fewer real estate agents in a deal is often better. Once you’ve agreed on a price, let the lawyers take it from there. However if you’re new to real estate or NYC, consider using a broker you trust.
BigGuy22 | 13 years and 6 months ago
A buyers broker SHOULD be workng for the seller just like the listing agent. The seller pays them both! A buyers agent is BS, REBNY brokers loveeeeeee to use this “buyers broker” crap all the time. There is no difference!!!! If you make an offer through a listing agent they will be inclined to make the deal happen, put one through a buyers broker they have no pull what so ever and are still relying on the listing agent to negotiate the deal. The buyers broker doesnt directly negotiate with the seller…so what the point of having one?
slopemope | 13 years and 6 months ago
Load of crap. They just want to keep all the commission in house. However, yes you do want to put brokers in a position that doesn’t work against them and makes them as much money as possible. That is how you get to be a preferred buyer (unofficially) vs other bidders that don’t play ball. These games are prevalent in many types of business, in this case seller is paying all commission, make broker happy and as usual keep cards extremely close to your vest. Its a competitive market, good luck!