A client once asked me: “What is wrong with calling the listing agent to see a house? Isn’t that their job – to show the home to potential buyers?”
This is how I explained the problems that can arise when buyers call the listing agent to see or maybe even buy a home. Although a listing agent’s job certainly involves showing their seller’s home to buyers, when buyers want to view, or subsequently buy, the home from the listing agent, complications often come up.
For starters, in Ontario, real estate agents are permitted to practice multiple representation – this means that Realtors are allowed to represent the seller and the buyer in a transaction. So when you ask a listing agent to see one of that agent’s listings, they are likely to ask you the question: “Are you working with an agent?” If you say no, then the agent assumes that if you want to subsequently buy the home they are showing you, you will write the offer with them.
If you call the listing agent to view a home, they will assume you want them to represent you if you write an offer.
The real problem arises when you write up an offer with your buyer agent after seeing the home with the listing agent. The listing agent who took the time to show you the home will feel used – agents do not work for free. Although their job is to show their client’s listing, if you already have an agent, it should be your agent that takes you through the home. Therefore, be truthful when answering the question of whether you are already working with another agent. Ticking off the listing agent of the home you love and want to buy, is not a great way to begin a successful negotiation.
The more important problem to consider however, is when you want BUY a property with the listing agent. In this situation, a conflict of duties arises. Realtors have certain fiduciary duties to their clients – these are the highest standard of care possible when an agent works to protect his clients’ best interests. The list includes Disclosure, Competence, Obedience, Accounting, Confidentiality and Loyalty. (See previous blog on Agency Relationship here.)
Clearly, one agent cannot provide full Disclosure and maintain full Confidentiality at the same time! This means that in order to avoid any conflict, an agent who represents both parties cannot place the interests of one client above those of the other.
Consider this scenario: In a multiple representation, an agent will share the asking price of a home with the buyers but can’t provide advice as to whether it is appropriate and cannot guide the buyers as to what an appropriate offer would be. Or in another situation, if an agent performs a Comparative Market Analysis, the results can be shared with both sellers and buyers, but not interpreted for either client. In both situations, no one is getting any professional guidance during the transaction.
Whether you are negotiating the purchase price, a credit for repairs or an extension of time, you are better off having someone as your advocate throughout the entire process. If the Realtor is negotiating for both the seller and the buyer, it makes it difficult to be on your side all of the time. In such a situation the agent is only able to relay what one party says to the other but cannot truly negotiate for either side. The negotiation turns into a mediation or arbitration – and is this what you really want when buying or selling your most expensive asset?
Ultimately, the decision to allow an agent to represent you while he is also representing the other party is a personal choice. If you really like and trust that agent then it could work out just fine for everyone. But having a Realtor working solely for you can save you some headaches, and a bundle.
If you would like a professional Realtor to help you sell or buy a home, I would be happy to help. Or, if you have questions about multiple representation or any part of this blog, please contact me at steve@stevewalsh.ca.
Image courtesy of phanlop88 / FreeDigitalPhotos.net
