Triangle Area Real Estate News & Information

Having worked as long as I have as a Realtor; I often forget that most people don't know as much as I do about real estate and how it works until I speak with people and quickly realize they really don't understand even the most basic things such as what the job of a real estate agent or broker is, why they should want an agent who is exclusively looking out for them and why the last thing they should accept is an agent who wants to work both sides of a transaction. It doesn't help that despite the protestations to the contrary, that the majority of agents with the blessing of their State Real Estate Commissions, absolutely want to have their Buyer clients purchase their listings and allow them to “represent” both sides. (This is known as Dual Agency)

The Three Possible Relationships You Can Have With A Real Estate Agent

Selling Agent - A Sellers Best Friend

Sellers Agent (or Listing Agent) – Lists, markets and promotes the property for the Seller. They have a fiduciary responsibility to the Seller and by contract are there to represent the Sellers interest. They have been hired to get the Seller the best possible price, terms and conditions period. They are obligated to tell their client (the Seller) any information they may learn about a potential Buyer that can be used to the Sellers advantage. In other words if you are speaking to the listing agent be careful what you say. Entitled to one half the commission being offered by the Seller upon successfully closing the transaction.

Buyer Broker - A Must-Have If You're Buying A Home

Buyer Broker – Hired by the Buyer to represent their interest exclusively. This is the complete opposite of a Sellers Agent and the Buyer Broker has a fiduciary responsibility to the Buyer only. They are to be solely focused on what is in the best interest of their client (the Buyer) and are contractually obligated to share with the Buyer anything they learn about the Seller that could benefit the Buyer when they are negotiating. They should be informing the Buyer of any properties they know of (regardless of whether they are listed for sale in the MLS or offering a commission that is less than the agent would like) that would be of interest to them. This is what they are hired to do. When it's negotiating time they should advise their clients as if they were their own family members. Entitled to one half the commission being paid by the Seller for successfully closing the transaction.

Buyer brokering has only been around since the early 1990's and was created for the simple reason that Buyers filed enough complaints and lawsuits after discovering after the fact; that the agent they had been sharing personal information with while driving around looking at homes was in fact legally working for and representing the interests of the Seller and was obligated to share everything the Buyer had told them with the Seller to aid the Seller in getting the best possible deal for themselves.

After enough complaints and litigation individual states started mandating that Buyers were entitled to representation and after considerable tugging and pulling the National Association of Realtors finally agreed and soon thereafter Buyer Brokering became the law of the land and agents were mandated upon first substantial contact with either a Buyer or a Seller to explain the different relationships a member of the public could have with a Realtor and have them sign a written disclosure statement acknowledging that these relationships were explained to them and that they understood them. (This is referred to as Agency Disclosure and surprisingly enough there are many agents who still fail to do this in direct violation of the law)

Dual Agency

This is where there is one agent “representing” both Buyer and Seller. I purposely used quotation marks around representing, for the simple reason that in reality neither buyer or Seller who signed contracts with the agent is getting represented. In fact the only person well represented in this case is the agent and honestly while I will admit that they are focused on getting the transaction closed it's not for the Sellers or the Buyers benefit, it is only so that they can keep 100% of the commission.

In case you might be wondering, many real estate companies pay bonuses on top of what the agent would ordinarily earn when an agent does this. Does this sound like a possible conflict of interest to you? It should.

Dual Agency no matter what argument may be presented by an agent does not serve a Buyer well. I have written about this before and blogged about it on several national real estate sites and trust me this has not endeared me to a large number of real estate agents throughout the country who want to argue that it's perfectly fine (it's not) perfectly legal (it is in most states) and that they are in fact doing what's best for both their clients (how could this possibly be true).

I recently received an email from an agent in Florida who claimed that they never had a Seller complain about it, that in fact all their Sellers ever said was,”I don't care what you do just get it sold.” as if this were proof that dual agency was a good thing. Give me a break, Buyer Brokering isn't about the Seller, it's about the Buyer and of course this is what all Sellers say, particularly now when home sales are down and it's a Buyers market.

Let's be honest, real estate should not be an adversarial process, but if nothing else when it comes to price what's best for a Seller and what's best for a Buyer are diametrically opposed. When an agent is hired they agree in their contract to promote the best interests of the person hiring them and how can this be accomplished when the agent is supposedly representing both sides. Consider the analogy of one attorney both prosecuting and defending the same person charged with a crime; it's absurd.

The truth behind all the arguments I hear from agents on this subject is simply they want all the money and if they are anxious to be “dual agents” then the bottom line is they aren't really focused on what is best for their clients.

When State Real Estate commissions permits this, it's actually under pressure from the largest real estate firms in that state and is their legal “end run” to circumvent the entire purpose of having both Sellers and Buyers Agents. It may be legal, but consumers have a choice and do not have to and should not accept it.

What's your opinion?

You can find more useful Buyer information on my website www.MyNCHomes.com where you can also search through every single property available for sale in Wake, Durham, Orange, Chatham and surrounding counties.