Q&A: Listing agent to help me buy

Q. Last week while visiting open houses, I found a house which I really, really like and want to purchase. The listing agent has been very helpful and since I don’t have an agent, she is encouraging me to go ahead and let her help me with the purchase before someone else gets it. Is it a good idea to let the listing agent represent me as well?

A. Agency is the relationship you establish when you select or engage someone to represent you. It is a legal arrangement where you become the principal and they, as your agent has a responsibility to protect your interests in helping you complete a transaction. It is implicit in this agreement that they have a fiduciary responsibility to put your interests first.

Dual agency

The situation you are asking about is commonly called dual agency, where one party represents both people. It is entirely legal, but can become complicated. The agent must disclose to both clients the existence of the other client (get you to sign a paper which says you understand and are comfortable with this arrangement). The legal requirement addresses the issue of appropriate disclosure; it does not address the issue of human nature. Human nature is such that most of us are going to choose between two individuals one of them whom we like a little better or for some reason feel a little closer to and work harder to get what they want out of a situation. In addition, in a house purchase, the listing agent has a relationship FIRST with the sellers. Even if there is an agreement to treat all parties fairly, if there is a major inspection issue (for instance) it is likely to be harder for the agent to press the people who listed with her to spend the necessary money when they already have an accepted price. On the other hand, if you had selected a buyer’s agent whose only responsibility is to represent you, then your agent can fight aggressively for having the repair done since they have NO connection to nor consideration for the seller.

Limited or dual agency is very popular with many agents who contend there does not have to be a conflict and they can handle any conflict which arises.

I disagree and believe that while dual agency may be legal, it is fraught with the opportunity for a buyer to receive less than full representation. The major fringe benefit for agents is that dual agency comes with dual paychecks. When I sold real estate, I declined dual agency unless it was an inter-family transaction where they simply needed a competent agent to process the transaction but they were already in agreement about the details.

I will never forget one transaction where I had the listing and my client did NOT understand why I did not want to represent a buyer who wanted her property. I explained dual agency and the problem which that MIGHT create. I told her I wanted her house to sell but I did not want to represent the buyer.

She took that to mean I didn’t think much of her house (which was a reflection of her lack of self esteem and lack of understanding of agency as I had explained it to her). Her house appeared to be in excellent condition, very well kept, neat, clean. Roughly a $65,000 starter home in Indianapolis. I would not have listed it had I not felt comfortable with its presentation and my ability to sell it. We get the house under contract with a young woman who had wanted me to represent her as well since she did not have an agent when she first looked at the property during an open house. I had insisted she had to go find another REALTOR since I would only represent the listing side.

Her inspection uncovered a major leak in the attic which required a full roof replacement for FHA financing. Neither my seller nor I had any idea there was a problem with the roof since there had not yet been a leak inside the house, but here we are with an accepted offer, scheduled to close in two weeks. She is looking at an outlay of more than $4,000 to put on a new roof which would eat up almost every penny which she expected to get from the proceeds AND she didn’t have the funds to do it in advance. We tried to negotiate to get the buyer to increase her purchase price, to no avail. My seller was unwilling to move forward to closing at the agreed price AND shell out the funds for the roof. We did not close because she could not (chose not) to correct the problem. I supported her position. I felt she had a legitimate position. She somehow felt that if I had represented the buyer I could have made her accept the house without the roof replacement and that I had cost her the sale. She did NOT relist with me.

I am sharing that I refused to participate in dual agency and still lost the transaction and some agents reading this will say I should have represented both of them. I am more convinced than I was before that transaction began that the worse possible situation for me would have been representing both of these women—essentially AGAINST each other—over a $4,000 roof issue.

In real life, too often agents do press one party to go ahead when they run in a scenario similar to the one above. When they do so, they fail to pass the test of integrity and do a disservice to the real estate industry and the clients whom they profess to represent. The general public has significantly less regard for all real estate salespeople, including REALTORS, than they did 10-12 years ago. We have lost their respect as a profession because of the multitude of agents who do not adhere to the standards which had placed us in such high regards just a mere 20 years ago.

Agents: Will you be part of the move toward professionalism? Integrity? Respect?

Consumers: Will you become better educated about what you should expect from your agent and then demand that they provide a level of service which you are comfortable with?

You’re paying for it, you deserve no less!

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(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)