Working with a Realtor

Nir · Aug 8, 2008

Hi All,

I recently found a potential property in a city I have not invested in yet. I called the RE agent on the ad/MLS and we are now in touch regarding my next purchase.

My dilemma is does he represent me or the seller? His name appears on many investment properties in the area so obviously he represents sellers. on the other hand he is willing to work with me whether on this property or others.

My question is if it is going to be this property, should I look for another RE agent to ensure I am represented? Or, just purchase through him?
(assume he is a nice guy who knows the area well.)

Lastly, is it important that I find a home inspector and property manager myself in order to avoid conflict of interest or do you recommend I contact people provided by the RE agent who knows the area better?

Thanks and Regards,
Neil

Dan_Eisenhauer · Aug 8, 2008

Neil, it is common for Realtor to have a "dual agency" relationship with both you and the seller. It means the Realtor represents both you and the Seller equally. The agency relationship is with the company, not the sales rep. In theory, and I think in practice most of the time, it means the Agent cannot reveal person or motivating information about either party to the other party. Your Realtor should have discussed this with you when you first met.

Having said that, the dual agency only applies when you are buying a property listed by the sales rep`s company. If you are looking at properties listed with another company, there is no possible conflict of interest.

Your Realtor should be able to help you find properties, to analyze them, and to make recommendations on price. (Recommendations on price in dual agency is not possible, although you can get a CMA for you to judge for yourself.)

The question comes down to, how comfortable do you feel with the Realtor in question? What is his reputation? Be aware that the listing agent cannot get you a deal on the property. (I wonder how often I have heard buyers think that will happen.

)

As for contractor referrals... The Realtor is governed by a code of ethics, and rules. He/she cannot, or at least should not, direct you to a given contractor. But giving you a list of three or more from which you can pick is common practice.

I hope this helps.

jedwards · Aug 8, 2008

All Realtors are obligated to explain Agency and how it works. Ask to see a pamphlet on it which describes the relationship if you`re not comfortable with the explanation from the Realtor. It varies if you have signed a Buyer Agency Agreement with him or not but Dan is correct about not disclosing personal motivations (whether you or the Seller) and how much - or how low on the price. It`s called limited disclosure.

For home inspectors, here`s a good site too:

http://www.oahi.com/default.asp?tier_1=63&...0&content=5

Savard · Aug 12, 2008

Brokers work for the deal. Which is to say they are working for themselves.
Please always ask - what is in the deal for any interested party? How is every party in the deal getting paid?

I encourage you to read "Freakanomics" There is a great chapter which shows how realtors will keep their own house on the market longer and get a higher selling price than what they provide for their clients.
With your deal you could offer keep the realtor "whole" on the fee, which is to allow them to keep both sides in return for getting you a very good deal. I`d bet the realtor will be very motivated to get you your deal. Or simply tell the broker that the buyers fee will be reduced out of the deal.

GarthChapman · Aug 13, 2008

Neil, this depends somewhat on what Province you are located in. I think I remember you to be in Ontario, but in case some Alberta information will help...

The dual agency thing is changing right now in Alberta. I think they are even now calling it something other than dual agency. We just made two such deals (a buy and a sell) with our Realtor, who is also our son, acting for both parties. There is now a more significant obligation by the Realtor to the Seller (aka the Client) than to the Buyer (aka the Customer). I think the changes are driven by Liability issues and are written by lawyers to protect Realtors from lawsuits. This to me means it is not much about you the Buyer/Seller. Hopefully one of our Alberta Realtors on this forum can explain this change.

My general comment is that whenever a Realtor, or anyone else in a professional capacity, is working for both parties, in the end they are working for the deal and themselves. Instead of having an advocate for your interests you end up with an advocate for closing the deal. It requires a person of exceptional integrity to properly serve the interests of both Buyer and Seller. My past experiences in dual agency leave me believing that you are generally not quite as well represented as you are with two Realtors working on the deal. But it can work - just make sure you know and trust your Realtor completely. Hence we are OK working with our son in dual agency - we trust him completely, and know that he is very good at what he does.

Hope that helps a bit,

RedlineBrett · Aug 13, 2008

Hi Garth,

A buyer can declare `customer status` which means that he or she is entering into the deal with the knowledge that the listing realtor is only representing the seller and will only act as a `facilitator` for the buyer. Meaning they only help the buyer by showing them the property and guiding them through what they have to fill in on the purchase contract. So no help on `what should I offer" or "should I get a property inspection" type of questions. Many agents will only work duals with this type of relationship.

The `customer status` type of relationship was largely created to make it easier for agents to work both ends of the deal and not get in hot water. It is a legal means to tell the buyer that they are only working for the seller. Sadly, many buyers don`t know how agency commissions are paid and they go direct to the lister without getting their own buyer`s agent.

QUOTE (GarthChapman @ Aug 13 2008, 10:27 AM) Neil, this depends somewhat on what Province you are located in. I think I remember you to be in Ontario, but in case some Alberta information will help...

The dual agency thing is changing right now in Alberta. I think they are even now calling it something other than dual agency. We just made two such deals (a buy and a sell) with our Realtor, who is also our son, acting for both parties. There is now a more significant obligation by the Realtor to the Seller (aka the Client) than to the Buyer (aka the Customer). I think the changes are driven by Liability issues and are written by lawyers to protect Realtors from lawsuits. This to me means it is not much about you the Buyer/Seller. Hopefully one of our Alberta Realtors on this forum can explain this change.

Hope that helps a bit,

Nir · Aug 13, 2008

Thank You Brett, Garth, Dan, `Savard` and `jedwards` for the EXCELLENT information!

Regards,
Neil

Charly · Aug 13, 2008

Excellent Information. I am in this situation right now. I am looking at possibly purchasing a property in BC and my agent, also happens to be the agent of the seller. I like my agent a great deal, but I do not think it is possible to get the best deal for myself under those circumstances.

The property is in an excellent location, close to a marina, golf course etc. It is great for rent, and will serve as my home for the future. Problem is it requires major upgrades which are quite pricey.
(25,000 plus which I will do after I no longer want the for rental ) -I will only put in an offer reflecting that. I think I will be asked to split the difference and frankly, that does not seem right. My point is here is that I would prefer a realtor that can aggressively go after a good price for ME, moreover, I am also, not sure about dealing with so many upgrades

Your thoughts. I am new at this. So your comments are appreciated.

GarthChapman · Aug 13, 2008

QUOTE (RedlineBrett @ Aug 13 2008, 11:23 AM) A buyer can declare `customer status` which means that he or she is entering into the deal with the knowledge that the listing realtor is only representing the seller and will only act as a `facilitator` for the buyer. Meaning they only help the buyer by showing them the property and guiding them through what they have to fill in on the purchase contract. So no help on `what should I offer" or "should I get a property inspection" type of questions. Many agents will only work duals with this type of relationship.

The `customer status` type of relationship was largely created to make it easier for agents to work both ends of the deal and not get in hot water. It is a legal means to tell the buyer that they are only working for the seller. Sadly, many buyers don`t know how agency commissions are paid and they go direct to the lister without getting their own buyer`s agent.

Brett, does your description above relate to Designated Agency?