Why Working with the Listing Agent Can be a Bad Idea
With competition to get into a home on the Mid-Peninsula at an all time high, buyers are going to great lengths to get their offers accepted. Many are waiving all contingencies, making cash offers, just stopping short of offering their first born to the seller in exchange for their home. Many of the same faces can be seen from open house to open house, from city to city, searching for the right place to call home. Some people start to think if they can work with a dual agent, meaning the same agent represents both buyer and seller, that they might be able to get a leg up on the competition. Unfortunately, in my experience, that doesn't tend to be the case.
While it isn't unique to the market that we're currently in, there are always people that approach the listing agent and say "I want to make an offer on this home and don't have an agent, will you work with me?" While this is certainly flattering to hear as a listing agent, it also raises a few questions. The first one is, how many times has this person used this line and what are their real intentions? If I represent them, am I going to be the 5th listing agent they've written an offer with? If their offer isn't accepted, will they vanish and move on to the next agent that lists the house around the corner?"
We're fortunate to have a lot of really good agents on the Mid-Peninsula, many of which will not represent both seller and buyer. There are a few reasons why agents might not want to double end a deal: it's often not in the sellers best interest, there are too many risks and liabilities associated with representing both buyer and seller, it's impossible to represent both the seller and buyer's best interest at the same time, and it's not fair to other agents (our colleagues). Regardless, there doesn't seem to be a shortage of buyers out there that think they'll get a better deal if they go through the listing agent.
Here is the thought process most buyers have that seek representation from a listing agent:
- The listing agent is going to share the seller's bottom line with you and you will then know the absolute lowest price you can buy the property for.
- Since the listing agent is representing you too, they make twice as much compensation, so they are going to work harder than any other agent would to get your offer accepted.
- The seller will pay less commission since the listing agent is representing you and them, so they will be willing to sell the property to you for less.
Unfortunately, in most cases, the points above don't happen that way and can actually add a good deal of stress and friction to a transaction. If those things were true, why wouldn't everyone want to just go through the listing agent and get the best deal possible? Years ago, having one agent represent both sides was a lot more common than it is today. But then real estate contracts became more intricate, more was required in terms of seller disclosures, and there were more lawsuits. This is what I believe has led to the decline of using one agent.
Here are some real life issues buyers may encounter being represented by the same agent as the seller:
- The seller doesn't like their agent representing an interested party, because they think it compromises their interest, so they decline your offer, regardless of the price and terms of the offer.
- The listing agent will not aggressively negotiate on your behalf because they do not want to put the seller in a bad position. After all, the seller was their client before you were and they will most likely have a closer relationship with the seller.
- You get into contract, an issue comes up, and the listing agent takes the sellers' side. It could be you needed more time to close escrow, the seller didn't properly disclose something, etc. Again, they don't want to put the seller in a bad position.
If you're out there trying to buy a home, the best thing you can do is to align yourself with a good agent and stick with them. A good agent will always have your back, have a high level of experience, be able to give you rock solid advice, and have the relationships needed with other high performing agents to give you the best opportunity possible in a multiple offer situation.
Cliff Whearley has been a resident of Redwood City for 23 years. He is a Realtor at Dwell Realtors, Inc. and has been practicing real estate since 2007. If you have any real estate questions, he would love to help!