Should I Use The Listing Agent For My Home Purchase?

I’ve heard and experienced too many crazy stories about buyers who think they’ll get a better deal by going directly to the listing agent of the property. Most often, they do not get a better deal, and they end up not being represented properly in the negotiations of many things in a Real Estate transaction. In fact, buyers who use the listing agent aren’t represented at all, which is why single-agent transactions seem abhorrent to many real-estate professionals and is only legal in a few states. 

I always ask this questions: “If you were being sued by someone, would you use the same attorney as the person suing you?” Of course not! But data from the National Association of Realtors seems to suggest that as many as 10 percent of residential transactions could be single-agent deals. (The trade group doesn’t have direct figures on buyers using listing agents, but instead relies on member surveys, which track real estate firms, rather than individual agents.)

Confusingly, the terms “dual agency” (which is what we use here in Hawaii) and “single-agent” transaction mean the same thing, with the difference being that of perspective: The agent sees his or her role as that of a dual agent because the agent represents both parties, whereas a buyer would view a deal with only one agent as a “single-agent” transaction.

Why Do Buyers Work With The Listing Agent?

Typically, most buyers who choose to work with the listing agent says they do so because they think they’re getting a better deal. 

With the idea that buyers can negotiate to get the listing agent to give up part of their commission because the buyers are unrepresented is a myth. Some people have success in doing so but still go unrepresented with the seller and listing agent taking full advantage. 

If the buyer is working with the listing agent, be aware of the conflict of interest problem that exists. Remember that the listing agent is interested in “ONLY” getting a deal done, and the higher the purchase price, the more they will make.

It also doesn’t make much sense when you consider that sellers, not buyers, typically pay commissions to both brokerages.

Do Buyers Actually Pay More?

Data are mixed on whether buyers in single-agent transactions end up paying more, according to Bennie Waller, a finance and real estate professor at Longwood University in Farmville, Va. But the reason for the mixed results, says Waller, most likely has to do with the time the property is on the market. Single-agent deals that happen within 30 days of listing typically sell for a 10 to 18 percent premium. But when the property sells within the last 30 days of the listing contract, the price actually drops by 5 to 6 percent.

What’s The Harm?

The problem with a dual agency deal is that it makes it impossible for the agent to fulfill a fiduciary duty to both parties.

The agent has an inherent conflict of interest when working with the buyer. It is extremely difficult for the agent to keep his knowledge of the buyer’s negotiating points, including their best price and best interest from becoming known to the seller, either directly or through the agent’s advice to the seller regarding counter-offers.

Beyond price, buyers should understand that a dual agency deal creates the opportunity for a problem on virtually every deal point, whether it is during the home inspection, termite inspection, appraisal, survey, review of condo docs, or reading through financial statements and reserves.

Because of the conflict of interest, there is a real chance that the agent doesn’t have the buyer’s best interests in mind and would just want to get the deal closed. 

What We Have To Offer?

As a service to our valued client’s, we do offer a special incentive to home buyers who choose to work with us and get represented in the manner that they should when purchasing one of their biggest asset’s of their lives. 

If you would like to learn more about what we offer our client’s who have considered directly working with the listing agent, please reach out to me and let me know. 

We are also more than happy to answer any questions that you may have regarding the pro/con’s to working with a listing agent directly.