Are You Giving Away Leverage By Working With The Listing Agent?

Should buyers work with the listing agent?

As agents, we run into buyers that believe they will have an advantage over competing buyers if they chose to work directly with the listing agent. On one level it makes sense, but is it really in the best interest of the buyer?

Listing Agent’s Motivation

When representing both parties, the listing agent is incentivized to have the sellers accept the offer from their buyer and to just get the deal done. They would then receive both commissions offered to the seller’s agent and the buyer’s agent, thus doubling the amount they would have received if they would only have represented the seller. While that may work out great for the agent, does it really work best for the buyer?

Double-ending & Lawsuits

The majority of lawsuits that occur in real estate transactions happen when a deal is double ended. If you’re not familiar with the term, it’s pretty self explanatory. Double ending is when an agent represents both ends of the transaction, the seller’s end and the buyer’s end. 

When you use a buyer’s agent, you are hiring a professional with a trained eye who will look over the disclosures and call out any items that may be of concern to you. A buyer’s agent has only your interests in mind and one of their jobs is to help you to avoid lawsuits in the future. Even if a listing agent’s intentions are honest and pure, mistakes still happen and you better believe that when there’s a lawsuit their doubling-ending will be scrutinized.

You wouldn’t hire a defense attorney who was representing the plaintiff as well, would you?

Negotiating

Real estate negotiations.

The very word “negotiations” bring to mind an image of two people playing cards against one another, both keeping their cards close to their chest so the other can’t get a peek. Can you imagine one person playing two different hands of poker against themselves? At some point they’re going to have to make a decision who wins.

Now let me apply it directly to real estate. Let’s say you submit an offer on a home using the listing agent to represent you. You write the offer at the list price of $2M and when the listing agent calls your lender, your lender says that $2M is perfectly fine. In fact, they have pre-approved you for $2.5M. Now the listing agent has a dilemma. Their duty is to their seller but now it is also to their buyer thus creating a conflict of interest. 

As a seller’s agent they should be trying to get as much of that $2.5M for their seller as they can while still keeping the deal alive. As the buyer’s agent they should be negotiating the best possible price for you.

So if you can’t gain an advantage from working directly with the listing agent then what is the best way to get a leg up on the competition? Your best course of action is to find a buyer’s agent who will represent you exclusively, is a local expert and has relationships with all the agents in the area you are looking to buy in. But most importantly, an agent who can negotiate the best possible price for you.

If you are looking for representation, drop me an email to sally.lee@compass.com to ask for a consultation so we can see if we would work well together.

Post by Vincent Ergas

IMPORTANT NOTE: I have not and will not verify or investigate the information supplied by third parties.

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