Who Represents You Or When To Keep Your Mouth Shut
Who Represents You Or When To Keep Your Mouth Shut
Knowing which type of relationship you have with your agent, and his broker, will help you negotiate the best possible deal, whether you’re a buyer or a seller.
And more importantly, will help you determine when to open up, and when to keep your mouth shut.
In the state of Oregon, agency relationship allows 3 ways to represent a client.
1. Buyer’s Agency
Want the agent to represent you and only you when you buy a home so that all the information you share with her is confidential? Opt for an exclusive buyer’s agent.
Who pays the buyer’s agent? Typically and perhaps surprisingly if you hire a buyer’s agent, the sellers generally pay his fee. You can pay your buyer’s agent yourself, or ask the seller (or the seller’s agent) to pay your agent a share of their sales commission.
When to keep your mouth shut: As a buyer who is savvy enough hire an exclusive agent, the answer is to be very careful when talking in front of the seller or their agent. It is best to stay quiet, and not let them know how interested or not you are in the house and leave it to your agent to do the negotiating for you, and ask the questions. You never know when giving away too much of your excitement over a home will cost your thousands of dollars in negotiating power.
2. Seller’s or Listing Agency
An exclusive seller’s agent represents only the sellers, not the buyers. If your exclusive seller’s agent finds a buyer for your home, he may have another agent -- maybe even a co-worker from the same brokerage -- represent the buyer in your transaction. In some cases the buyer may have no agent at all. Your exclusive seller’s agent is loyal only to you, so it’s OK to discuss strategy with him.
Who pays the seller’s agent? The seller pays a commission to the seller’s agent from the proceeds of the sale. The seller’s agent may, and often does, share the commission with the homebuyer’s agent.
When to keep your mouth shut: It is easier as a seller to keep your mouth shut...or so one would think. As a general rule, only communicate through your agent, and don't be home when buyers come to look at your property. You never know when sharing just a little too much information on you motivation will cost you thousands of dollars when the buyer's agent realizes if you don't sell the home in 45 days that your mother will be kicked out of the nursing home.
3. Dual Agency
A dual agent situation often arises when one agent represents the buyers and the sellers of the same home. The agent must disclose the relationship and you must agree in writing to such dual representation because of the potential for conflicts of interest. A trusted Realtor can keep confidential information from both parties confidential. They still owe a duty to each party to guide them though the buying and selling process, but are not allowed to suggest terms. For example, the agent can provide the buyer with comps to the house they have listed, but cannot suggest what price to offer. Conversely, when presenting the offer to the seller, they cannot suggest how much to counter back for, but can provide counseling on terms and norms.
Who pays the dual agent? Usually the seller pays the commission.
When to keep your mouth shut: This is the hardest one to have a general rule of thumb with. Typically the seller will already have established a listing agency relationship with the Realtor. So the buyer is the party that needs to be cautious at the beginning until it is made clear that the Realtor will be representing both parties. A good Realtor can handle this, but needs to explain in great detail what it entails. If the Realtor tells you that the seller will take less than full price...RUN! That means they will also disclose that the buyer is willing to pay more.
The Big Misconception: Thinking if you go straight to the listing agent, that you will get a better deal on the house because only one Realtor is getting paid. What actually happens typically is the Realtor gets paid double in this situation. And for a good reason. The risk associated with representing both side of the transaction go up and the amount of work to complete the deal increases because it is not being spread between two agents.
My Recommendation: If you are looking to buy a home, hire a buyers agent. If you are looking to sell a home, hire a listing agent. If you have hired a listing agent and trust them, and a buyer comes in unrepresented, it is fine to let your agent do Dual Agency. But it is also perfectly acceptable to ask them not too.
I both list houses and represent buyers. I always keep my clients info confidential. And I always inform my sellers that if I list there house, and they prefer that I don't help a buyer purchase it, that I will refer any buyers that I may get for their house to another trusted agent in the community.
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